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 the 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 opportunities.
Unfulfilled Expectations: In addition to a perfect storm of tough economic times, now improving measurably, one reason data mining technology has not lived up to its promise is that "data mining" is a vague and ambiguous term. It overlaps with data profiling, data warehousing and even such approaches to data analysis as online analytic processing (OLAP) and enterprise analytic applications. When high-profile success has occurred (see the front-page article in the Wall Street Journal, "Lucky Numbers: Casino Chain Mines Data on Its Gamblers, And Strikes Pay Dirt" by Christina Binkley, May 4, 2000), this has been a mixed blessing. Such results have attracted a variety of imitators with claims, solutions and products that ultimately fall short of the promises. The promises build on the mining metaphor and typically are made to sound like easy money - "gold in them thar hills." This has resulted in all the usual dilemmas of confused messages from vendors, hyperbole in the press and unfulfilled expectations from end-user enterprises.
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