Data Mining & Why it's Important to a Company's Success

 

“Data mining is the process of discovering interesting patterns and knowledge from large volumes of data stored in databases, data warehouses, the web, or from other information repositories,” (Software Testing Help, 2022). The data mining process extracts relevant information from raw data sources such as photos, transactions, flat files, videos, and then automatically processes that information to generate useful, actionable business reports. Businesses are then able to use these reports to make more informed decisions by discovering trends and patterns in that data (Software Testing Help, 2022). 

The data mining process is broken down into two phases: the processing and the mining phases. The data processing phase includes data cleaning, data integration, data reduction, and data transformation. The data mining process performs the data mining, pattern evaluation, and knowledge representation of the data. During the data cleaning phase, noisy or incomplete data is removed from the collection. In the data integration phase, different types of data sources such as data cubes, databases, or files are used and then combined as part of the analysis process. Data is then reduced to obtain only relevant data for analysis from the data collection. Next, the data is then transformed to a more suitable form for use in the data mining process. The data is then mined in attempts to find interesting patterns and trends from this large amount of data. The patterns are then evaluated, using data summarization and visualization methods so they are better understood by the user. Finally, data visualization and knowledge representation tools are used to represent the mined data (Software Testing Help, 2022).

According to Prasanna, 2022, some of the advantages and disadvantages of data mining includes:

Advantages -

·        It allows companies to gather reliable information that can in turn be used in marketing research to help determine what products customers are interested in, and when to make those products available to them.

·        It can be used to make correlations between products, consumers, suppliers, and other business aspects to make operational adjustments and profitable production decisions.

·        It can be used to make informed decisions based off of the identified patterns and trends in the data.

·        It helps to detect risks and fraud that may not be easily identifiable during traditional data analysis.

·        It can analyze very large quantities of data very quickly that used to be too difficult to understand due to the vast amounts of data.

·        It helps to understand behaviors, trends, and hidden patterns in the data.

               Disadvantages –

o   Data mining tools are often complex and difficult to use, they require additional training.

o   The analysis of the data isn’t always correct, there are different methods in analyzing the data, and some are more accurate than others.

o   Companies are sharing data with others, and this raises privacy concerns about personal information being sold to other companies without their knowledge, or approval.

o   Large databases are required for data mining, more data means more storage is needed, this can be costly and difficult to house.

o   It is expensive, companies need to hire additional personnel that are skilled in data mining, and they have to purchase specialized software.

               Interestingly enough, the costs behind data mining often outweigh the benefits for smaller businesses to adopt because they don’t produce data valuable enough to have an adequate return on investment (Prasanna, 2022). Larger companies, with bigger budgets usually reap the benefits of the data mining process.

 

References

Data Mining Process: Models, process steps & challenges involved. Software Testing Help. (2022, August 7). Retrieved August 22, 2022, from https://www.softwaretestinghelp.com/data-mining-process/

Prasanna. (2022, March 22). Data Mining Advantages and disadvantages: What is data mining?, pros and cons of Data Mining. A Plus Topper. Retrieved August 22, 2022, from https://www.aplustopper.com/data-mining-advantages-and-disadvantages/#:~:text=The%20advantages%20of%20data%20mining,and%20inaccuracies%20in%20the%20findings.