Using Data Mining in Your IT Systems

Rafal to edit Master subtitle style Click Lukawiecki Strategic Consultant, Project Botticelli Ltd rafal@projectbotticelli.co.uk

Objectives

Solve common business and IT scenarios Understand how to use BIDS

See it in action (about 70% afternoon for demos)

Solve DM problems by choosing and parametrising correct DM algorithms

This seminar is partly based on Data Mining book by ZhaoHui Tang and Jamie MacLennan, and also on Jamies presentations. Thank you to Jamie and to Donald Farmer for helping me in preparing this session. Thank you to Roni Karassik for a slide. Thank you to Mike Tsalidis, Olga Londer, and Marin Bezic for all the support. Thank you to Maciej Pilecki for assistance with demos.
The information herein is for informational purposes only and represents the opinions and views of Project Botticelli and/or Rafal Lukawiecki. The material presented is not certain and may vary based on several factors. Microsoft makes no warranties, express, implied or statutory, as to the information in this presentation. 2007 Project Botticelli Ltd & Microsoft Corp. Some slides contain quotations from copyrighted materials by other authors, as individually attributed. All rights reserved. Microsoft, Windows, Windows Vista and other product names are or may be registered trademarks and/or trademarks in the U.S. and/or other countries. The information herein is for informational purposes only and represents the current view of Project Botticelli Ltd as of the date of this presentation. Because Project Botticelli & Microsoft must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Microsoft, and Microsoft and Project Botticelli cannot guarantee the accuracy of any information provided after the date of this presentation. Project Botticelli makes no warranties, express, implied or statutory, as to the information in this presentation. E&OE.

Agenda

Overview of Techniques Scenarios:

Customer Segmentation and Classification Analysing Sales Profitability and Risk Customer Needs Analysis Forecasting Other Scenarios

The Techniques

Microsoft DM Algorithms

Designed for wide use

Auto tuning and parameterisation They just work with little effort on your side

Consistent and simple interface Why Microsoft xxx?

There are few truly standard algorithms yet Each DM vendor has their own significant variations Microsoft invented some of the techniques

E.g. Use of trees for regression or nested cases

You can add 3rd party and your own algorithms easily

Algorithm

Data Mining Algorithms Description

Finds the odds of an outcome based on values in a training set Identifies relationships between cases Classifies cases into distinctive groups based on any attribute sets

Decision Trees Association Rules Clustering

Nave Bayes Clearly shows the differences in a particular variable for various
data elements

Sequence Clustering

Groups or clusters data based on a sequence of previous events

Time Series Analyzes and forecasts time-based data combining the power of
ARTXP (developed by Microsoft Research) for short-term predictions with ARIMA (in SQL 2008) for long-term accuracy.

Neural Nets Seeks to uncover non-intuitive relationships in data Linear Regression Logistic Regression
Determines the relationship between columns in order to predict an outcome Determines the relationship between columns in order to evaluate the probability that a column will contain a specific state
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Algorithm Matrix
Associatio n Rules Clustering Decision Trees Linear Regression Logistic Regression Nave Bayes Neural Nets Sequence Clustering Time Series
ti ica if ss Cla on

i io o tat iat ati en oc gm tim ss A Es Se n n on

ed nc ti s va ca n e Ad ta tio xt ysis a or F ra D Te al g plo n n A Ex

Scenario 1: Customer Classification & Segmentation

Who are our customers? Are there any relationships between their demographics and their interest in buying from us? Who should we concentrate on more?

Lets Get Familiar with BIDS

Business Intelligence Development Studio

Offline and online modes Everything you do stays on the server Offline requires server admin privileges to deploy Process: 1. Define Data Sources and Data Source Views 2. Define Mining Structure and Models 3. Train (process) the Structures 4. Verify accuracy 5. Explore and visualise 6. Perform predictions 7. Deploy for other users 8. Regularly update and re-validate the Model

Demo
Using BIDS to Prepare for Data Mining Click to edit Master subtitle style
1.

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Data Mining Designer

1.

2. 3. 4. 5.

Build a Mining Structure and its first Mining Model Train (process) model Validate model in the Accuracy Chart tab Explore and visualise Perform predictions

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Microsoft Decision Trees

Use for:

Classification: churn and risk analysis Regression: predict profit or income Association analysis based on multiple predictable variable

Builds one tree for each predictable attribute Fast

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Decision Tree Parameters

COMPLEXITY_PENALTY FORCE_REGRESSOR MAXIMUM_INPUT_ATTRIBUTES MAXIMUM_OUTPUT_ATTRIBUTES MINIMUM_SUPPORT SCORE_METHOD SPLIT_METHOD

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Demo
Building a Data Mining Model for Click to edit Master subtitle styleCustomer Classification
1. 2.

Using Microsoft Decision Trees Exploring the Decision Tree

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Microsoft Nave Bayes

Use for:

Classification Association with multiple predictable attributes

Assumes all inputs are independent Simple classification technique based on conditional probability
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Nave Bayes Parameters

MAXIMUM_INPUT_ATTRIBUTES MAXIMUM_OUTPUT_ATTRIBUTES MAXIMUM_STATES MINIMUM_DEPENDENCY_PROBABILITY

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Clustering

Applied to

Segmentation: Customer grouping, Mailing campaign Also: classification and regression Anomaly detection

Discrete and continuous Note:

Predict Only attributes not used for clustering

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Clustering

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Clustering
Anomaly Detection

Ag e

Daughte r Paren t

So n

Mal e

Femal e

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Clustering Parameters

CLUSTER_COUNT CLUSTER_SEED CLUSTERING_METHOD MAXIMUM_INPUT_ATTRIBUTES MAXIMUM_STATES MINIMUM_SUPPORT MODELLING_CARDINALITY SAMPLE_SIZE STOPPING_TOLERANCE

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Neural Network

Applied to

Classification Regression
Hidden Layers

Output Layer

Loyalt y

Great for finding complicated relationship among attributes

Difficult to interpret results

Input Layer Ag e Educatio n Se x Incom e

Gradient Descent method

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Neural Network Parameters

HIDDEN_NODE_RATIO HOLDOUT_PERCENTAGE HOLDOUT_SEED MAXIMUM_INPUT_ATTRIBUTES MAXIMUM_OUTPUT_ATTRIBUTES MAXIMUM_STATES SAMPLE_SIZE

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Demo
Expanding Customer Classification and Segmentation Click to Microsoft Clustering, Nave Bayes, and Neural with edit Master subtitle style Networks 2. Exploring and Visualising Patters Found with the Above
1.

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Validating Results

Accuracy Viewer tabs run a full prediction against the holdout data Results compared to known holdout values and visualised:

Classification Matrix tedious but precise Lift Charts show how your model compares to a random uneducated guess

Compare multiple algorithm results Two types of chart: generic and specific to a predicted value (e.g. [Total of Car Purchases] = 2) Not a real profit prediction, just a name

Profit Chart is a simple variation of a Lift Chart

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Demo
Verifying Master subtitle style Click to edit Results Using Classification Matrix
1. 2.

Validating Model Accuracy Using Two Types of Lift Charts

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Improving Models

Approaches:

Change the algorithm Change model parameters Change inputs/outputs to avoid bad correlations Clean the data set Verify statistics (Data Explorer)

Perhaps there are no good patterns in data

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Demo
Improving Clustering Results by Parameterisation Click to edit Master subtitle style
1. 2.

Re-validating Customer Classification Models

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What makes some of our products more successful? Why is a model or a brand favoured by some groups of clients? Can we recommend additional products on our web site automatically without annoying them?

Scenario 2: Analysing Sales

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First of All, Use:

Decision Trees

Especially with Nested Cases

This subtly changes DT so it finds associations

Clustering Naive Bayes Neural Networks And...

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Association Rules

Use for:

Market basket analysis Cross selling and recommendation s Advanced data exploration

Finds frequent itemsets and rules Sensitive to parameters

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Association Rules Parameters

MINIMUM_SUPPORT MINIMUM_PROBABILITY MINIMUM_IMPORTANCE MINIMUM_ITEMSET_SIZE MAXIMUM_ITEMSET_COUNT MAXIMUM_ITEMSET_SIZE MAXIMUM_SUPPORT

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Demo
Analysing Customer Needs style Click to edit Master subtitle with Decision Trees and No
1. 2. 3.

Nesting... ... and Decision Trees with Nested Cases Using Association Rules to Find Shopping Preferences

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Who are our most profitable customers? Can I predict profit of a future customer based on demographics? Should I give them a Platinum Elite card now?

Scenario 3: Profitability and Risk

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Profitability and Risk

Finding what makes a customer profitable is another example of classification Typically solved with:

Decision Trees (Regression), Linear Regression, and Neural Networks or Logistic Regression Important to predict probability of the predicted, or expected profit Logistic Regression and Neural Networks

Often used for prediction

Risk scoring

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Functions

DMX functions can be used to build richer prediction expressions Predict statistical measures:

PredictProbability PredictHistogram

Essential to use when predicting any values, in particular profit or risk

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PredictProbability
PredictProbability(LoanStatu Probability of the most s) likely outcome PredictProbability(LoanStatu Probability that the loan s, will become very Defaulted) unhealthy

Similar for PredictAdjustedProbability, etc.

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Demo
Analyzing and Predicting Lending Risk with a Named Query 2. Analyzing Profitability Using Multiple Algorithms Click to edit Master subtitle style 3. Performing Predictions in BIDS 4. Predicting in Excel Using Previously Deployed Models and Data Mining Tab
1.

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Cross-Validating Results: Reliability

SQL Server 2008

X iterations of retraining and retesting the model Results from each test statistically collated Model deemed accurate (and perhaps reliable) when variance is low and results meet expectations

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Demo
Cross-validation of Models style Click to edit Master subtitle Reliability
1.

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How do they behave? What are they likely to do once they bought that really expensive car? Should I intervene?

Scenario 4: Customer Needs Analysis

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What is a Sequence?

To discover the most likely beginning, paths, and ends of a customers journey through our domain consider using:

Association Rules Sequence Clustering

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Sequence Clustering

Analysis of:

Customer behaviour Transaction patterns Click stream Customer segmentation Sequence prediction

Mix of clustering and sequence technologies

Groups individuals based on their profiles including sequence data

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Sequence Data
Car Purchases Cust ID 1 Age 35 Marital Status Seq ID M 1 2 3 2 20 S 1 2 3 3 57 M 1 2 Brand Porch-A Bamborgini Kexus Wagen Voovo Voovo Voovo T-Yota

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Sequence Clustering Parameters

CLUSTER_COUNT MAXIMUM_SEQUENCE_STATES MAXIMUM_STATES MINIMUM_SUPPORT

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Demo
Analysing Customer Transaction Click to edit Master subtitle styleBehaviour Using
1. 2.

Sequence Clustering Analysing Events Leading to Customer Loss using Sequence Clustering

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What are my sales going to be like in the next few months? Will I have credit problems? Will my server need an upgrade in the next 3 months?

Scenario 5: Forecasting

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Estimating Future
Forecasting

But: data often is very seasonal

Seasonality detected by a Fast Fourier Transform SQL Server 2005 uses ARTXP (Auto Regressive Tree with Cross Prediction)

Time Series

For short term forecasting

SQL Server 2008 uses a hybrid of improved ARTXP and industry-standard ARIMA (Auto Regressive Integrated Moving Average)

Great for short and long-term forecasting

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Time Series

Uses:

Forecast sales Inventory prediction Web hits prediction Stock value estimation

Regression tree technology to describe and predict series values

Tree allows multiple regressors

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Auto-Regression
Month Milk Jan Feb Mar Apr May Jun July
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Bread 80 90 85 110 120 123 150

Case Id 1 2 3 4 5

100 120 110 115 125 120 140

Milk (t-2) 100 120 110 115 125

Milk (t-1) 120 110 115 125 120

Milk (t0) 110 115 125 120 140

Bread Bread Bread (t-2) (t-1) (t0) 80 90 85 110 120 90 85 110 120 123 85 110 120 123 150

Regression Tree
All

Bread(t-2) <=110

Bread(t-2) >110

Milk(t1) <=120
Milk = 3.02 + 0.72*Bread(t-1) +0.31*Milk(t-1)

Milk(t1) >120

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Input Data
Month Jan Feb Mar Apr May Jun July Format A Milk 100 120 110 115 125 120 140 Bread 80 90 85 110 120 123 150 Month Jan Jan Feb Feb Mar Mar Apr Format B Product Milk Bread Milk Bread Milk Bread Milk Sales 100 80 120 90 110 85 115

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Time Series Parameters

AUTO_DETECT_PERIODICITY COMPLEXITY_PENALTY HISTORIC_MODEL_COUNT HISTORIC_MODEL_GAP MAXIMUM_SERIES_VALUE MINIMUM_SERIES_VALUE MINIMUM_SUPPORT MISSING_VALUE_SUBSITUTION PERIODICITY_HINT

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Demo
Click to edit Master Using a Custom Model and BIDS 1. Forecasting Sales subtitle style
2.

Forecasting Sales Using Table Analysis Tools in Excel

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Performance Monitoring

Issue:

What is causing my servers to suffer? Is there a pattern to a failure that keeps repeating?

Suggested Solution:
1.

2.

Time Series of a Performance Counter from a log, averaged and normalised Sequence Clustering for events that occur in the application log for each transaction

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Demo
Click to edit Master Disk Utilisation Needs Using Time 1. Predicting Server subtitle style
Series

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Other Scenarios

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Data Improvement During ETL

Issue:

Inconsistent or missing data during ExtractTransform-Load (data warehousing).

Suggested Solution:
1.

2. 3.

Decision Tree (or Clustering, Naive Bayes) model for existing data Apply prediction in real-time as ETL is taking place Flag each row containing predicted values row with a probability measure (it is not a fact)

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Security Threat Detection

Issue:

Finding suspicious transactions and intruder detection.

Suggested Solution:
1.

2.

. 1.

Clustering (or Neural Network) to find small groups of outliers Prediction of just one row transactional data to see if it belongs to the suspected cluster Or Sequence Clustering of clicks to detect a known attack pattern
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Web Site and Email Feedback Analysis

Issue:

What are the main issues our customers highlight? How can I quickly spot problem submissions that need a response?

Suggested Solution:
1. 2.

3.

Text extraction and tokenization using SSIS Association Rules (or Sequence Clustering) of extracted tokens Possible prediction of a previously suggested resolution or just classification of the submission

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Resources

Demos & newsletter: www.sqlserverdatamining.com AdventureWorksDW: www.codeplex.com Book by Jamie MacLennan and ZhaoHui Tang Data Mining with SQL Server 2005, Wiley 2005, ISBN 0471462616 Also: www.beyeblogs.com/donaldfarmer blogs.msdn.com/jamiemac www.microsoft.com/sql/technologies/dm forums.microsoft.com/MSDN/ShowForum.aspx?ForumID=81& SQL Server Books Online for all documentation Excellent seminars at www.microsoft.com/technetspotlight

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Summary

Data Mining is a key technology for Predictive Analysis, a major trend Intuitive with great visual feedback for quality May promote you to a keeper of knowledge Discover and explore the hidden knowledge that can make you and your company more successful

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Questions and Answers

Thank You!

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 2008 Microsoft Corporation & Project Botticelli Ltd. All rights reserved.
The information herein is for informational purposes only and represents the opinions and views of Project Botticelli and/or Rafal Lukawiecki. The material presented is not certain and may vary based on several factors. Microsoft makes no warranties, express, implied or statutory, as to the information in this presentation. 2007 Project Botticelli Ltd & Microsoft Corp. Some slides contain quotations from copyrighted materials by other authors, as individually attributed. All rights reserved. Microsoft, Windows, Windows Vista and other product names are or may be registered trademarks and/or trademarks in the U.S. and/or other countries. The information herein is for informational purposes only and represents the current view of Project Botticelli Ltd as of the date of this presentation. Because Project Botticelli & Microsoft must respond to changing market conditions, it should not be interpreted to be a commitment on the part of Microsoft, and Microsoft and Project Botticelli cannot guarantee the accuracy of any information provided after the date of this presentation. Project Botticelli makes no warranties, express, implied or statutory, as to the information in this presentation. E&OE.

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How can I detect incorrect data entry without hard-coding the rules? Intelligent applications?

Bonus Scenario: Data Entry Validation

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What is So Special?

Application behaviour evolves and follows the data mining model

Influenced by real-world events caused by your application!

We are creating a feedback loop from the application through its effects back to the application

The trick that connects the two is the discovery of new emerging patterns and old patterns disappearing the very job of DM

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Intelligent Application
Training Data
DB data Client data Application log

Mining Model

Data To Predict
Just one row New Entry New Txion

DM Engi ne Mining Model Mining Model

DM Engi ne Predicted Data

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Intelligent Application Steps

A Simplified View
1. 2.

3.

Prepare the database for mining Create and train the DM model on your data, consisting of both the inputs and actual outcomes Test the model. If OK... The model predicts outcomes Make application logic depend on predicted outcomes (if, case etc.) Update (and validate) the model periodically as data evolves
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1. 2.

1.

The Intelligent Bit in Our Apps

Your if statement will test the value returned from a prediction typically, predicted probability or outcome Steps:
1.

Build a case (set of attributes) representing the transaction you are processing at the moment

E.g. Shopping basket of a customer plus their shipping info

2.

3.

Execute a SELECT ... PREDICTION JOIN on the preloaded mining model Read returned attributes, especially case probability for a some outcome

E.g. Probability > 50% that TransactionOutcome=ShippingDeliveryFailure

4. 5.

Your application has just made an intelligent decision! Remember to refresh and retest the model regularly daily?

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Watch The Demo At...

www.microsoft.com/technetspotlight Find my session Build More Intelligent Applications Using Data Mining from Microsoft TechEd Developers 2007 in Barcelona

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