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Source of generating data are day to day business transactions, customer database, secondary
sources like news papers, internet etc. however this data is into raw form which need to be
process to get useful, meaningful information which support decision making process.

The information which use for decision making process should be obviously accurate, timely
available & error free. But many organizations lack this kind of information as they don¶t
maintain proper database management.

Database management system is software that permits an organization to centralize data, manage
them efficiently & provide access to the stored data by application programs. It acts as an
interface between application programs & the physical data files. It makes physical database
available for different logical views required by users.

DBMS solves the problem of the traditional file environment. It reduces data redundancy &
inconsistency by minimizing isolated files in which the same data are repeated. Also it enables
the organization to centrally manage data, their use & security.

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Data Warehouses and Data Mining techniques are becoming crucial ingredient of business
intelligence programs. The terms data mining and data warehousing are often puzzled by both
business and technical staff. The entire field of data management has experienced a phenomenal
growth with the implementation of data collection software programs and the decreased cost of
computer memory. The primary purpose behind both these functions is to provide the tools and
methodologies to explore the patterns and meaning in large amount of data.

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‘

‘‘
‘
Data Warehousing is a total architecture for collecting, storing, and delivering decision support
data for an entire enterprise. It consists of tools, technologies, and methodologies that allow for
the construction, usage, management, and maintenance of the hardware and software used for a

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data warehouse, as well as the actual data itself. It is a storage - bank of an organization's
electronically stored data. They are designed to assist reporting and analysis.

The definition of the data warehouse focuses on data storage. However, the means to retrieve and
analyze data, to extract, transform and load data, and to manage the data dictionary are also
considered essential components of a data warehousing system. Thus, an expanded definition for
data warehousing includes business intelligence tools, tools to extract, transform, and load data
into the repository, and tools to manage and retrieve metadata. It stores historical data that has
been extracted from operational systems & external data sources.

As the data is collected from various production systems, a historical database is built that
business analysts can use. It receives regular updates in order to keep the data fresh & accurate.
Old data which is no longer needed is flush out from the data warehouse. Applications of data
warehouses include data mining, Web Mining, and decision support systems (DSS).

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‘‘

£‘ Heterogeneous data integration

±‘ merge from various sources, fuzzy matches
±‘ remove inconsistencies

£‘ Data cleaning:
±‘ missing data, outliers, clean fields e.g. names/addresses
±‘ Data mining techniques

£‘ Data loading: summarize, create indices

£‘ ÿroducts: ÿrism warehouse manager, ÿlatinum info refiner, info pump, QDB, Vality

Figure 1 describes data warehouse architecture:

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Data warehousing and business intelligence efforts improve decision making which in turn
provides numerous benefits including:

p‘ Identifies ways to maximize revenues or results

p‘ Helps to control costs
p‘ Helps to deals with risks



‘ 
‘

Data mining is the practice of automatically searching large stores of data for patterns and trends
that go beyond simple analysis. It uses sophisticated mathematical algorithms to segment the
data and evaluate the probability of future events. It is also known as Knowledge Discovery in
Data (KDD).

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In simple words, it is the process of extracting patterns from data. It is important tool to
transform this data into information. It is commonly used in a wide range of profiling practices,
such as marketing, surveillance, fraud detection and scientific discovery.

Data mining can be used to uncover patterns in data but is often carried out only on Ú
Ú of
data. The mining process will be ineffective if the samples are not a good representation of the
larger body of data. An important part of the process is the verification and validation of patterns
on other samples of data.

The related terms   

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Ú
 and   Ú
 refer to the use of data mining
techniques to sample sizes that are (or may be) too small for statistical inferences to be made
about the validity of any patterns discovered (see also   Ú
 
Ú). Data dredging may,
however, be used to develop new hypotheses, which must then be validated with sufficiently
large sample sets.



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‘ ulassification - Arranges the data into predefined groups. For example, an email program
might attempt to classify an email as legitimate or spam.
‘ ulustering - Is like classification but the groups are not predefined, so the algorithm will
try to group similar items together.
‘ 6egression - Attempts to find a function which models the data with the least error.
‘ Association rule learning - Searches for relationships between variables. For example a
supermarket might gather data on customer purchasing habits. Using association rule
learning, the supermarket can determine which products are frequently bought together
and use this information for marketing purposes. This is sometimes referred to as market
basket analysis.

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w‘ Data mining in customer relationship management applications can contribute

significantly to the bottom line. 6ather than randomly contacting a prospect or customer
through a call center or sending mail, a company can concentrate its efforts on prospects
that are predicted to have a high likelihood of responding to an offer. Once the results
from data mining (potential prospect/customer and channel/offer) are determined,
³sophisticated application" can either automatically send an e-mail or regular mail.

Finally, in cases where many people will take an action without an offer, uplift modeling
can be used to determine which people will have the greatest increase in responding if
given an offer. Data clustering can also be used to automatically discover the segments or
groups within a customer data set.

w‘ Data mining can also be helpful to human-resources departments in identifying the

uniqueness of their most successful employees. Information obtained, such as universities
attended by highly successful employees, can help H6 focus recruiting efforts
accordingly. Additionally, Strategic Enterprise Management applications help a company
translate corporate-level goals, such as profit and margin share targets, into operational
decisions, such as production plans and workforce levels.

w‘ In market basket analysis, which is relates to retail sales can apply data mining
techniques. If a clothing store records the purchases of customers, a data-mining system
could identify those customers who favor silk shirts over cotton ones.

Market basket analysis has also been used to identify the purchase patterns of the Alpha
consumer. Alpha uonsumers are people that play a significant role in connecting with the
concept behind a product, then adopting that product, and finally validating it for the rest
of society. Analyzing the data collected on these types of users has allowed companies to
predict future buying trends and forecast supply demands.

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 w‘ Data Mining is a highly effective tool in the catalog marketing industry. uatalogers have
a rich history of customer transactions on millions of customers dating back several
years. Data mining tools can identify patterns among customers and help identify the
most likely customers to respond to upcoming mailing campaigns.

Figure ± 2 describes the process of data mining.

Figure ± 2


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In India¶s recently liberalized life insurance market, fast-growing Max New York Life (MNYL),
a joint venture of two leading global businesses, (Max India Limited and New York Life
International), has adopted SAS technology to transform its efforts to strengthen customer
retention and cross-selling to a tightly segmented customer base. With the help of SAS; Max
New York Life able to access right data, the right models, and the right execution. As a result,
high-margin revenue from cross-selling has tripled.

Since its beginning in 2000, MNYL has rightly recognized that, even as it continues to grow, the
greatest revenue opportunity lies within its current customer base, which was vulnerable to
exceptional levels of churn. There were two major challenges. First was company wanted to be
able to identify the best customers and ensure to take appropriate action to retain them & second
was to develop its relationship with them. These are mutually beneficial aims because, by selling
more products and services to them , company improve the likelihood & consumer loyalty will
increase.

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ÿreviously, MNYL found that a mere 7 percent of new revenue came from cross-sales to existing
customers and only 1 percent of customers owned two or more MNYL policies. While those
figures are consistent with a fast-growing enterprise, they still represented an important
opportunity for improvement. Sales cycles to existing customers are faster and the average
premium amount is often 30 percent to 40 percent higher. ÿlus, company found that the retention
probability for a customer goes up 300 percent to 400 percent once they make a second purchase.
uompany was eager to get momentum in these areas, since it would be a more profitable way to
grow business. Therefore there was a Need of an accurate data warehouse for viable information
which can use in increasing customer retention and improving cross-selling efforts.

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Achieving these ambitious targets started with one important objective: a centralized repository
of customer data. Getting that single view of the customer meant pulling all of data into a unified
data warehouse. uompany requires giving business users the right analytic tools to make good,
strategic decisions. But, from a tactical level, addressing the quality of the data was essential for
executing selling initiatives.

9 ‘

Seeking the right technology foundation to aggregate and clean the data, build models, analyze
data sets, and manage campaigns, MNYL turned to SAS. The company acquired a suite of SAS
solutions which includes SAS Business Analytics, including SAS uampaign Management, SAS
Enterprise Miner and SAS Enterprise Guide. It helps to clean data and pump the right
information to the right people at the right time so that they can make the right decisions.
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Through this broad initiative, MNYL has achieved remarkable improvements in retention and
cross-selling. It has benefited with implementations of SAS solutions as follows:

A‘ Using SAS, Max New York Life has increased the number of new sales from existing
customers from 7 percent to more than 20 percent and improved the premium revenue by
nearly 40 percent with shorter sales cycles.
A‘ With a favorable economy, the company believes it can generate 25 percent to 30 percent
of all new sales from existing customers.
A‘ One of the key advantages that SAS provides is improved speed and precision. Before
use of SAS Solution; company needed at least three weeks just to build a model but now,
it can build and run a model in two days which enables company to target customer
segments much more logically and granularly.