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SAP HANA PAL – K-Means Algorithm or How to do Customer Segmentation for the
Telecommunications Industry

Former Member

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‎03-28-2013 3:11 PM

 5 Kudos

PAL is an optional component from SAP HANA and its main porpoise is to enable modelers to perform predictive analysis
over big volumes of data. If this is the first time you hear about PAL, I would recommend reading the official documentation.
You can also take a look at my prior post where I talk about the Apriori Algorithm.

https://community.sap.com/t5/technology-blogs-by-members/sap-hana-pal-k-means-algorithm-or-how -to-do-customer-segmentation-for-the/ba-p/12976696/page/2 1/39

3/14/24, 7:15 AM SAP HANA PAL – K-Means Algorithm or How to do Cust... - SAP Community

In this post I’m going to focus on how to use the K-Means clustering algorithm included in PAL because it’s one of the most
popular and most commonly used in data-mining. But before we jump into the code, let’s talk about how the algorithm
works.

According to Wikipedia, “clustering is the task of grouping a set of objects in a way that objects in the same group (called
cluster) are more similar (in some sense or another) to each other than to those in other groups (clusters)”. In other words,
grouping your data into multiple clusters. The most common use case for a clustering algorithm is customer segmentation,
meaning you use a clustering algorithm to divide your customer database in multiple groups (or clusters) based on how
similar they are or how similar they behave, e.g., age, gender, interests, spending habits and so on.

The K-Means algorithm works in a very simple way (for me that I don’t have to code it in C++ J). The first step is to plot all
the database objects into space where each attribute is a dimension. So if we use a two attributes data set the resulting
chart would look something like this:

After all the objects are plotted, the algorithm calculates the distance between them and the ones that are close to each
other are grouped in the same cluster. So if we go back to our previous example we can create 4 different clusters:

https://community.sap.com/t5/technology-blogs-by-members/sap-hana-pal-k-means-algorithm-or-how -to-do-customer-segmentation-for-the/ba-p/12976696/page/2 2/39

3/14/24, 7:15 AM SAP HANA PAL – K-Means Algorithm or How to do Cust... - SAP Community

/* Table Type that will be used as the input parameter

that will contain the data that I would like to cluster */

DROP TYPE PAL_KMEANS_DATA_TELCO;

CREATE TYPE PAL_KMEANS_DATA_TELCO AS TABLE(

"ID" INT,

"AVG_CALL_DURATION" DOUBLE,

"AVG_NUMBER_CALLS_RCV_DAY" DOUBLE,

"AVG_NUMBER_CALLS_ORI_DAY" DOUBLE,

"DAY_TIME_CALLS" DOUBLE,

"WEEK_DAY_CALLS" DOUBLE,

"CALLS_TO_MOBILE" DOUBLE,

"SMS_RCV_DAY" DOUBLE,

"SMS_ORI_DAY" DOUBLE,

https://community.sap.com/t5/technology-blogs-by-members/sap-hana-pal-k-means-algorithm-or-how -to-do-customer-segmentation-for-the/ba-p/12976696/page/2 7/39