MODULE 1

Data mining

We live in a world where vast amounts of data are collected daily. Analyzing such
data is an important need. “We are living in the information age” is a popular saying;
however, we are actually living in the data age. Terabytes or petabytes of data pour into
our computer networks, the World Wide Web (WWW), and various data storage devices
every day from business society, science and engineering, medicine, and almost every
other aspect of daily life

What Is Data Mining?

Data mining refers to extracting or mining knowledge from large amounts of

data. Mining is a vivid term characterizing the process that finds a small set of precious
nuggets from a great deal of raw material.

KDD steps – STEPS IN KNOWLEDGE DISCOVERY FROM DATA

Many people treat data mining as a synonym for another popularly used term,
knowledge discovery from data, or KDD, while others view data mining as merely an
essential step in the process of knowledge discovery. The terms knowledge discovery in
databases (KDD) and data mining are often used interchangeably.

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Over the last few years KDD has been used to refer to a process consisting of
many steps, while data mining is only one of these steps.

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 Knowledge discovery in databases (KDD) is the process of finding useful
information and patterns in data. Data mining is the use of algorithms to extract the
information and patterns derived by the KDD process

Data mining stages:

1. Data cleaning (to remove noise and inconsistent data)

2. Data integration (where multiple data sources may be combined)

3. Data selection (where data relevant to the analysis task are retrieved from the
database)

4. Data transformation (where data are transformed and consolidated into forms
appropriate for mining by performing summary or aggregation operations)

5. Data mining (an essential process where intelligent methods are applied to extract
data patterns)
6. Pattern evaluation (to identify the truly interesting patterns representing knowledge
based on interestingness measures)
7. Knowledge presentation (where visualization and knowledge representation
techniques are used to present mined knowledge to users)

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Steps 1 through 4 are different forms of data preprocessing, where data are
prepared for mining. The data mining step may interact with the user or a knowledge
base. The interesting patterns are presented to the user and may be stored as new
knowledge in the knowledge base. The preceding view shows data mining as one step
in the knowledge discovery process, albeit an essential one because it uncovers hidden
patterns for evaluation.

Data mining is the process of discovering interesting patterns and knowledge

from large amounts of data. The data sources can include databases, data warehouses,
the Web, other information repositories, or data that are streamed into the system
dynamically.

Data mining applications:

1. Classification: Eg: In loan database, to classify an applicant as a prospective or

defaulter, given his various personal and demographic features along with
previous purchase characteristics.
2. Estimation: Predict the attribute of a data instance. Eg: estimate the percentage
of marks of a student, whose previous marks are already known.
3. Prediction: Predictive model predicts a future outcome rather than the current
behavior. Eg: Predict next week’s closing price for the Google share price per
unit.
4. Market basket analysis(association rule mining)
5. Business intelligence
6. Business data analytics
7. Bioinformatics
8. Web mining

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 9. Text mining
10. Social network data analysis

Architecture of a typical data mining system/Major Components

Data mining is the process of discovering interesting knowledge from large

amounts of data stored either in databases, data warehouses, or other information
repositories. Based on this view, the architecture of a typical data mining system may
have the following major components:

1. A database, data warehouse, or other information repository, which consists of the

set of databases, data warehouses, spreadsheets, or other kinds of information
repositories containing the student and course information.

2. A database or data warehouse server which fetches the relevant data based on users’
data mining requests.

3. A knowledge base that contains the domain knowledge used to guide the search or to
evaluate the interestingness of resulting patterns. For example, the knowledge base may
contain metadata which describes data from multiple heterogeneous sources.

4. A data mining engine, which consists of a set of functional modules for tasks such as

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classification, association, classification, cluster analysis, and evolution and deviation
analysis.

5. A pattern evaluation module that works in tandem with the data mining modules by
employing interestingness measures to help focus the search towards interestingness
patterns.

6. A graphical user interface that allows the user an interactive approach to the
data mining system.

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Data mining models

Data mining functionalities/Data mining tasks: what kinds of patterns can be

mined?

1. Class/Concept Description: Characterization and Discrimination: Data

characterization is a summarization of the general characteristics or features of a
target class of data. The data corresponding to the user-specified class are typically
collected by a query.

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For example, to study the characteristics of software products with sales that
increased by 10% in the previous year, the data related to such products can be
collected by executing an SQL query on the sales database.

Data discrimination is a comparison of the general features of the target class

dataobjects against the general features of objects from one or multiple contrasting
classes.The target and contrasting classes can be specified by a user, and the
correspondingdata objects can be retrieved through database queries. For example, a
user may want tocompare the general features of software products with sales that
increased by 10% lastyear against those with sales that decreased by at least 30%
during the same period.

2. Mining Frequent Patterns, Associations, and Correlations, Frequent patterns,

as the name suggests, are patterns that occur frequently in data. There are many kinds
of frequent patterns, including frequent item sets, frequent subsequences (also known
as sequential patterns), and frequent substructures. A frequent item set typically refers
to a set of items that often appear together in a transactional data set for example, milk
and bread, which are frequently bought together in grocerystores by many customers. A
frequently occurring subsequence, such as the patternthat customers, tend to purchase
first a laptop, followed by a digital camera, and thena memory card, is a (frequent)
sequential pattern. A substructure can refer to differentstructural forms (e.g., graphs,
trees, or lattices) that may be combined with itemsets or subsequences. If a
substructure occurs frequently, it is called a (frequent) structuredpattern. Mining
frequent patterns leads to the discovery of interesting associations andcorrelations
within data.

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Association analysis:

A confidence, or certainty, of 50%means that if a customer buys a computer,

there is a 50% chance that she will buysoftware as well. A 1% support means that 1%
of all the transactions under analysisshow that computer and software are purchased
together. This association rule involvesa single attribute or predicate (i.e., buys) that
repeats. Association rules that contain asingle predicate are referred to as single-
dimensional association rules. Dropping thepredicate notation, the rule can be
written simply as “computer) software [1%, 50%].”
Adopting the terminology used inmultidimensional databases, where each
attribute is referred to as a dimension, theabove rule can be referred to as a
multidimensional association rule.

3. Classification and Regression for Predictive Analysis:

Classification is the process of finding a model (or function) that describes and
distinguishesdata classes or concepts. The model is derived based on the analysis of a
set oftraining data (i.e., data objects for which the class labels are known). The model is

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usedto predict the class label of objects for which the the class label is unknown.
A decisiontree is a flowchart-like tree structure,where each node denotes a test
on an attribute value, each branch represents an outcomeof the test, and tree leaves
represent classes or class distributions.

A classification model can be represented in various forms: (a) IF-THEN rules,

(b) a decisiontree, or (c) a neural network. A neural network,when used for
classification, is typicallya collection of neuron-like processing unitswithweighted
connections between theunits. There are many other methods for constructing
classificationmodels, such as naıveBayesian classification, support vector machines, and
k-nearest-neighbor classification.Whereas classification predicts categorical (discrete,
unordered) labels, regressionmodels continuous-valued functions. That is, regression
is used to predict missing orunavailable numerical data values rather than (discrete)
class labels. The term predictionrefers to both numeric prediction and class label
prediction.

Regression analysis is a statistical methodology that is most often used for

numeric prediction, although othermethods exist as well. Regression also encompasses
the identification of distributiontrends based on the available data.
Unlike classification and regression, which analyze class-labeled (training) data sets,

4. Clustering analyzes data objects without consulting class labels. In many cases,
classlabeleddata may simply not exist at the beginning. Clustering can be used to
generateclass labels for a group of data. The objects are clustered or grouped based on
the principle of maximizing the intraclass similarity and minimizing the interclass

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similarity. That is,clusters of objects are formed so that objects within a cluster have
high similarity in comparisonto one another, but are rather dissimilar to objects in other
clusters. Each clusterso formed can be viewed as a class of objects, from which rules can
be derived. Clusteringcan also facilitate taxonomy formation, that is, the organization
of observationsinto a hierarchy of classes that group similar events together.

6. Outlier Analysis
A data set may contain objects that do not comply with the general behavior or
modelof the data. These data objects are outliers. Many data mining methods discard
outliersas noise or exceptions. However, in some applications (e.g., fraud detection) the
rareevents can be more interesting than the more regularly occurring ones. The analysis
ofoutlier data is referred to as outlier analysis or anomaly mining.

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Outlier analysis may uncover fraudulent usage of credit cards bydetecting
purchases of unusually large amounts for a given account number in comparisonto
regular charges incurred by the same account. Outlier values may also be detectedwith
respect to the locations and types of purchase, or the purchase frequency.

Technologies for data mining

Statistics:

Statistics studies the collection, analysis, interpretation or explanation, and

presentationof data. Data mining has an inherent connection with statistics.A statistical
model is a set of mathematical functions that describe the behavior ofthe objects in a

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target class in terms of random variables and their associated probabilitydistributions.
Statistical models are widely used to model data and data classes.
In other words, such statistical models can be theoutcome of a data mining task.
Alternatively, data mining tasks can be built on top ofstatistical models. For example, we
can use statistics to model noise and missing datavalues. Then, when mining patterns in
a large data set, the data mining process can usethe model to help identify and handle
noisy or missing values in the data.
Statistics research develops tools for prediction and forecasting using data and
statisticalmodels. Statistical methods can be used to summarize or describe a
collectionof data.
Statistical methods can also be used to verify data mining results. For example,
aftera classification or prediction model is mined, the model should be verified by
statisticalhypothesis testing. A statistical hypothesis test (sometimes called
confirmatory dataanalysis) makes statistical decisions using experimental data. A result
is called statisticallysignificant if it is unlikely to have occurred by chance. If the
classification or predictionmodel holds true, then the descriptive statistics of the model
increases the soundness of the model.

Machine learning: Investigates how computers can learn (or improve their
performance)based on data. A main research area is for computer programs to

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automatically learn torecognize complex patterns and make intelligent decisions based
on data. For example, atypical machine learning problem is to program a computer so
that it can automaticallyrecognize handwritten postal codes on mail after learning from
a set of examples.Machine learning is a fast-growing discipline. Here, we illustrate
classic problems inmachine learning that are highly related to data mining.

Supervised learning is basically a synonym for classification. The supervision in

thelearning comes from the labeled examples in the training data set. For example, inthe
postal code recognition problem, a set of handwritten postal code images andtheir
corresponding machine-readable translations are used as the training examples,which
supervise the learning of the classification model.

Unsupervised learning is essentially a synonym for clustering. The learning processis

unsupervised since the input examples are not class labeled. Typically, we may
useclustering to discover classes within the data. For example, an unsupervised
learningmethod can take, as input, a set of images of handwritten digits. Suppose that it
finds10 clusters of data. These clusters may correspond to the 10 distinct digits of 0 to9,
respectively. However, since the training data are not labeled, the learned modelcannot
tell us the semantic meaning of the clusters found.

Semi-supervised learning is a class of machine learning techniques that make useof

both labeled and unlabeled examples when learning a model. In one approach,labeled
examples are used to learn class models and unlabeled examples are used torefine the
boundaries between classes. For a two-class problem, we can think of theset of
examples belonging to one class as the positive examples and those belongingto the

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other class as the negative examples. In Figure if we do not consider theunlabeled
examples, the dashed line is the decision boundary that best partitionsthe positive
examples from the negative examples. Using the unlabeled examples,we can refine the
decision boundary to the solid line. Moreover, we can detect thatthe two positive
examples at the top right corner, though labeled, are likely noise oroutliers.

Active learning is a machine learning approach that lets users play an active rolein the
learning process. An active learning approach can ask a user (e.g., a domainexpert) to
label an example, which may be from a set of unlabeled examples orsynthesized by the
learning program. The goal is to optimize the model quality byactively acquiring
knowledge from human users, given a constraint on how manyexamples they can be
asked to label.

Major issues in data mining

1. Mining methodology and user interaction issues

 Mining different kinds of knowledge in databases:
Because different users can be interested in different kinds of knowledge, data mining
should cover a wide spectrum of data analysis and knowledge discovery task. These
tasks may use the same database in different ways and require the development of

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numerous data mining techniques.
 Interactive mining of knowledge at multiple levels of abstraction:
Interactive mining allows users to focus the search for patterns, providing and refining
data mining requests based on returned results. The user can interact with the data
mining system to view data and discovered patterns at multiple granularities and from
different angles.
 Incorporation of background knowledge:
Background knowledge, or information regarding the domain under study, may
be used to guide the discovery process and allow discovered patterns to be expressed in
concise terms and at different levels of abstraction

2. Mining methodology and user interaction issues

 Pattern evaluation—the interestingness problem:
A data mining system can uncover thousands of patterns. Several challenges
remain regarding the development of techniques to assess the interestingness of
discovered patterns, particularly with regard to subjective measures that estimate the
value of patterns with respect to a given user class, based on user beliefs or
expectations. The use of interestingness measures or user-specified constraints to guide
the discovery process and reduce the search space is another active area of research.

3. Performance issues
 Efficiency and scalability of data mining algorithms:
To effectively extract information from a huge amount of data in databases, data
mining algorithms must be efficient and scalable. The running time of a data mining
algorithm must be predictable and acceptable in large databases.

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  Parallel, distributed, and incremental mining algorithms:
The huge size of many databases, the wide distribution of data, and the
computational complexity of some data mining methods are factors motivating the
development of parallel and distributed data mining algorithms. Such algorithms divide
the data into partitions, which are processed in parallel. The results from the partitions
are then merged.
4. Issues relating to the diversity of database types:
 Handling of relational and complex types of data:
Because relational databases and data warehouses are widely used, the development of
efficient and effective data mining systems for such data is important. However, other
databases may contain complex data objects, hypertext and multimedia data, spatial
data, temporal data, or transaction data. Specific data mining systems should be
constructed for mining specific kinds of data.
 Mining information from heterogeneous databases and global information
systems:
Local- and wide-area computer networks (such as the Internet) connect many
sources of data, forming huge, distributed, and heterogeneous databases. The
discovery of knowledge from different sources of structured, semi structured, or
unstructured data with diverse data semantics poses great challenges to data
mining

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Data Warehouse
Data warehousing provides architectures and tools for business executives to
systematically organize, understand, and use their data to make strategic decisions.
Data warehouse refers to a database that is maintained separately from an
organization’s operational databases.A data warehouse is a subject-oriented, integrated,
time-variant, and non-volatile collection of data in support of management’s decision
making process”

1. Subject-oriented: A data warehouse is organized around major subjects, such as

customer, supplier, product, and sales.

A data warehouse focuses on the modelling and analysis of data for decision
makers(not on day to day transaction).
Provide a simple and concise view around particular subject issues by excluding
data that are not useful in the decision support process.

2. Integrated: data warehouse is usually constructed by integrating multiple

heterogeneous sources, such as relational databases, flat files, and on-line
transaction records.
3. Time-variant: Data are stored to provide information from a historical
perspective
Every key structure in the data warehouse contains, either implicitly or explicitly,
an element of time.

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 4. Non-volatile: A data warehouse is always a physically separate store of data
transformed from the application data found in the operational environment.
Due to this separation, a data warehouse does not require transaction
processing, recovery, and concurrency control mechanisms. It usually requires
only two operations in data accessing: initial loading of data and access of data.

Data warehousing is the process of constructing and using data warehouses.

 The construction of a data warehouse requires data cleaning, data

integration, and data consolidation.
 The utilization of a data warehouse often necessitates a collection of
decision support technologies. This allows “knowledge workers” (e.g.,
managers, analysts, and executives) to use the warehouse to quickly and
conveniently obtain an overview of the data, and to make sound decisions
based on information in the warehouse.
Data warehousing is very useful from the point of view of heterogeneous
database integration.
The traditional database approach to heterogeneous database integration was a
‘query- driven’ approachdata warehousing employs an update-driven approach in
which information from multiple, heterogeneous sources is integrated in advance and

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stored in a warehouse for direct querying and analysis.

A Three Tier Data Warehouse Architecture

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 Tier-1:
The bottom tier is a warehouse database server that is almost always a relational
database system. Back-end tools and utilities are used to feed data into the bottom tier from
operational databases or other external sources (such as customer profile information
provided by external consultants). These tools and utilities perform data extraction,
cleaning, and transformation (e.g., to merge similar data from different sources into a
unified format), as well as load and refresh functions to update the data warehouse .
The data are extracted using application program interfaces known as gateways. A
gateway is supported by the underlying DBMS and allows client programs to generate SQL
code to be executed at a server.
Examples of gateways include ODBC (Open Database Connection) and OLEDB
(Open Linking and Embedding for Databases) by Microsoft and JDBC (Java Database
Connection). This tier also contains a metadata repository, which stores information about the
data warehouse and its contents.

Tier-2:

The middle tier is an OLAP server that is typically implemented using either a
relational OLAP (ROLAP) model or a multidimensional OLAP. OLAP model is an extended
relational DBMS that maps operations on multidimensional data to standard relational

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operations A multidimensional OLAP (MOLAP) model, that is, a special-purpose server that
directly implements multidimensional data and operations.

Tier-3:

The top tier is a front-end client layer, which contains query and reporting tools,
analysis tools, and/or data mining tools (e.g., trend analysis, prediction, and so on)

Data Warehouse Models

There are three data warehouse models.

1. Enterprise warehouse:
An enterprise warehouse collects all of the information about subjects spanning the
entire organization. It provides corporate-wide data integration, usually from one or more
operational systems or external information providers, and is cross-functional in scope. It
typically contains detailed data as well as summarized data, and can range in size from a few
gigabytes to hundreds of gigabytes, terabytes, or beyond. An enterprise data warehouse may
be implemented on traditional mainframes, computer super servers, or parallel architecture
platforms. It requires extensive business modeling and may take years to design and build.

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2.Data mart: *********
A data mart contains a subset of corporate-wide data that is of value to a specific
group of users. The scope is confined to specific selected subjects. For example, a marketing
data mart may confine its subjects to customer, item, and sales. The data contained in data
marts tend to be summarized. Data marts are usually implemented on low-cost departmental
servers that are UNIX/LINUX- or Windows-based. The implementation cycle of a data mart
is more likely to be measured in weeks rather than months or years. However, it may involve
complex integration in the long run if its design and planning were not enterprise-wide.

Depending on the source of data, data marts can be categorized as independent

or dependent. Independent data marts are sourced from data captured from one or
more operational systems or external information providers, or from data generated
locally within a particular department or geographic area. Dependent data marts are sourced
directly from enterprise data warehouses.

3.virtual warehouse is a set of views over operational databases. For efficient query
processing, only some of the possible summary views may be materialized.
A virtual warehouse is easy to build but requires excess capacity on operational database
servers.

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Meta Data Repository: *****
Metadata are data about data. When used in a data warehouse, metadata are the data
that define warehouse objects. Metadata are created for the data names and definitions of the
given warehouse. Additional metadata are created and captured for time stamping any
extracted data, the source of the extracted data, and missing fields that have been added by
data cleaning or integration processes.
A metadata repository should contain the following: A description of the structure of
the data warehouse, which includes the warehouse schema, view, dimensions, hierarchies,
and derived data definitions, as well as data mart locations and contents. Operational
metadata, which include data lineage (history of migrated data and the
sequence of transformations applied to it), currency of data (active, archived, or purged), and
monitoring information (warehouse usage statistics, error reports, and audit trails).
The algorithms used for summarization, which include measure and dimension
definition algorithms, data on granularity, partitions, subject areas, aggregation,
summarization, and predefined queries and reports. The mapping from the operational
environment to the data warehouse, which include source databases and their contents,
gateway descriptions, data partitions, data extraction, cleaning, transformation rules and
defaults, data refresh and purging rules, and security (user authorization and access control).
Data related to system performance, which include indices and profiles that improve data
access and retrieval performance, in addition to rules for the timing and scheduling of refresh,
update, and replication cycles. Business metadata, which include business terms and
definitions, data ownership information, and charging policies.

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 OLAP(Online analytical Processing):

OLAP is an approach to answering multi-dimensional analytical (MDA) queries

swiftly. OLAP is part of the broader category of business intelligence, which also
encompasses relational database, report writing and data mining.
OLAP tools enable users to analyze multidimensional data interactively from multiple
perspectives.
OLAP consists of three basic analytical operations:
 Consolidation(Roll-Up)
 Drill-Down
 Slicing
 Dicing
 Pivot

Consolidation involves the aggregation of data that can be accumulated and computed
in one or more dimensions.
For example, all sales offices are rolled up to the sales department or sales division to
anticipate sales trends.

The drill-down is a technique that allows users to navigate through the details. For

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instance, users can view the sales by individual products that make up a region’s sales.

Slicing and dicing is a feature whereby users can take out (slicing) a specific set of data of the
OLAP cube and view (dicing) the slices from different viewpoints.

Types of OLAP:

1. Relational OLAP (ROLAP):

ROLAP works directly with relational databases. The base data and the dimension
tables are stored as relational tables and new tables are created to hold the aggregated
information. It depends on a specialized schema design. This methodology relies on
manipulating the data stored in the relational database to give the appearance of traditional
OLAP's slicing and dicing functionality. In essence, each action of slicing and dicing is
equivalent to adding a "WHERE" clause in the SQL statement. ROLAP tools do not use pre-
calculated data cubes but instead pose the query to the standard relational database and its
tables in order to bring back the data required to answer the question. ROLAP tools feature the
ability to ask any question because the methodology does not limit to the contents of a cube.
ROLAP also has the ability to drill down to the lowest level of detail in the database.

2. Multidimensional OLAP (MOLAP):

MOLAP is the 'classic' form of OLAP and is sometimes referred to as just OLAP.
MOLAP stores this data in an optimized multi-dimensional array storage, rather than in a
relational database. Therefore it requires the pre-computation and storage of information in the
cube - the operation known as processing. MOLAP tools generally utilize a pre-calculated data

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 set referred to as a data cube. The data cube contains all the possible answers to a given range
of questions. MOLAP tools have a very fast response time and the ability to quickly write
back data into the data set.

3. Hybrid OLAP (HOLAP):

There is no clear agreement across the industry as to what constitutes Hybrid OLAP,
except that a database will divide data between relational and specialized storage.
For example, for some vendors, a HOLAP database will use relational tables to hold
the larger quantities of detailed data, and use specialized storage for at least some
aspects of the smaller quantities of more-aggregate or less-detailed data.
HOLAP addresses the shortcomings of MOLAP and ROLAP by combining the
capabilities of both approaches. HOLAP tools can utilize both pre-calculated cubes and
relational data sources.

Difference between Operational Database systems and Data Warehouse

 Operational Database systems

 Main task is to perform on-line transaction and query processing. These
systems are called on-line transaction processing (OLTP) systems.
 They cover most of the day-to-day operations of an organization, such as

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purchasing, inventory, manufacturing, banking, payroll, registration, and
accounting.
 Data Warehouse
 serve users or knowledge workers in the role of data analysis and
decision making.
 Such systems can organize and present data in various formats in order to
accommodate the diverse needs of the different users. These systems are
known as on-line analytical processing (OLAP) systems.

Difference between OLTP and OLAP

 Users and system orientation:

 OLTP system is customer-oriented and is used for transaction and query
processing by clerks, clients, and information technology professionals.
 OLAP system is market-oriented and is used for data analysis by knowledge
workers, including managers, executives, and analysts.
 Data contents:
 OLTP system manages current data
 OLAP system manages large amounts of historical data, provides facilities
for summarization and aggregation, and stores and manages information
at different levels of granularity.
 Database design:
 An OLTP system usually adopts an entity-relationship (ER) data model
and an application-oriented database design.

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  An OLAP system typically adopts either a star or snowflake model and a
subject oriented database design.
 View:

 An OLTP system focuses mainly on the current data within an enterprise

or department, without referring to historical data or data in different
organizations.
 An OLAP system often spans multiple versions of a database schema, due
to the evolutionary process of an organization.
 OLAP systems also deal with information that originates from different
organizations.
 OLAP data are stored on multiple storage media.
 Access patterns:
 The access patterns of an OLTP system consist mainly of short, atomic
transactions. Such a system requires concurrency control and recovery
mechanisms.
Accesses to OLAP systems are mostly read-only operations although many could be
complex queries.

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KTUStudents.in A Multidimensional Data Model
Data warehouses and OLAP tools are based on a multidimensional data model.
This model views data in the form of a data cube. A data cube allows data to be modeled
and viewed in multiple dimensions. It is defined by dimensions and facts. In general
terms, dimensions are the perspectives or entities with respect to which an
organization wants to keep records.

For example, AllElectronics shop may create a sales data warehouse in order to
keep records of the store’s sales with respect to the dimensions time, item, branch, and
location. These dimensions allow the store to keep track of things like monthly sales of
items and the branches and locations at which the items were sold. Each dimension may
have a table associated with it, called a dimension table, which further describes the
dimension. For example, a dimension table for item may contain the attributes item
name, brand, and type. Dimension tables can be specified by users or experts, or
automatically generated and adjusted based on data distributions.

A multidimensional data model is typically organized around a central theme,

like sales, for instance. This theme is represented by a fact table. Facts are numerical
measures. Think of them as the quantities by which we want to analyze relationships
between dimensions. Examples of facts for a sales data warehouse include dollars sold
(sales amount in dollars), units sold (number of units sold), and amount budgeted. The

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fact table contains the names of the facts, or measures, as well as keys to each of the
related dimension tables.

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Stars, Snowflakes, and Fact Constellations: Schemas for Multidimensional

Databases

The entity-relationship data model is commonly used in the design of relational

databases, where a database schema consists of a set of entities and the relationships
between them. Such a data model is appropriate for on-line transaction processing.
A data warehouse, however, requires a concise, subject-oriented schema that
facilitates on-line data analysis. The most popular data model for a data warehouse is a
multidimensional model. Such a model can exist in the form of a star schema, a
snowflake schema, or a fact constellation schema. Let’s look at each of these schema
types.
Star schema: The most common modeling paradigm is the star schema, in which
the data warehouse contains (1) a large central table (fact table) containing the bulk of
the data, with no redundancy, and (2) a set of smaller attendant tables (dimension

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tables), one for each dimension. The schema graph resembles a starburst, with the
dimension tables displayed in a radial pattern around the central fact table.

Snowflake schema: The snowflake schema is a variant of the star schema model, where
some dimension tables are normalized, thereby further splitting the data into additional

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tables. The resulting schema graph forms a shape similar to a snowflake.

The major difference between the snowflake and star schema models is that the
dimension tables of the snowflake model may be kept in normalized form to reduce
redundancies. Such a table is easy to maintain and saves storage space. However,
this saving of space is negligible in comparison to the typical magnitude of the fact
table. Furthermore, the snowflake structure can reduce the effectiveness of browsing,
since more joins will be needed to execute a query. Consequently, the system

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performance may be adversely impacted. Hence, although the snowflake schema
reduces redundancy, it is not as popular as the star schema in data warehouse design.

Fact constellation: Sophisticated applications may require multiple fact tables to share
dimension tables. This kind of schema can be viewed as a collection of stars, and hence
is called a galaxy schema or a fact constellation.

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Need for Data Warehousing

1. The data ware house market supports such diverse industries as manufacturing,
retail, telecommunications, and health care. Think of a personnel database for a
company that is continually modified as personnel are added and deleted... If
management wishes determine if there is a problem with too many employees
quitting. To analyze this problem, they would need to know which employees
have left, when they left, why they left, and other information about their
employment. For management to make these types of high-level business
analyses, more historical data not just the current snapshot are required.

A data warehouse is a data repository used to support decision support

systems

2. The basic motivation is to increase business profitability. Traditional data

processing applications support the day-to-day clerical and administrative
decisions, while data warehousing supports long-term strategic decisions.
3. For increasing customer focus, which includes the analysis of customer buying
patterns (such as buying preference, buying time, budget cycles, and appetites
for spending)

4. For repositioning products and managing product portfolios by comparing the

performance of sales by quarter, by year, and by geographic regions in order to

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 fine tune production strategies; analyzing operations and looking for sources of
profit.

5. For managing the customer relationships, making environmental corrections,

and managing the cost of corporate assets.

6. The below figure shows a simple view of a data warehouse. The basic
components of a data warehousing system include data migration, the
warehouse, and access tools. The data are extracted from operational systems,
but must be reformatted, cleansed, integrated, and summarized before being
placed in the warehouse.

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Challenges for Data Warehousing

1. Unwanted data must be removed.

2. Converting heterogeneous sources into one common schema. This problem is the
same as that found when accessing data from multiple heterogeneous sources.
Each operational database may contain the same data with different attribute
names. For example, one system may use "Employee ID," while another uses
"EID" for the same attribute. In addition, there may be multiple data types for the
same attribute.
3. As the operational data is probably a snapshot of the data, multiple snapshots
may need to be merged to create the historical view.
4. Summarizing data is performed to provide a higher level view of the data. This
summarization may be done at multiple granularities and for different
dimensions.
5. New derived data (e.g., using age rather than birth date) may be added to better
facilitate decision support functions.
6. Handling missing and erroneous data must be performed. This could entail
replacing them with predicted or default values or simply removing these entries.
The portion of the transformation that deals with ensuring valid and consistent
data is sometimes referred to as data scrubbing or data staging.

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 7. Data warehouse queries are often complex. They involve the computation of large
groups of data at summarized levels, and may require the use of special data
organization, access, and implementation methods based on multidimensional
views.

8. Data Quality – In a data warehouse, data is coming from many disparate sources
from all facets of an organization. When a data warehouse tries to combine
inconsistent data from disparate sources, it encounters errors. Inconsistent data,
duplicates, logic conflicts, and missing data all result in data quality challenges.
Poor data quality results in faulty reporting and analytics necessary for optimal
decision making.

9. Understanding Analytics – When building a data warehouse, analytics and

reporting will have to be taken into design considerations. In order to do this, the
business user will need to know exactly what analysis will be performed.
10. Quality Assurance – The end user of a data warehouse is using Big Data
reporting and analytics to make the best decisions possible. Consequently, the
data must be 100 percent accurate or a credit union leader could make ill-advised
decisions that are detrimental to the future success of their business. This high
reliance on data quality makes testing a high priority issue that will require a lot

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of resources to ensure the information provided is accurate.

11. Performance – Building a data warehouse is similar to building a car. A car must
be carefully designed from the beginning to meet the purposes for which it is
intended. Yet, there are options each buyer must consider to make the vehicle
truly meet individual performance needs. A data warehouse must also be
carefully designed to meet overall performance requirements. While the final
product can be customized to fit the performance needs of the organization, the
initial overall design must be carefully thought out to provide a stable foundation
from which to start.

12. Designing the Data Warehouse – People generally don’t want to “waste” their
time defining the requirements necessary for proper data warehouse design.
Usually, there is a high level perception of what they want out of a data
warehouse. However, they don’t fully understand all the implications of these
perceptions and, therefore, have a difficult time adequately defining them. This
results in miscommunication between the business users and the technicians
building the data warehouse. The typical end result is a data warehouse which
does not deliver the results expected by the user. Since the data warehouse is
inadequate for the end user, there is a need for fixes and improvements
immediately after initial delivery.

13. User Acceptance – People are not keen to changing their daily routine especially
if the new process is not intuitive. There are many challenges to overcome to
make a data warehouse that is quickly adopted by an organization.

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 14. Cost – A frequent misconception among credit unions is that they can build data
warehouse in-house to save money.. The harsh reality is an effective do-it-
yourself effort is very costly.

Applications of DWH

There are three kinds of data warehouse applications: information processing,

analytical processing, and data mining.

1) Information processing supports querying, basic statistical analysis, and

reporting using crosstabs, tables, charts, or graphs. A current trend in data
warehouse information processing is to construct low-cost web-based
accessing tools that are then integrated with web browsers.

2) Analytical processing supports basic OLAP operations, including slice-and-

dice, drill-down, roll-up, and pivoting. It generally operates on historic data in
both summarized and detailed forms. The major strength of online analytical
processing over information processing is the multidimensional data analysis
of data warehouse data.

3) Data mining supports knowledge discovery by finding hidden patterns and

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associations, constructing analytical models, performing classification and
prediction, and presenting the mining results using visualization tools.

Different areas are:

 Banking Industry

 In the banking industry, concentration is given to risk management and

policy reversal as well analyzing consumer data, market trends,
government regulations and reports, and more importantly financial
decision making.

 Certain banking sectors utilize them for market research, performance

analysis of each product, interchange and exchange rates, and to develop
marketing programs.

 Analysis of card holder’s transactions, spending patterns and merchant

classification, all of which provide the bank with an opportunity to
introduce special offers and lucrative deals based on cardholder activity.

 Finance Industry

 Revolve around evaluation and trends of customer expenses which aids in

maximizing the profits earned by their clients.

 Consumer Goods Industry

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  They are used for prediction of consumer trends, inventory management,
market and advertising research.

 In-depth analysis of sales and production is also carried out.

 Government and Education

 The federal government utilizes the warehouses for research in

compliance, whereas the state government uses it for services related to
human resources like recruitment, and accounting like payroll
management.

 The government uses data warehouses to maintain and analyze tax

records, health policy records and their respective providers.

 Criminal law database is connected to the state’s data warehouse.

Criminal activity is predicted from the patterns and trends, results of the
analysis of historical data associated with past criminals.

 Universities use warehouses for extracting of information used for the

proposal of research grants, understanding their student demographics,
and human resource management.

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 Healthcare

 All of their financial, clinical, and employee records are fed to warehouses
as it helps them to strategize and predict outcomes, track and analyze
their service feedback, generate patient reports, share data with tie-in
insurance companies, medical aid services, etc.

 Hospitality Industry

 A major proportion of this industry is dominated by hotel and restaurant

services, car rental services, and holiday home services.

 They utilize warehouse services to design and evaluate their advertising

and promotion campaigns where they target customers based on their
feedback and travel patterns.

 Insurance

 The warehouses are primarily used to analyze data patterns and

customer trends, apart from maintaining records of already existing
participants.

 The design of tailor-made customer offers and promotions is also possible

through warehouses.

 Manufacturing and Distribution Industry

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  A manufacturing organization has to take several make-or-buy decisions
which can influence the future of the sector, which is why they utilize
high-end OLAP tools as a part of data warehouses to predict market
changes, analyze current business trends, detect warning conditions, view
marketing developments, and ultimately take better decisions.

 They also use them for product shipment records, records of product
portfolios, identify profitable product lines, analyze previous data and
customer feedback to evaluate the weaker product lines and eliminate
them.

 For the distributions, the supply chain management of products operates

through data warehouses.

 The Retailers

 Retailers serve as middlemen between producers and consumers.

 They use warehouses to track items, their advertising promotions, and

the consumers buying trends.

 They also analyze sales to determine fast selling and slow selling product
lines and determine their shelf space through a process of elimination.

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 Telephone Industry

 The telephone industry operates over both offline and online data
burdening them with a lot of historical data which has to be consolidated
and integrated.

 Analysis of fixed assets, analysis of customer’s calling patterns for sales

representatives to push advertising campaigns, and tracking of customer
queries, all require the facilities of a data warehouse.

 Transportation Industry

 In the transportation industry, data warehouses record customer data

enabling traders to experiment with target marketing where the
marketing campaigns are designed by keeping customer requirements in
mind.

 To analyze customer feedback, performance, manage crews on board as

well as analyze customer financial reports for pricing strategies.

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