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9 Laws of Data Mining Presented by Rob McCullagh, Sen, Account Manager 23/09/2014 London Formerly SPSS Ireland From Business Intelligence to Predictive Analytics From Business Intelligence to Predictive Analytics 3 Bus. Intelligence Predictive Analytics Sense and respond Predict and act Back office Point of impact Skilled analytics experts Everyone Instinct and intuition Real-time, fact-driven Automated Optimized So why are we here? Inserting “intelligence” at key decision points in business processes to improve outcomes 4 In the Beginning – Data Mining - The Silver Bullet????? And then there was CRISP 6 The 9 Laws of Data Mining Thou shalt not........... 7 The 9 Laws of Data Mining 1st Law - Business Goals 2nd Law - Business Knowledge 3rd Law - Data Preparation 4th Law - NFL-DM 5th Law - Watkins’ Law 6th Law - Insight 7th Law - Prediction 8th Law - Value 9th Law - Change 8 First Law - Business Goals Law 1. Business objectives are the origin of every data mining solution 29% Profit Improvement 9 Multi-product Car insurance Car insurance Line of Credit Life insurance Life insurance Conventional Campaign optimization Second Law - Business Knowledge Law Business Knowledge is central to every step of the data mining process 10 Third Law – Data Preparation Law Data preparation is more than half of every data mining process “Problem Space Shaping” 11 Fourth Law – No Free Lunch for Data Miners NFL-DM”: The right model for a given application can only be discovered by experiment 1. Problem not Defined 2. Multiple questions 2. Up sell 3. Data Prep. Impacts model value 3. Cross sell 4. Business objectives change CUSTOMER TRACKS 1. Welcome 4. Churn Prevention 5. Reactivation 6. Winback 7. Priority service 8. Seasonal offers 12 Fifth Law – Watkins Law “Watkins’ Law”: There are always patterns 13 Sixth Law – Knowledge Amplification Law Data mining amplifies perception in the business domain How Data Mining produces insights 14 Seventh Law – Prediction Law “Prediction Law”: Prediction increases information locally by generalisation 15 Eight Law – Value Law “Value Law”: The value of data mining results is not determined by the accuracy or stability of predictive models 16 Ninth Law – Law of Change “Law of Change”: All patterns are subject to change 17 Thank you Data House 79 Old Kilmainham Road Kilmainham Dublin 8, Ireland 18Formerly SPSS Ireland TELEPHONE +353 (0) 1 456 7896 EMAIL [email protected] www.presidion.com