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We live in the age of information. Data is the most valuable resource of an enterprise.
In today’s competitive global business environment, understanding and managing enterprise
wide information is crucial for making timely decisions and responding to changing business
conditions. Many companies are realizing a business advantage by leveraging one of their
key assets – business Data. There is a tremendous amount of data generated by day-to-day
business operational applications. In addition there is valuable data available from external
sources such as market research organizations, independent surveys and quality testing labs.
Studies indicate that the amount of data in a given organization doubles every 5 years.
Data warehousing has emerged as an increasingly popular and powerful concept of
applying information technology to turn these huge islands of data into meaningful
information for better business. Data mining, the extraction of hidden predictive information
from large databases is a powerful new technology with great potential to help companies
focus on the most important information in their data warehouses. Data mining tools predict
future trends and behaviors, allowing businesses to make proactive, knowledge-driven
This paper describes the practicalities and the constraints in Data mining and Data
warehousing and its advancements from the earlier technologies.


Data Warehousing

• A data warehouse can be defined as any centralized data repository which can be
queried for business benefit

• Warehousing makes it possible to

o Extract archived operational data

o Overcome inconsistencies between different legacy data formats

o Integrate data throughout an enterprise, regardless of location, format, or

communication requirements

o Incorporate additional or expert information

Data Mining

Data mining is not an “intelligence” tool or framework, typically drawn from an

enterprise data warehouse is used to analyze and uncover information about past performance
on an aggregate level. Data warehousing and business intelligence provide a method for users
to anticipate future trends from analyzing past patterns in organizational data. Data mining is
more intuitive, allowing for increased insight beyond data warehousing. An implementation
of data mining in an organization will serve as a guide to uncover inherent trends and
tendencies in historical information, as well as allow for statistical predictions, groupings and
Classification of data.
Typical data warehousing implementations in organizations will allow users to ask
and answer questions such as “How many sales were made, by territory, by sales person
between the months of May and June in 1999?” Data mining will allow business decision
makers to ask and answer questions, such as “Who is my core customer that purchases a
particular product we sell?” or “Geographically, how well would a line of products sell in a

particular region and who would purchase them, given the sale of similar products in that

Generally, data mining (sometimes called data or knowledge discovery) is the process
of analyzing data from different perspectives and summarizing it into useful information -
information that can be used to increase revenue, cuts costs, or both. Data mining software is
one of a number of analytical tools for analyzing data. It allows users to analyze data from
many different dimensions or angles, categorize it, and summarize the relationships
identified. Technically, data mining is the process of finding correlations or patterns among
dozens of fields in large relational databases.

Although data mining is a relatively new term, the technology is not. Companies have
used powerful computers to sift through volumes of supermarket scanner data and analyze
market research reports for years. However, continuous innovations in computer processing
power, disk storage, and statistical software are dramatically increasing the accuracy of
analysis while driving down the cost.


Dramatic advances in data capture, processing power, data transmission, and storage
capabilities are enabling organizations to integrate their various databases into data
warehouses. Data warehousing is defined as a process of centralized data management and
retrieval. Data warehousing, like data mining, is a relatively new term although the concept
itself has been around for years. Data warehousing represents an ideal vision of maintaining a
central repository of all organizational data. Centralization of data is needed to maximize user
access and analysis. Dramatic technological advances are making this vision a reality for
many companies. And, equally dramatic advances in data analysis software are allowing
users to access this data freely. The data analysis software is what supports data mining.

According to Bill Inman, author of Building the Data Warehouse and the guru who is
widely considered to be the originator of the data warehousing concept, there are generally
four characteristics that describe a data warehouse:

• Subject-oriented: data are organized according to subject instead of application e.g. an

insurance company using a data warehouse would organize their data by customer,
premium, and claim, instead of by different products (auto, life, etc.). The data
organized by subject contain only the information necessary for decision support

• Integrated: When data resides in many separate applications in the operational

environment, encoding of data is often inconsistent. For instance, in one application,
gender might be coded as "m" and "f" in another by 0 and 1. When data are moved
from the operational environment into the data warehouse, they assume a consistent
coding convention e.g. gender data is transformed to "m" and "f".

• Time-variant: The data warehouse contains a place for storing data that are five to 10
years old, or older, to be used for comparisons, trends, and forecasting. These data are
not updated.

An Overview of Data Mining Techniques:

This overview provides a description of some of the most common data mining
algorithms in use today. We have broken the discussion into two sections, each with a
specific theme:

1) Classical Techniques such as statistics, neighborhoods and clustering, and

2) Next Generation Techniques such as trees, networks and rules.

Each section will describe a number of data mining algorithms at a high level, focusing
on the "big picture" so that the reader will be able to understand how each algorithm fits into
the landscape of data mining techniques.



Extracting meaningful information from numerous databases and cross-referencing it

to find patterns, trends and correlations that might otherwise be overlooked is called "data
mining." Assembling the information in one place is called "data warehousing."

 All the information is stored in Information repositories.

 Data warehouse takes the cleaned and integrated data.

 The data taken by Data warehouse is selected and transformed and the useful data
is sent through Data mining.

 The data, which is sent through data mining is evaluated and presented.


Data Warehousing

• Insulate data - i.e. the current operational information

o Preserves the security and integrity of mission-critical OLTP applications

o Gives access to the broadest possible base of data.

• Retrieve data - from a variety of heterogeneous operational databases

o Data is transformed and delivered to the data warehouse/store based on a

selected model (or mapping definition)

o Metadata - information describing the model and definition of the source data

• Data cleansing - removal of certain aspects of operational data, such as low-level

transaction information, which slow down the query times.

• Transfer - processed data transferred to the data warehouse, a large database on a high
performance box.

Data Mining

• Medicine - drug side effects, hospital cost analysis, genetic sequence analysis,
prediction etc.

• Finance - stock market prediction, credit assessment, fraud detection etc.

• Marketing/sales - product analysis, buying patterns, sales prediction, target mailing,

identifying `unusual behavior' etc.

• Knowledge Acquisition

• Scientific discovery - superconductivity research, etc.

• Engineering - automotive diagnostic expert systems, fault detection etc.

• Enhances end-user access to a wide variety of data.
• Business decision makers can obtain various kinds of trend reports e.g. the item with
the most sales in a particular area / country for the last two years.
A data warehouse can be a significant enabler of commercial business applications,
most notably Customer relationship Management (CRM).


Data mining systems rely on databases to supply the raw data for input and this raises
problems in that databases tend be dynamic, incomplete, noisy, and large. Other problems
arise as a result of the adequacy and relevance of the information stored.

Limited Information

A database is often designed for purposes different from data mining and sometimes
the properties or attributes that would simplify the learning task are not present nor can they
be requested from the real world. Inconclusive data causes problems because if some
attributes essential to knowledge about the application domain are not present in the data it
may be impossible to discover significant knowledge about a given domain. For example
cannot diagnose malaria from a patient database if that database does not contain the red
blood cell count of the patients.

Missing data can be treated by discovery systems in a number of ways such as;

• Simply disregard missing values

• Omit the corresponding records

• Infer missing values from known values

• Treat missing data as a special value to be included additionally in the attribute


• Or average over the missing values using Bayesian techniques.


The future of data mining lies in predictive analytics. The technology innovations in
data mining since 2000 have been truly Darwinian and show promise of consolidating and
stabilizing around predictive analytics. Variations, novelties and new candidate features have
been expressed in a proliferation of small start-ups that have been ruthlessly culled from the
herd by a perfect storm of bad economic news. Nevertheless, the emerging market for
predictive analytics has been sustained by professional services, service bureaus (rent a
recommendation) and profitable applications in verticals such as retail, consumer finance,
telecommunications, travel and leisure, and related analytic applications. Predictive analytics
have successfully proliferated into applications to support customer recommendations,
customer value and churn management, campaign optimization, and fraud detection. On the
product side, success stories in demand planning; just in time inventory and market basket
optimization are a staple of predictive analytics. Predictive analytics should be used to get to

know the customer, segment and predict customer behavior and forecast product demand and
related market dynamics. Be realistic about the required complex mixture of business
acumen, statistical processing and information technology support as well as the fragility of

resulting predictive model; but make no assumptions about the limits of predictive analytics.
Breakthroughs often occur in the application of the tools and methods to new commercial


Comprehensive data warehouses that integrate operational data with customer,

supplier, and market information have resulted in an explosion of information. Competition
requires timely and sophisticated analysis on an integrated view of the data. However, there is
a growing gap between more powerful storage and retrieval systems and the users’ ability to
effectively analyze and act on the information they contain. Both relational and OLAP
technologies have tremendous capabilities for navigating massive data warehouses, but brute
force navigation of data is not enough. A new technological leap is needed to structure and
prioritize information for specific end-user problems. The data mining tools can make this
leap. Quantifiable business benefits have been proven through the integration of data mining
with current information systems, and new products are on the horizon that will bring this
integration to an even wider audience of users.

• Data mining has a lot of potential

• Diversity in the field of application

• Estimated market for data mining is $500 million


1.Books Referred:

a. Data Mining: concepts and techniques-Jiawei Han

b. Data Mining Techniques- Arun k. Pujari.

c. Decision Support and Data Warehouse systems-Efrem G.Mallach

2. Internet Sites Availed:

a. www.kluweronline.nl

b. www.internet2.com

c. www.the-data-mine.com