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Guide to Data Mining
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Data Mining Information and Resources


Simply put, data mining is the processing of taking data and analyzing it from different perspectives so that it can then be summarized into useful information. This information can then be used for various reasons including increasing revenue and cutting costs. While there are a number of tools that are used in data mining, one of the most important is data mining software. Data mining software allows users to analyze, categorize, and summarize the information found. Although the term "data mining" is fairly new, the technology behind it is not. For years, companies have used computers to analyze volumes of data, however the technology continues to improve everyday.

Data Mining Guide

Data mining allows business to use large amounts of information in an effective manner, and proper practices help to minimize costs while improving results.

Data refers to any numbers, facts, or text that is able to be processed by a computer. This can include dales, inventory, forecast data, and more. The relationships, patterns, and associations among any data can provide information. The information is then converted into knowledge about future trends as well as historical patterns. This knowledge, for instance, can help a grocery store analyze sales information in light of promotional efforts so that they can learn more about the buying behavior of consumers.

Data mining is usually performed in data warehouses. Data warehouses essentially refer to the process of centralized data management and retrieval. Companies are starting to be able to integrate their numerous databases into data warehouses due to extraordinary advances in processing power, data capture, data transmission, and storage capabilities. Just like data mining is a relatively new term, so is the term data warehouse. Data warehousing is an important step that businesses should take to ensure they have a centralized location for their data that will help maximize not only user access but also analysis.

The primary use of data mining today is by companies that have a strong consumer focus, including but not limited to, retail, marketing, financial, and communication organizations. While data mining is important for these industries, there are privacy implications that need to be kept in mind by those participating in data mining.

Data mining will enable these consumer focused companies to do the following:

  • Determine the relationship between internal factors such as price and product positioning.
  • Determine the relationship between external factors such as customer demographics and competition.
  • Determine the impact of relationships on customer satisfaction, sales, and corporate profits.

Data mining works by using data mining software that has the ability to analyze patterns and relationships within stored data, based on open-ended user queries. There are various types of software that can be used to perform these analytical tasks. With data mining, there are generally four kinds of relationships that are sought including clusters (data items grouped according to logical relationships), classes (using stored data to locate predetermined groups), sequential patterns (data mined in anticipation of behavior patterns and trends), and associations (data that is mined to determine associations).

Data mining consists of five important elements.

  1. Storage and management of data in a multidimensional database system.
  2. Analysis of data through the use of application software.
  3. Providing data access to analysts and IT professionals.
  4. Extraction, transformation, and loading of transaction data onto the data warehouse system.
  5. Presentation of the data in a useful format.

The technological infrastructure that is needed to achieve data mining will vary greatly depending on the amount of data that needs to be processed along with the complexity of the queries that need to be processed. The more data that needs to be processed and then maintained, the more powerful the system will need to be. Prices for the systems needed to maintain and process the data will also vary greatly in price from several thousand dollars to over a million dollars. There are various software systems that buyers can choose from.

To learn more about data mining, data warehousing, and the uses of each, take a look at the following resources:

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