Data Mining with Neural Networks Solving Business Problems {rom Application Development to Decision Support Joseph P. BigusMcGraw-Hill Fd Aino of heMeGree til npc Lert Cong Can aetna om, Soh ‘Sly wh ne ccs sg ann pent sepieion ecopmen scan sper oy Sah ae Sere agen werne oinen Shoorsoctos a) eprat © 106 by The Mim Compa, Pad he Unt Ss of ‘owt or pemedethe nedSaapre At 8 pare ae ‘ton roy terpenes yam ory amenen cr et ‘en ym ot te tr npr ear sik 224867690 pocDoc 900087 ‘he ponaring tf hs tk wn doer Ho Goa he eb isan Sa et at ec irs rE etc sen aera re atin Coaney ant ese ‘Print anton by. Douay an Sows Company, Crafers on, eam tak eae cal nya remo an ae emo hr we tannin Pagan Ferme ei, be ee 2 ‘SEB Si rh oth Bs kM et band mans i ok may ds a of do Tl ‘onto to te saat opal an cheney ce ‘Slain out ean ant aor es ra a ok ‘Srp cero pcr cht | gy ‘Tie bok contains simple examples to prove stration. The data used ln the examples contain iNformatn tat snot based on ary eal corps ‘es or people The asthor an publisher of tis bok have used ther best ‘ot n preparing this book. The author and publisher make no warranty ‘tary Kind, expressed or imped, with regard to the documentation ad ex. “ples contained inthis book. The author and publisher shal not be Habe {nary event for incidental or consequent damages in connection with, ot ‘isn ou ofthe we of information in tis book. "The views expressed inthis book ae the ws of he author ad do not necessary refect the views ofthe TBM Corporation. Ts book it spon Sored inary part rin ary manner, by TM.‘Jennifer, my wife and bes friend. Contents Part The Data Mining Process Using Neural Networks ‘onaper Entanlng eson Support Developing Buses Applcaons Example ata tning Appts rdton to Dat ining Chapter 2, itoduction to Nour! Networks ‘orl eropecve Irian Compan Sybol Manipulation Pater Recognition? ‘charging the rier Sang Pre ‘he LeringBroere:Ajusting Our Bases sageeseuueeChapter 2. Dat Preparation Noga Stee syne nie Preprocessng aw xara Dat sty Garage, Gorge Out Chapter 4 Nowra Network Madels and Arctitectues ‘he dase earning Paradis eval atu Topstar (Chapter 5. Tring and Testing Neural Networks onrting he ining Process i Leaming Parameters Chaar 6. Anayzing Neural Networks for Decision Support Senta ‘Shing though te Outpt Using Doman Keowee seucseesasered CChaper7.Depioying Nera Network Applications linen Ratvanig tr EaoughSne Model of Changes Worl? ‘chap, Inegent Agents an Automated Dats Mining a Ae niger Agee? {pest gens ‘ang GomainKronadpe ous Res ‘eg arin to gents ough Ot ne Part2_ Data Mining Application Case Studies Cchapor 9, Markt Segmentation ‘Segreming Bata nth Hera twos fe application ana Becnson ‘Chapter 10, Rea Estate Pricing Mode! Dat Repesertton Deponing ne aing be Appcson Feed Appeatons nd Bacusnan v8“Chapter 11. Customer Ranking Made! ata epesetin Senate sty ‘epoyn nt ann he Appesion Flstod aopaeatone ond Discussion Cchapar12. Sates Forecasting ‘ate Rapasnttin Deploying anda he picton Appa A. BM Neural Network Uy Append. Furry Lose Appendix. Genetic Aion tony 0 Acknowledgments 1 would ike to extend my thanks to the mary people who have helped me with his took, Fin, would be remus not to thank ey cide, Sarah and [le, forthe patience when I monopaized our computer wl working on the book, They gave Up mat opportune to pay earputer games so hat could meet my schedule. MY wie, Jenfr, ut up with my working range hoor (stranger then wud, should sa) while Juggling my Job at TMC th the wring chores I tly eould not have westen this witout her help and suppor. Pike to thank my manage, Ler, for his under- Standing while simultaneously completed tis book, bull anew house nd paricpeted in a wordwde software design and devlopent elf “Al ofthe graph lutations in hi book were erated ty Gordy Hall would ike to thank Gary fr his fine work and his patience as we turned my eas into iustrations. Ia peture is worth a thousand words, then Gordy saved me plenty of wen "This book has benefited from the comments and suggestions of Jenviter| igi, Cindy Hiteheock, E Linvere, Jeff Pig, Don Sehlosragle, Sally Glover, and Alex Berson. hank ter for che time spent reading Urough iy drat an for sharing thelr opinions wit me. Twente o ask ny editor a McCraw Jewifer Hot Diovan, or folowing up ater our Ast meting atthe TBM Techical Teerchange in New Orleans Herinterest nny ies fora book about neural ewer appa” prompted me to submit my proposal an rested in this bok being write, ‘Over the years, many people at IBM have heed develop the Neural "Network Uuily product. These ine Shawn Anstvol, Steve Lund, ohn Hence, Paul Haspers, Larry MeMins, Lisa Baro Kart Set, Scott Peterson, Helen Pung, Matt Latham, Cindy Hicheock, de em, Todd Sand, Ea Selte and Bon Sehiosrag. I wuld Ike to thank ese people for ‘he cottons they mde, ad continue orale, tothe NNU echoIntroduction Jn my postion 16M, regularty bof executives, manages, nd computer professionals on data mining and neural network techoingy tn my brief- Ings, Tver the fundamentals of data ming and neural networks, ad T tise dacuss specific appieations relevant to the customers” businesses ‘Since time fs usualy Unig, my goals to quiclygve them s base under- standing o data isan to park tel inaginatos so they can vsaize ‘ow the technology can be wed in thei own enterprises, When | succeed, {satfying to see their excitement as they ‘pander the possibiies "Inthe ‘lestor-and answer period following my presentations, 1 arm tnviably {Shed for recommendation cn 2ood boa on neural networks” 2 they ‘an leammote With few exception, these people donot want to know how earl networks wotk; they want to know how neural networks ean be ab- piled to slve business problems, using terminology dey can understand $n ea-word examples to which hey can relate "While there ae many neural network books avable today mast focus on thinner workings ofthe technology These texts approach neural networks {rom either cognitive scence or an engineering perspective, with core ‘sponding emphasis eter on phloophieal arguments oon detaled treat- rent ofthe complex mathematics undering the varius neural network ‘models Other neural network books dseuss academic applications, which Ine le or no relation to real business problems, and are ul of Cor C++ sourcecode showing nkty-grty implemertation deta, None ofthese te tes would fit my defition of goed book cn neural networks” that ap propriate fora business ornted audience. "This book, however, ls targctod directly at executives, managers, and ‘computer professional by explaining data ring ae neural networks fom 4 business Information sysems and management perspective. I presets ata mining with neural networks asa strategic busines technol, with ‘he focus onthe praca, compautve advantages they offer, In adn,the book provides a general methodology for neural network data mining and appiation development using a set of realistic busines problems as fexamples The examples are developed using 2 commercily avalible ‘eral network data mizing ac the TBM Neural Network ily. Datamining, the des of extracting vase formation fom d,s not ‘ew Whats new the wholesale computation of busines transactions fd the consequential Mood of busines data. What sew ithe dsributed ‘omputer processing a storage tochnloges, which low gigabytes and terabytes of data to remain one, avalble for processing by eioserver Soplcatons, What i new are neural networks a he development of d- ‘ance algoritns for inowledge discovery. When combined, these new c- Palit offer the prose of saver to buineses drowning na sea of thelr own data, ‘Neural networks ae computing technology whose fumes purpose Istorecognz patternein data seed on compu mode sat the ur ‘evving structure of te human ren neural networks she the bal ai igytoleam or adapt in response to extermainputs When expused toa trem of ning da neural networs can sever previo unknown reltion- ‘hips and eam coex nmliear mappings inthe dala. Neural networks provide some fundamental, new eapabtis for processing business daa, Honever, tapping these new real network data mung faneons requires completly aferentsppratin development process from eradtoal pro- [ramming So eventhough the commer use of neural network technol ‘as surged nthe pac 10 years, constrain sucosfl neural network app ‘tions til considred "black ar” ty many in che software development mmarity, As wil be shown, han unfortutte nd inaccurate peeep- ‘Gon of the sate ofthe ato eur neowork sppbeation developmen "Tis book presents a comprebensive view fal the major issues elated to data mining a the practical application of neural networks to solving ‘ewer business problems. Begining wii an intedction to data t= {ng and neural network cehnaogies from a busines orientation the book ‘ortnues with an exaunton ofthe dan mining process and ends wih p= Deaton exanples, Appendices describe ented ecologies suchas izzy Jogi and genetic algorithms. "The data mining press starts with data preparation issues ncuding ata selection, cleaning, and preprocessing. Next, neural neswork model sn architecture selections dScused withthe focis onthe problens the “atious models can solve, not the mathematica! deta of how they slve “hem. Then the neural network taining and testing process is described, followed by a dscussio of the ws of data mining for declion suppor and Spplcaton development Automated data mining through the use of nel Tigent agers also presented, "The application ease studies deal with common business problems. The specific examples are choen from a broad range of indstres inorder to be relevant to most readers Te data mining functions of asication, chs ‘ering, modeling and time-series forecasting are stated inthe examples "When you fr reading this book, you will know what data mini 8, what problems nerd networks can sole today, how a deterine i prab- Jem it sproprate fra neural network solution, how to setup the problem Fer solution, ae aly howto solve Insert, wil ry to Mumia the ack at” of developing neural network applieations and pce Hn con text with other aplication development technolagis suchas obec-o- feted computing ae incremental development ae prototyping techniques or busines exsciives, managers, or computer professionals this bok provides a thorough inroigeton to real neework technology ae the = Ses elated tots appleatin without ting bogged down in complex math ‘rnedles details The reader wilt ble to enti commeon business prob Jems that are amenable tothe neural network approach and wile sensitized tothe tases that ex affect sieesfl completion of such applications ‘The book use lar, nonvechrial language ada casey approach to ‘explore te issues voved in sing neural networks to sae busines roby lem Ti text can be used protably by someone tying to se neural net works to implement applieaton solutions using comuneci neural network tool or by managers tri to understand how neural networks can be a+ Dlied to ther buineses. Each chapter nchudes a summary at the ee long wha reference ist for ther reading Pare spans eight chapters, eluding introductory chapters 1 and2, and then provides a comprehensive methodology and overview othe key issues indata mining with neural networks for decision support and applieation evelopment. ‘Chapter 1 deseies the busines and information technology trends that ace contrtng tothe requirements for data iting aplcaions. Key de ‘elopmentsinlude the corporate data warehouse ade istributed eo Duting models The major top in he data ning process ae detailed, and tata mining architecture s presented, Data raring as enkanced decision {hpport a as application development ae examined A estalg of exam ple dala ming applications in specific industries is described. in chapter 2 neural nebwors are inzouced as a fundamentally new computing ad problem-solving paradigm fr approaching data mining 29- pllestons, Neural eomputing is presented as an alternative path onthe evo- hon of inttigent computing, path that was dominated ty symbolic ‘refi ineligence, The key fetrsresporsibe for the inal rejection fn the recent reemergenceo neural networks ae discussed. ‘Chapter 2 also describes the paradin shiR required for problem sing ith neural netwotks as opposed to waditonal computer programming. AN ‘rample of knowledge workers wed to compare and contrast the use of ‘pera networks fr sla asks, Next, the neural processing element and the mechani fr adaptive behavior Is cussed Then | ocus on the ba-‘le neural network computing functions: clasiicatlon, clustering, model ng, and te series forecasting ‘Chapter’ sce the daa reparation step eprning with an overview ‘ofthe curent state ofthe tn database manageroent syste. Next, igh light ene importance of data seleeon and representation tothe neural net. work spplcalon development process. Data representation schemes for ‘meri al synbic varabls using real numbers and coded daa yes ae ‘vere, Data preprocessing operaions—inludng synbobic mapping a noms, and sealing or Uesolling of tuner values—are described (Common vechaiques for dataset maragement, cdg the quantky and ‘quality othe dats are discussed “Chapter 4 presents & survey ofthe base neural netwotk earning pars gna, including sopensses, unsupenised, and reinforcement karin "The aor nourl network topologies are discussed. Next, the most popular {ypes of neural network model and their apabltes ae described, The o- ‘cusis onthe fanctonaldferenaes between neural network models, not on ther materatia derivations, The chapter ends with a dscusion of the ey issues in electing neural network model fora parca problem, ‘Chapter walls the reader tough atypieal neal network developent proces, Fist | hghight the knportace of selecting an appropriate exror Iesoure to indicate when te network rang is complete. Next, describe the most mporeant taining parameters wed to contra he eaiing ime bse quality ofthe trained neural network Te rai neural network de ‘opment process examined, and throughout | give & fel fr the “no. ‘mal evoition nd how to detect “abeoral” problems “Chapter 6 dresses the araljiof nual network models created Urongh ata ining Ths process of covering what the neural network aris ‘equi for decnn support appiatons. This chapter presents the mast ‘common tecnique for vsalzation of neural networks a data ming e- ‘sls Rule generation rom neural networks and input sensitivity analysis ae ‘tea desert ‘Chapter 7 describes the we of trained neural networks forthe deploy mento operational applications | dscuss data pre-and postprocessing re- ‘uirements at un te, Row neural aetworks ean be treated as simple ‘strovuines, and how neural network prediction accuracy ean be mon tored. Application maintenance sues ae also addressed, ‘Chaper 8 deals wth the epic of ineligent agents and ow the data mining tecuiques and neural networks can be used Toad lent inligent genta, Ae computer systems become more comples, users are increas looking to edvanced satware ease her burdens Intligent aged can a. tomate both usr and estem management tasks through & combination of ‘aller recopution ard domain knows. Part 2 gives four deta! examples of how neural networks can be ap- pled to sting tases poles. Bach applicauon fellows te data min lng methodology used in Part, inhaling a discussion of ow the specie trample ven canbe generalized to sole other sindar busines protien, ‘ReomprehersveUrt of spplcauon references is provided. Bach chapter ‘are 2 can stan alone; no order is implied or sugested. ‘Chapter 9 combines customer databse arses transaction dats to de Fine aget markets. Ts appiation uses neural networks to segment the ‘customers hy etealing casters based on saris ofthe customer ab tts. This infermation can then be we to target proetions st members of the group whe have the tallies in which we are interested This chapler Inelnes sean ofthe analysis of cstrsor segments in dla mii pplication, ‘Chapter 10 uses market data on properirs and sling prices to bull & pce entinator for el etate appraals. Ths is a asle exapie of sin eur networks for data mining Ie a sng eveing appllestion, with lige input vrabirs ad one output (rarket pice rest. Ary business that ms ake propel an use its past experience wth ilar projec to ake fas, accurate etiates, “Chapter 1] mins customer pole information to rank usomerso eup piers This aplestion ses We iformation a busines as avaabe on ts furrent and past cistomers to Dull a eral network moet that ranks themin order of"gnodnes (Le. probly). Prospective new esters ‘ante targeted o selected using thei expected profiad. ‘Chapter 12 uses an inventory and sls trarsacton database to ull are- penises ayer, Thi Ume-cres forecasting application deals with (ata that changes over ine, The dea isto use past history to pred future ‘behavior lsdes unique o forecasting are discussed indepth ‘Appendix A presents an averdew of the IBM Neural Network Uty proc nd theireapabities, The focus on features ofthe prc hat ippor the data mining and neural network application methodology bre sented in Par “Anpendi Bi an itroduction o fuzzy sets and zy loge Often Wed in conjunction with neural network, fizzy Tag, through fuzzy expert 8 emo, provides an excelent way to add domain krowledge to data mining operations. ’AvpendlsC describes evolutonary programing and genetic lgorithns. Like neural networks, genetic algrihas are boil igpired, They use ‘retaphor forthe pres f natural sleet to perform paral searches. “Genet algoritis are use to find optinal neural network achtecres find toast connection wes "The glossary provides lt of the most common trms used in data ‘mining and neural network application development. The annotated bib Togrepiy contains 2 tesource list of neural network reference books and pusiness-orentad application papers and artices, with brief descriptions ‘oftheir contentsPart The Data Mining Process Using Neural Networks Part 1 presents methodology for data mining with neural ‘networks, Structured around the major sles of data reparation, data mining, and analysts ofthe mang routs, {he eight chapiors ints sction highlight the isues specie tommural network algorithms, The eduction montioned the "hlack art labetoften used 1 refer fo the neural netiork development process While perhaps not iit cookbook in ‘hnproach, careful reading of Ys material wil constderadly ‘enhance your chances of succesfully raoning your neural ‘network. For those familiar wih raditimal data analysis {and modal bung, wot those sed to object orintad development, ths process will sem comfortably familiar The ‘emphasis om the hey steps and proctical considerations, not ‘nthe theoretical ies involved ‘Part I begins with an intrexction to data mining and neural networks Then the discussion Burns fo the many {spect of data preparation, the frst step required fr daa ‘mening, readies ofthe data mang algorithm sed. Of "pecfc importance neural networks ithe representation. (dae, so tne common representations and dota types used (are discussed. The key aspects that dierentiate neural ‘works training paradigm, topeloou ane earning ligorthns are covered in deat I describe tho trazning (process, starting firs with he defnion af “sucess” ad thendescribing the most important learning parameters uso fo omtrl that proces After neural network trasning. I explore tmothods for disovering what the neural network armed. ‘Those techniques include visualization, rule generation ensitvty ante and model predictions. Thon | discs tov to depioy and matndain neural network applications Part] ends with lok a tntligent agent chology In a symbiotic Chapter Introduction to Data Mining tn this chaper, {discus the business environment and infomation tech- rolgy tren that have mae data mig bth necessary and achievable. I Drovie foal definon for data mining and describe the mor steps in {he data mining process. Fal presenta istof the mary data sing ap- plcations that have been developed uring neural network technology Data Mining: A Modern Business Requirement elng a business manager or computing professional aay i anything bat ‘ull, A wave fer weve of tew information technology isthe masket an ‘Shy get esmiated into daly operations, te risk (and rewards) grow Tiger for thove who have to place uelr bets on the tehokgy roulette ‘wheel. Get iri, and you might gain several pins of market share at your Competitors expense. Get t wrong oF do nothing and you might have to Spend years ying to recover lot ground. As he od Chinese prover 3s, ‘Hay sou ive in interesting tines” We, oration technology workers ave certain Dt the Jackpot ‘Over he past re decades, the use of computer technology has evolved from the plecemea! automation of catan busines operations, such a a: ‘counting and bling, into today's integrated computing environments, whichfer end-toend automation ofa major busines processes. Not only has ‘he compute technology charged, How ta teehnotog) i Wwe and bow {ti ued in business has charged. From the new hardvare configurations ‘ting lal ad wide area networks or dstibutd censerver eompating {othe software emphasis on aljccriented programming. these charges ‘sippor one overriding business reuiement—process more data fasten ‘evermore complex ways in 196, the IBM PC was introduced. Costing just $3000, used 16-bit Intl 085 processor, 64 Hates (KB) of RAM, ad ase 5.25 Noppy ‘rive The rat hard erive valle was a Seagate 525° Winchester ard driv, which stored whopping 5 megabytes (MB) of data, In ate 1985, ‘2000 wil ay a PC with an intel Pit processor, 10 MB of RAM, art 3 ‘austyte (GB) hard drive. In jst 15 years the amount of disk storege salable ina $9000 PC has increased 200 tines in 1968, the TBM ASHAO0 midrange systems were announced wth upto MB of main memory and amaximu hard disk capacity of 38GB using 400- MB drives. In 1986, he ASHOD Advanced System supports 15 GB of main ynemory and upto 280 GB of dsk storage using 2G drives 1990, the TM DB Mutyetem fr ASAD wl wpport databases up 16 teratytes ‘spread across 29 AS/AOD systems, From paper ape to punch ards, to mage hic drum, to the relertess advance im direct access storage devices (DASD ving IBM terminology, otherwise known as hard disk drives), the Increases in both dla storage eapubes and device rebaity Rave been jenomens. Figure 1 shows the recent explosion in the amount of infor- ration stored on mainframe computer ystems, a supposedly dying bree, ftom the 1000 through 1906, nd projected though 1908. have met with IN customers who are gathering gigabytes of ata daly ‘Tey re nerly unable to toe al of heir data ois and have to put ito tape for backup storage. This Be being a rain farmer witha bumper crop ‘who hast et rot nthe eld cause he doesnt have storage dust he & ‘op in the eld, tuiness infomation decreases in value as as, and the ‘ot of planing the ero atering the data) has already been Pid Increasingly, tasness data seen a2 a valuable commodity in its own ght, not jst as by-product of processing the days transactions. Tedey’s ‘operational data represents the current sate of your business. When ts ‘combined with historical busines dar, can tell you where you are going hd where you ee By taking opettiona dats and dumping it ape, you tight be protecting the data, but yu are nese it aswell With bus ‘ness deciona being made a breakneck pace, magers and executives reed information on which to bake those decisions. And that information reeds be online Dut jst being tine int enough. Theo query and reporting tos have long sine lot thelr abit to ee up with these tration neds. New Chererver software that allows free form queries hss helped. But query Genoa ‘World-Wide Gigabytes Shipped rewssyis0 DAS Or jen0 9811992 “T9HD "199 TaHG 199 THE 19 Yeon ue t Grwih tan sng (Source Iran De OP) tools ont help fy kw whist you re lok for Mutiiercional data {iues, which provide thon-mersional views of das, and alive analytical ‘proceaing (LAP) tols are cerany enhancing basnes daa analy ape ‘ilies, However, evn they do ot suficein ay’ competitive ernment. ‘Wha bout all the information buried in your estore transaction fles? Maybe there tee tha says your custorers are switching to a diferent produto configuration, and your inventor is going tobe widely out otal Enoeifyou dont rene Maybe there la string of transactions that re aly ‘ut of enaractr for tat cstome (ssh st her ered card). Maybe the ‘his equiement fr your next produc development ar hidden nthe st purchases made by customers inthe target market. Wulén it be nice to find tht information? Aer al, was tat part of the business ease fr ‘computerans business operations in the fist pace? Would be nce to realy cath non th investment in computing technology? Tf youve asked these questions, tien ou are not alone. neeasngy, poo- le wan to leverage thelr investments in busines data, to use eas an an fecsion making, and to tun i into operational application, Data mining promises todo ist that. More than ust complex queries, data mining pro- ‘es the means to dacover Information in raw business data In mat “lsties, has become a business imperative. It yon are not eng Your ata fo als worth, you are gully ofunderuse of one of your companys retest assets, Becase In that data information abut your estomereand the products they buy. At you lee, the old busines maxim of "now your cisiomer” ie avaiable today ug data mining techniques, “The Evolution of Information Technology “The evolton in business computing oer the past 30 years has ben dr Ina eis often dificult determine which cae ist, the charge to the fatter business organization o the new dstbuted computing expablies, ‘Wale the raw provensing powers rage eapabtes of eomputers Nat expanded a an sstonstrg pace, te business comsmurty ha sed that “ional computing ower to prove een in thee operations and to tenance tel competitiveness in the markets they serve "The computing styles ave matched the orgaaations. The fst comput ers were late minraes that centralized 8 business organizations dala land computer data process tasks ln ary ways this matched the her- ftchieal command and contol management used by Tare corporations. "The management information systems (MI) stain thee las house (the raed Moors and alpcondtioned computer rooms required by the ma Frames) controlled acces to and procesing fal corporate data. "The development of minlcomputers or departmental computes was somewhat an extension of the malarae paradigm ad somewhat pre ‘ror ofthe fature. These computers allowed groups of people working ot common tasks to control some oftheir computing exronment, Cough ‘ual withthe guidance and blessing ofthe cental MI ongaization, Rather than wat for ane epor or eppeation tobe developed by the MIS ‘organization, the department woud ie is own programmers or software ‘engineers to sole its own computing probes. Inthe earl 180s the development o the personal camputer completly “cane the dynamics of busines computing, though it was some Ue be- fore the central IS erganizaton ae the business management relied this. "Now an vidal could purchase a PC are applcauons software a work this or her own desk to save daly problems. The development of spread thee and word procesors gave te business justiiation fr these pur ‘hase. Over tine, the enviroment eveved fom a spring of PCs or ‘workstations inthe ogarzatio, to the point where nearly every know: ge worker has aPC on his or er desk. While Us evaltion from ental fae to debated computing has dramatically charged bow and where ‘ata processing ix performed in an organization, perhaps the bggest impact {sen ow busines data erent and managed ‘The Data Warehouse ‘Looking at this computing evettion from business data perspective raises ‘Soe lneesting aes. nthe hast cnt computing model, the corporate uta was stored onthe central computer. This owed the MS ongarization tomanage the vauabie corpora information, wo safeguard om the oF ‘damage, and ocllect ew uses data a twas created through business transactions. Of couse, one downside to hs central eontolto data was that Iwedge workers wo needed vo acess the data often had to wa long time forthe 1S organization to respand to their needs. Writing new COBOL ‘or RPG programs to generate reports aes ine (ae programs). As departnentleve systems wer niredaced the workgroup could exer ioe more cntrol of he dats Ofte this was aloded fro the minrare Sd a sometimes ou ofa, bt thse anes sale data was sal rice topay fr eltiveyeany access tv information, Carvers te depr- nent computer wae eed Yo proces ranean and create new business fat, then the information had to be moved upto the corporate data reps tor While this cased some problems for central MIS, they were usual ore than happ'to gt the aplcatonbekog dom by pushing tat work onthe ‘dparteentl users, There war abo seme dszonert due tote dition ‘ta, but agin, tat wae apie they ad op to eet the busines needs. When large numbers of stand-alone PCs were brought into offices, real robles begat curface in the management of Key business data Now {he crack financial nat erunching numbers on hs or her PC spreadsheet ha Key business data tha wa totaly oof the puro the central MIS ‘ongaizalion. Who would back up the data? Who would ensure the security ‘ofthat information? ‘As the PCr were connected to the corporate computer network, some of these problems were solved The knowiege worker auld downland key in- formation from the departmental oe mainfame computes, process the data wih PC-based aplleations, and thn recur the data to he eomporate ‘offers, Today the remote administration of PCs by 1S has brougit this [ober fl crcl, back wo the days when aller business data was un er conto, nt completly. ‘One problem wth the praferaton of computers ugha the business fate lange numberof databases sattered across ystems As the databases In doparmenal and PC ystems gre, the dats was nt aways passed up to the centraliand sytem, Over ine, nrmation abou customers, upper, ‘rodct design, snd manufacturing operations was stored in separate data ‘ites While moving the data under centralized cots desirable beease of operational reality, many of hese databases remain where they Were ot Inaly deployed. The are needed to run the business. However, strategic ‘ew appleations are ever ging to be developed, this dsparae set of sta ‘need to be contoldated ue one (iguraive) rbot This eat us tone of the most sweeping ideas to the database management rena since rel ‘onl databases the da warehouse ‘A data warehoute, a the name implies, sa data store for alarge amount of corporate dat. The data quay and itagrity can be rintine by a1 TeeDatamtning Process Using Nel Nebo entalied staf. Applications developers donot have to dea with Iyouts tt raile incompatible and sometimes overlapping databases, In sort, then they need to acces corporate dal, thy Know where to nd tin the data warehouse, While the ides of centralized data management i ot Hen how we ott ths alt a combination f the story ofthe eal tion of information teehnolgy and the tremendous gronth in computing ‘Storage capability Ina lange corporate data warehouse, we are not aking interme of thindreds of megabytes of data (which ean now be stored cn 8 ‘ingle PO) but in the hundreds of tellons of bytes of data (erty) Indeed, the ea sn so mich tat the data resides physically ons sie ‘computer aster, but thet al of he daa stored aes acessibe trough Shetwork of tuted systems so that l presents itself as a seamless col Teeion of corporate data. Figure 1.2 depts atypia configuration ofa corporate deta warehouse ‘operational datas enerted trough tansoctons proceed by applications epetin B S ring on PCs and servers and i then stared in operational datatates ‘These operate daaboes usally hol several mors of sta ad range {hom 10 to 60 gigabytes in sie. At certain intervals the operational dat is ‘oved ofthe transaction pressing estes ono he data warehousing s+ tem Products sich as IBM DataPropagator and Visual Warehouse can ait ‘mite these data repeation asks. The warchouse might be anes of PC fle servers, a midrange computer Ske an IBM ASCO, an IBM mainframe, of ame eterogencoss mix of computer systems, Te data warehouse might ‘old years of data ar! can wel to terabyes of data. In dln tothe aforementioned Dena fr data quality and security, a ‘ata warchoute opens new posses interns of executive information ystems, dessin support sys, and bull, Ino-oF bsiness oper tonal appisations With computers, s wth people, you eat make good ‘decision unless you have ll ofthe avalable data. A good corporate dat wrarehovee males tet data esl svalsbe In adaton, wt rakes possible 2 while new els of computing aplleabons, now known as data mining Data Mining Overview ata mining so refered to as knowledge discovery (Prawley, Patty ‘Stapio, and Mateus 1982), has become something of a buzzword in bust ‘ea ies, Everyone want ad therefore mary computer hardware and Software vendor aim at tey have Te oly problem ofcourse that rot everyone agrees on what ts, To sme is cenuserver queries. Toh ‘rit b mliimensinal databnees. To sl others itis OLAP with dil. ‘down capabilities Seerngly the only pints of agreement ae that ith 0 {do wth database systema and hat important In UN soetion,Lexplore ny vow ofexacly wat data mining, and wore importantly, how kis done. Fist a stare with definition: Data mining is the ecient discovery of ‘aluable,nonobious information rom a large collection of data. "This innoewous sentence Senta some key attributes tht ean be used to determine what sae no “dsta mining" The operative wordin his de- fon deat wit the “scorery"oftormation fo dat. Notice ha am tu alin sbout complex queries where de user already sa suspician out telathnsti inthe data ae wants to pul all of he igormaton to [ether to manly check or valate a hypothesis. No are we talking bout Performing stati texts of hypotheses sing standard staistial tech ‘ques Data mining centers onthe auaated discovery of ew facts andre [tonship in data, Te ea dha he raw materials the busines da, and the data mining algo Ue excavator stg tvough te vast. quate ‘sofa data olny for the valuable gets of busines information, “A daa mining operation i “ofiint” if the value ofthe extracted infor maton exceeds the cst of processing the raw daa. When ewe fom thisperspective data mining efficiency i retum on investment statment not proce time statement. To some people, data ming algoritn sf Fekent only lt completes in under Uwree mites and supports erache hast of the results. However, ew people would argue aginst spending {ro weeks of processing ime (at cot of $100,000) fake design or man ‘turing proces parameter is covered ad wil sae $1,000,000 in ‘conte over he next to yours ieincy isa costversus-benefit statement, ‘When we specify nonatwiusness asa Yequlrement for data mining, hs is sao a statement about the elfiiency and value ofthe process. If you pend $10 on data ingot nd out something that was wel known it Sour business, ten you have st wasted 610. And while ary data mining ‘gorthin are sed to process dala inorder to find laters ad pat tem, they often produce voluminous outputs of trivia, obvious informa ‘on. This information might make you fel beter by ening your ov Lunderstanding ofthe busines fundamental im your industry, butt does ‘ota vale to your decslon-naking proces. This separaing the wheat {om the chal the backend analysis the data mining output. is every ‘bias important asthe quant and quay of te raw data and ofthe data ‘ming agora (he tools) with which you process the data. The infor- ‘nation dleavered through data mining valuable on it helps you gan {compete advantage ln your busines, or aids in the decision-making press. "Alig collection of data” is cetay a subjective quantity smal bus nets git considera gabe of data to be alge databasa worthy of i ing. A large corporation might have multiple databases in the tens. or hundreds of ggaytes range. To some exten database iar enough for ata mining ft conains enough data so thatthe relationships are hidden from view sod o that vahable,sonavious information ean be extracted. "The data ming process consists of three majr steps, as strate in| Figure 12, Of core, tall starts witha big ple of data The st processing ‘ep ls data preparation, ote refered to as “scrubbing the dat” Data selected cleanse, and preprocessed under the guidance and knowlege of 1 domalt expert Second, & data mining algorithm is used to process the Prepared data, comprestng and waruforalg it to ale easy to ienily fy Intent valuable sugges of infonrtion. The third phase 1s the dala Atay pase, where the data mining output is evaluated to see if ad ‘onal domain Knowledge was discovered! ant determine the relative i porta ofthe farts generated by the mining algorithms. This is where tee barnes deision are made using information leaned by te data ‘ming process and where operational appications are depioyed “As basnesses have computerized ther operations, they have gay developed collection of separate and sometines incompattle systems. Fither through merges of dnc information technology departrents or ‘Spl through the requirements for diferent appeations, customer, sles transactions, ventory, and design information usual exist in more than ‘ne plice inthe corporate infonnaion systems. This duplication must be ‘edvced or eliminated inorder to perform eflecsve data ining Ths con- ‘Sidston of eruclbasness data now beng refered toa the coxporate “data warehosve” Wile not an absolute prerequisite to data ming deve ‘oping a comprehensive data warehouse a practical prerequisite to devel ‘hing ecb decision suppor system. T se mining metaphor, tsa ot taser to mine in an area with good roa a bridges tan in he mile at ‘forest or mourainiop, where the ung tks would have tobe aiited tn Gaining neces to the ra mater apart of te eos ofthe operation td therefore fete the efeleney (etn on uvestve)- Having the cor porate data concolldated ae eat valable wil make some data mii ‘perations more preci from a coxtslandpolnt than the data had to be ‘olctd from serach, Untrtunstly, jit collecting the data in one place and making it esly salle st enough. When operational data ftom transaction is loded Into the data warehouse, i offen contains missing or inaccurate dala, How {goad or bad the data i funtion ofthe amount of input checking done in the appleation that generates the transaction, Unfortanately, many de Ployed applications are less han star when I comes to vaialng te it pts, To overcome tis problem, the operational data must go sough 3 "eansing” paces, which fakes cae of missing of ot orange vals. It Lis clearing tp f not done before the datas loaded into the data ware hse, ill have to be performed repeatedly whenever that data isused in data ming operation For mrt deta ming appcatins the reatively clean data hat esis in the corporate dara warehouse mst ule refined processed befoeit “undergoes the da mining process. This reprocessing involve ing Information fom mulpe tbls, selecting specie ros oF records of daa, fn ios certain incest which enki elf dst to look inthe data mining sep. Often two ot more fesare combine to representratios or derive values. This data selection ae manipulation process st {ly performed by someone wth a ped deal of owiege about the problem domain and the data related to che problem under sty: Depewing onthe ‘taining algorithm ilved, he data mag need to be formated in spe ‘ie ways (eueh a tang of runerc daa) before ti processed, Wile ‘ewe ty sume as bothers peimiary step (sor ke seraing the {paint way before sppbing fe coat of pat), ala preparation cr: {Gatos sues data mining application. Iedeed, BM Consiga inde ‘endenteovaltant confirm estimate that dat preparation might consume nywher om 0% to 60% othe resources pent ina data ming operation. "The secnd step in dat mining, once the data i collected and pre- proceso is when the dat mining algorithms perform the seal sing Process Bary techniques have been wed to perform the common data frining acts of sociation, clustering, cssiiation, modeling, == ‘tenn ptere, an time series forecasting, These teciques ran frm ‘Satie, rough sets, to neural networks See Table Lt fora Est ofthe ost comon data mining functions, the corresporting data mining al- ‘Mths, an typi appistions. Tink of the diferent data mining al ‘hme ag the dil bis ofthe mining mache. Ifthe oe is locked in hard Fock, den we might nee a diamond dil (or algorithm fe certain ype). I itisinmote por rock, dhen we might be able to ncrease our efficiency by tau aes expensive dil it (or algorhin) The typeof data ining anc tion we are eying to perform, slong withthe quay and quantity of data Svalabe combine o opel which data mining algorithm should be used. emareton = Tsar canoe cin Sag ty Tusa ae ante oumeroe wnt cn tii Met natn on Mote imran emi Reyne peste Sine Aas erg rt Serine Staite hy staat et at ne in “The third and final step the analysis ofthe data mining results or ot ‘putt sme ees the outptiin form hat makes it very easy to dscern the vlaable maget of information from the teal or urnteresting facts. Figure 14 shows the outpot of data mining run wing the Quest associa. n> tert Serves ame aay a ‘cosmo 1) yatta a ‘inca ay Maer ene pe ay Maat Agen ese Rue bt om an scl ton algorithm developed by IBM Almaden Research The relationships be- {wen ems int market basket anapsis are represented in then re Fern Te anecedent (lea se) hts the items purchased and the as Sociaton with the consequent (ight-and sie) Kem In ters of confidence Gow often the items are purchased atthe stme time) and support (the pefeentage of records in whch the association appears). With the rules re- ‘tnt text form the valuable information i uch ese to bent Inher eates weve, thers wil have tobe aalyzed ether ily or thug ance level of tools to assy the nuggets acorn to pre (dicted vale: Pgure 1 Wstrates 8 visualzation of anoter marke basket Fe Vt face riennasa using segmentation performed by Une IBM. UK Seientine Center ‘The Baphiciksirates the tats profle ofthe customers in each major easnent and how te attbates compare to the whole population of eu tomers, Whatever data mining algorit sede ests wil have to be resend to the user, A succesful dus mung application involves the ‘fnrafration of row data into a form that is ore compact and under- ‘Sandable. a where reltionstps are expel defined Tre talked about data ming as Use process of extracting vile inf ration from dat, Ofeourse, wht makes information valle toa business is when tat information lea to atinns of market behavior tha gives a fiacerle competitive advange. There are two major ways for bust ‘ears to ue te output ofa data mining process. The fis i to nance ‘mle decision support proceses, Te second ito use the data main Inodels as part of operational applications. 1 discuss Use Seo principal ‘ies of data mining nthe folowing sections. Enhancing Decision Support [As the quantity of business data has grown, anew elas of applications and data amis tools has emerged, called ether decison suppor. syste (OSS), oF exceutive information systems (EIS), depending on he software ‘endo, Whatever itis ellod the tots main thst isto allow busines de- USnon makers to analyze and detect patter in data, aed to aid ther i naling strategic business decisions. "A typlal use of decison support systems would be fora purchasing agent ot buyer for lange retailer to reat an interactive query for sales [ind inventory data for sparUeular product or product group, Once te dat is etreved, the decison spor sytem would allow the data wo be dis ‘plyed graphically in vane o format. Based on this transformation of {he raw data, the decison maker woud decide what quantity of hat rod ‘bets ordered, Nowe that te “dscovery” element ofthis pictre i provide by the data anata her election of which data to request and ow. n most respect, this Ia query aplieation integrated with a graph cal display system In contact, «deta mining solution to this problem would be to mine 2 duatace that contains ses and inventory information on the product. Figure 1.6 shows apical scenario fr using data mining far decision eup- pont Staning mi election of prepared data, neural network i se 0 Bada sles and inventory forecast mode, This models constructed ato- ‘matically fromthe data, lg the learning capabilites of neural networks ‘Once ths modells read, was" canbe run throught by the aalyst tage more aceurate predictions ofthe fur als and inventory requte- tment, rt determine the sensitivity of sales to changes nan ofthe input ‘arlbles.mporanty, when computational made fs generated from the » SO rrepaton tana raw data using dat mining algorithm, it also opens the way to complete utomation ofthe process, Tis seuss in he next section. Developing Business Applications For the past 20 year, the standard approach to developing busines app tations as been to haves efter aaj determine te data tat needs to te procesoed, and iene the aor steps ofthe business process that o0- totes on that data. Once characterized, te problem is broken down into ‘problems, nd agri are designed to operate onthe data This op down approsch work wel for wide varetyof problems and has Become {He sandard technique wed by business progzaming shops woddwde “anther mre mx apptoach to perform an araljss ofthe problem inter of he business jets that are involved in he process an the op trations performed on or by those object, This so-called object oriented Salis and desig, combined with cbjectoieted pregraning ANBages fStchas Salakaed Gre even 00-COBOL) ifs becoming the prefered “pplicaton development technique fr busines. Major avarages are code ‘hate and inroved reiaity becase new appieatios are developed si Previously develope ae ested objects. Although the focus Ison objects ed thelr behavior rater than on problem decomposition, object-oriented rogram stl ust nother approach to wring algo fr dtl ‘computers. “Ae mertioned care, a third alternative exists for developing business applicators, Ths approach based on data mining andthe use of models ‘le rin the discovery process. Figure 1.7 shows Row data ini can be used for automated application development. The prepared dla wed to bl «neural network model of he function to be performed. Trnsac- tion are then run though the neural network, and the opts are used to rake automated business decisions, Ts use of data mining places ile ‘cnt requirements onthe data mining algorithms, since the prspety isnot ‘Soimportant, Whats important in bulla business applications sing ta> reparation Data Min) = pred nes Dang pet depen lng is thatthe undeying processing fanctions—whether they be cis tering laaication,modeing or me serie forecasting accurate and reliale Plage note that sppiations bul sg data mining algorithm do ‘ot have to neces perform the Disiness processing funeion “better” ‘than applications bull Byough the traditional programmatcal approach Buivalent sceuray would stl yc sgnieant benefits because the appl ‘alin i generated automata, as by-product of Ue data mina proces. However, there are many cases where Waditional progransved applications cannot be developed, since no one in the business understands how the ‘ta eats well enough to desig or write an lgrithn tocaptue those r= lationship Ie ishere where the advantages of using data ning techniques such 5 neural network are realy competing. Example Data Mining Applications So far | have talked about data mining from tecnologia perspective. Now lets change our view to business perspective (Ui 199). How are Thslnesoes using ts mining and neural newark toy? What ind a p> pletion have been succesfully deployed? What inustes are lang in the adoption otis eehnolgy? Mareting ‘Bvery busines sto market ts product or servis, and the os of ma ering etforts mut be factored int theultimate ein rice. Ay technol ‘ogy that can improve marketing feats or lower marketing costs ges a howe lok by businesses. In eotuncion, customer credit bing, nd pur ‘ches were sme of the Birt business transactions to be automated wih computer, so large amount of data are readily avaiable for mining These factors have combined to make marketing one of the hotest application a a for dats ming Ts general area i refered to as database marketing (Gessarot 185). ‘Customer relationship management is the term most wed forthe overall proces of exploiting customer related information and using it to enhance {he revenue fow from an existing customer. Info ct customer de- ‘mographies and thelr parchasing pales are sed to segment the cs tomers based on ther Ueeryng sare, whether socioeconomic or by {hel interest and hobbies as demonstrate by the product they purchase ‘By determining simar cases of customers, odversingretum on ivest- ‘ment ean be enbasced since the marketing messages are accurately reach ‘ng thowe customers most Bkely to buy By segmenting the customer base, flerent products and serces ean be developed, which are tuned 0 p> peal to members ofthe speced group. Database marketing data mining techniques against databases with marketing information an be used in several ferent aspects ofthe ‘Cstomerfosnese relationship. Ti information ean be used to improve the eustomer retention rate by Henig customers who ar kel to "wich toanether provider Since oats mach more to win anew customer ‘han to sell to an existing one, this applcaton can ave asic impact ‘on profits. When knownage about te customer i combined with product Information, specific promotions can be Fun that increase the average ur ‘Chases more by that customer segment. By knowing what a partcalar us omer ir intersted in, marketing costs can be lowered through more fective mailings, and customer satisfaction improved because they are ‘ot reeling what they perelve as Junk mal” Direct mall response campaigns use data mining to fist elect target set ‘of estomers. A teat malin is then made to a smal subset of this et, Based ‘on the size ofthe responce andthe characteristics o those who responded, {Ueterminaton can be made as to who shouldbe incued in the subse ‘Qvent mass malig and which ofr or fers shoud be included. Inthe retail sector, perhaps the bigest aplication a market basket analy fs This involves ining the pln of se transactions to nd asocationsbetween products, This information i then used to determine product ‘fines and suest promotion trategis that ean maximize profits. "Atypical scenario ta cole all pone-of sale trasactons na database “thetransacton database then mined to fd those products tha are mest ‘tronay associated. When customers purchase baby apes, thy alo tee to purchase baby formula Thus a retailer would not rena put both a ‘pers and formula onsale at the sae tne. Rather, using know thal there fan aszoration between theee two products, the rae would put fone onsale an place te ter tom next or in close proxinity tothe fist tem The placement often grocery soresis no accident, The output of ‘market-tasket anaes would identify association between products that. ta never been suspected. One anecdotal tale is of a convenience store ‘hin that noticed tat Ure was a strong assoeaton between purchasers ‘of baby diapers and beer Apparent, when Dad went ut to pk up dia per, he often picked up a spac along the way. “A lated application the use of sequential patterns to spot temporal trends or baying behavior. Ts is another appraton tats tased on asso- ‘aon beeen items oF prosucs, nly now the focus i on the temporal felationshp. An example when someade purchases anew su then with ‘high kelood they wil eturn to purchase new dres shirts and es. Are- {aller would the use tis information to ry to encour the purchase of these related items ia gle tp to the store because they might shop ‘deewhre to pick up the accestoies. Foance ‘ata mining ein widespread sein the Hrance industry (Disney 19). Neural networks are eed to detct paler of potential rule ras tions in consumer creditcard (Norton 1905) Tay are alo used to pre- dct inerest rate asd exchange rate Huctuatins in currency markets Several brokerage houses use neural networks to help in managing stock fn bond portaios (Sehwarts 1904). Neural networks have been used for ‘edit sk assessments and for tankruptcy prediction in commercial lend- Ing and bond ating in the nance industry ifferent arses of customers ae treated fer cently, base on the perceived risk tothe lender (Margarta aed Betti 1902), Thos, lasing te amount of isk associated with a customer ot witha patcular transaction s extremely important. A modest improve- rent inthe abit to detect impending bankruptcies, for example, wl yield tsranprecible revenue eres tothe franc intivation (Uo 1980), in the commodities trading arena, a complex set of variables is used to conatruct trading strategies (Grud and Osbur 1980) Whe the ef ‘Gent markt theory hs been widely accepted fr year, mary brokerage ‘houses sl ely on tectaal traders to analae the data ad make educated guesses about the masts, The most ngrtant iyi to detec rend or ‘hangs inmvementof the market as a whole oof sme particular segment ‘ratck (Kom, Chang, nd Ko 1904). This aso tren the currency ex ‘ange ara, Neural networks ables to model time-series and complex fonknear functions has prompted the wse inal ofthese appatlon aes Manutectring ‘The complenty in modesm manufscturingenvionments and the require ments for both eflency and gh qualy has prompted the use of ata ‘mining in several areas Neral networks are used in computer aided design {oath prt requirements io existing parts or design reuse, nb sched tng and manufctring conto, in optumzation of chemial processes, and {omininize energy consumption. Neural networks are also widely wed in ‘Quality contol and automated inspection applications “Jb shop schedhing cu problem tht deal with asiging the sequence of jobs and how works assigned to specifi machines nama facturing plant. Ther ae sally many constraints that absolutely must be tet, such asthe ence of proces steps ad whether a particular mate alc be processed ya specific machine In aon to hese hard eon ‘Brains, there are soft ones such as oplinizing operating eficiencis by Srading needless eetup anc reconfiguration of machines by scheduling tlm types of products oF operations onthe sae pece of equipment. Neural networks have been wed wo sais dese constrains whe generat- {ng optimized job asigmeris Nanufacturng process contol ab with the automated aeustment of rameters that contol the quality an quay of profs produced by the Ianufactaring sit. A wellnown teteique cal tatsteal process on- trl eed to track the quality of te goods proce by a mance by Imetsurng the vary and Wolerances in various aspects of the fed fonds, Using examples of goed and bad parts, neural networks have been ‘Se satin the conta of proceses athe deection o ube Mam In ‘the plant outputs Tn sme chemical manufacturing processes, complex natures of chemi cals must be heated, cooled, sed} and transported by an aoa ot {talaystem: Dangers stains or abnormal operating codons must be Setected and compensated fr sutomatieal, or the system could explode Neural networks have been eed to mize the generation of wate prod- tits and vo improve the proper of Ue mater produced, such a sea tom bs faces, “Automated nepection requirement in mary manufacturing envio rents where high-speed and high-output quarts can overheim the sles of human inspetors to accurately and reiably spot defects in wok In process Using data images, neural networks have been used to detectaul in ole steel and aluminum n printed eit tears, an in com Sumer product packaging, They have teen wed to classy the grades of {rant sort prodts a they enme of of an integrate assembly ne. Hetty and mecles! "There aro two pray uses fr data ining inthe Heath industry: the a ministration of patent services, bling, insurance, et. and the dignosis fan stent of disease “The heath industry i sing data mining to dete fraudulent insurance claims fom both unsrupulous patients ad health care providers. Acom- ton approach tt develop a model for a “noel” pater of aetvy and then detect and srutnize ora” behavior Bol cistern and mode Ing function ae used for his. Another major application i to Meni the ‘ost ensteffective healthcare providers. Many aspects ofthe health ie Clty ae under tight goveramert corral, and compliance with gover rent regulations mist be matined. ‘Data mining is also being used to automate Ue diagnosis of cervical cancer, breast cance, and heart attacks (Sabbatini 1002), Patient data fan be collected on large poplation and presented toa neural nerwork ‘Thus adata mining system ean look at more patients in one day than 8 ‘human doctor coud see in iene. Neural networks abilities to sy {henge s large body of data and to detect subtle patterns have proven to be effective (Hazrson, Chee, ae Kennedy 1994). nergy and tity ‘Supliers of electrical power re subject to large srg in demand fo e- ‘ce, A single weather font roving tough argon ean considera i ‘reas demand fr power ina mater of hours, Desions Rave tobe mae {wo whether pant should be browght one or taken down for preventive Iaintenanee. Large consumers of electrical power such as manufacturing Plants are often charged based on et peak energy wae, so tin then terest to manage Ue consumgeion to minimize excesie demands for ser ‘ice Ts major dependency on accurate oad foreass has made the uty indsty oe ofthe major users of neural networks (Park eal. 1990). “Another application in the ener industry isthe search fr new gas of ll deposits, Neural networks have ben snooty wed toa natal of Soundings taken attest dling ses for dtersing changes in the stata of ook and to enti key ses fr mineral depos. summary ‘The changes inthe busines computing envionment over the pas three ecules hve ben dramatic, Canputer processing and storage technology sdranoes provide businesses with se ably to Keep hundreds of iabytes fr even terabytes of data online. However, this 8 god news, Yad news Story. Te dor news Is that now we ean Rave years of historical business ‘dats evailble for decision support applications. The bad news s that tad tional data query and analysts methods are not capable of dealing with that nuh data. The consequence la that businesses are drowning in dat. ‘Data mining or knowlege dlcovery offers a slution to ths problem. ‘With the ernphase on the discovery of valuable Information from large “stabs, dla mining proves med value to the investment in the cor. porate data warehouse The data mining proces consists of three base eps ata preparation, ivormation discovery by data mining algorithm, Sv analysis the mining algorithm ouput "Me benefits of data ming are evden in two major business activites, decison suppor and applirstion development, In decison suppor. 7 ero, data mining transforms the data to revel hidden information inthe form of face, rls, and graphieal representations of the data. The ex- tremely large amounts of data ae compressed to fovea the inner rlaon- ‘ips among the data elements, When used i he application development {ete data ining with neural networks protdes automated construction transactions processing systems and forecasting models. Applistlon of data mining span al industries. Businesses ofall types tse data mining to target markeung messages to specie customer sets, both to sty thelr etstomers’ needs and vo ierease revenues. Retaers {oe data mining to find associations between products purchased atthe Save time ano forecast eles and corresponding inventory requirement, ‘The dhance industry wes data mining techniques 19 marage risk and to Getect trends in the market. Manufacturers use neural networks inthe de San, pruction scheduling, process control and quality Inspections of their products Hoel and isurance cormpanies mine tei dala t0 de- tect rade claims by heal eae provers and patents, and pitas the advanced patter recogatian caps of neural networks to auto rte laboratory test, Uies use neural networks to forecast demand and ‘kt respon o equipment outages ad changes in the weather “Ary buses wth data abot its customers, supper, profucts and sales can benefit from dla rng, When businesses ae loki for the sahtest ‘ge ve er competition, dey are wing travel far and wie nd spend Ino of dolar to ay information about tel markets, ten this nor. Inaton siting gt in heft, hdn aay in ther ata warehouses, Relerences Ara 168 Opty ner: ngage aay ig own ey pec aera Se ST ratty gh 9 eager ond caging pen Mh ee ist del ann, er oa Pe {ger aanon hem sa