Data Mining With Oracle Database 11g Release 2: Competing On In-Database Analytics

An Oracle White Paper
September 2009
Data Mining
with Oracle Database 11g Release 2
Competing on In-Database Analytics
Oracle White Paper—Data Mining with Oracle Database 11g Release 2: Competing on In-Database Analytics
Executive Overview............................................................................. 1
In-Database Data Mining .................................................................... 1
Key Benefits of Oracle Data Mining ................................................ 3
Introduction ......................................................................................... 4
Oracle Data Mining ......................................................................... 4
Data Mining Deep Dive ....................................................................... 6
Exadata and Oracle Data Mining ........................................................ 8
Oracle Data Mining for Data Analysts ............................................... 15
Oracle Data Mining for Applications Developers............................... 16
Competing on In-Database Analytics ................................................ 18
Beyond a Tool; Enabling Predictive Applications.......................... 19
Spend Less ....................................................................................... 21
Eliminate Redundant Data and Traditional Analytical Servers.......... 22
Conclusion ........................................................................................ 22
“Some companies have built their very businesses on their ability to collect, analyze, and act on data. …Although numerous
organizations are embracing analytics, only a handful have achieved this level of proficiency. But analytics competitors are the
leaders in their varied fields—consumer products finance, retail, and travel and entertainment among them.”
—Tom Davenport, author, Competing on Analytics
Executive Overview
The Oracle Data Mining Option provides powerful data mining functionality within the
Oracle Database. It enables you to discover new insights hidden in your data and to
leverage your investment in Oracle Database technology. With Oracle Data Mining, you
can build and apply predictive models that help you target your best customers, develop
detailed customer profiles, and find and prevent fraud. Oracle Data Mining helps your
company better compete on analytics.
In-Database Data Mining

With Oracle Data Mining, everything occurs in the Oracle Database—in a single, secure,
scalable platform for advanced business intelligence. Oracle Data Mining represents a
breakthrough in business intelligence. In contrast to traditional statistical software that
requires data extraction to separate servers, which may be insecure and costly to
maintain, Oracle Data Mining embeds a wide-range of mining functions inside the
database—where the data is stored. Coupled with the power of SQL, Oracle Data Mining
eliminates data movement and duplication, maintains security and minimizes latency time
from raw data to valuable information.
Oracle Data Mining enables you to:
• Leverage your data to discover patterns and valuable new insights
• Build and apply predictive models and embed them into dashboards and applications
• Save money. Oracle Data Mining costs significantly less than traditional statistical
software. As an integrated component of your Oracle IT platform, Oracle Data Mining
significantly reduces your total cost of ownership.
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Oracle Data Mining eliminates data movement, data duplication and security exposures.
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Key Benefits of Oracle Data Mining

• Mines data inside Oracle Database, an industry leader in performance and reliability
• Eliminates data extraction and movement
• Provides a platform for analytics-driven database applications
• Provides increased security by leveraging database security options
• Delivers lowest total cost of ownership (TCO) compared to traditional data mining vendors
• Leverages 30+ years of experience of ever advancing Oracle Database technology
Oracle Data Mining enables you to go beyond standard BI and OLAP tools that answer
questions like: “Who are my top customers?” “What products have sold the most?” and
“Where are costs the highest?” Data mining automatically sifts through data and reveals
patterns and insights that help you run your business better. In today’s competitive
marketplace, your company must manage its most valuable asset — its data. Moreover,
your company must exploit its data for competitive advantage. If you don’t, your
competitors will. With Oracle Data Mining, you can implement strategies to:
• Understand and target select customer groups

• Develop detailed customer profiles for building marketing campaigns
• Anticipate and prevent customer churn and attrition
• Identify promising cross-sell and up-sell opportunities
• Detect noncompliance and potential fraud
• Discover new clusters or customer segments
• Perform market-basket analysis to find frequently co-occurring items
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“Simply put, data mining is used to discover [hidden] patterns and relationships in your data in order to help you make better
business decisions.”
-- Herb Edelstein, Two Crows Corporation
Introduction
Traditional business intelligence (BI) reporting tools report on what has happened in the past.
OLAP provides rapid drill-through for more detailed information, roll up to aggregate
information, and sometimes aggregate level forecasting. With a good BI or OLAP tool, a good
analyst and enough time, you could eventually find the information you want. —But eventually
can mean a very long time. According to the infinite monkey theorem, a monkey hitting keys at
random will eventually type the complete works of Shakespeare.
Data Mining is now possible due to advances in computer science and machine learning. Data
Mining delivers new algorithms that can automatically sift deep into your data at the individual
record level to discover patterns, relationships, factors, clusters, associations, profiles, and
predictions—that were previously “hidden”.
Oracle Data Mining, a collection of machine learning algorithms embedded in the Oracle
Database, allows you to discover new insights, segments and associations, to make more accurate
predictions, to find key variables, to detect anomalies, and to extract more information from your
data. For example, by analyzing your best customers, ODM can discover profiles and embed
predictive analytics in applications that identify customers who are likely to be your best
customers. These customers may not represent your most valuable customers today, but they
match profiles of your current best customers. With ODM you can apply predictive models to
generate reports and dashboards that reveal the most promising customers for your marketing
and sales departments, or real-time predictions for call center personnel. Knowing the “strategic
value” of your customers — which customers are likely to become profitable customers in the
future and which are not, or predicting which customers are likely to churn or likely to respond
to a marketing offer — and integrating this information at just the right time into your
operations is the key to successfully competing on analytics.
Oracle Data Mining

Oracle Data Mining, an Option to the Oracle Database Enterprise Edition, delivers a wide range
of cutting edge machine learning algorithms inside the Oracle Database. Since Oracle Data
Mining functions reside natively in the Oracle Database kernel, they deliver unparalled
performance, scalability and security. The data and data mining functions never leave the
database to deliver a comprehensive in-database processing solution.
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Oracle Data Mining Release 11g Release 2 supports twelve in-database mining algorithms that
address classification, regression, association rules, clustering, attribute importance, and feature
selection problems. Working with Oracle Text (which uses standard SQL to index, search, and
analyze text and documents stored in the Oracle database, in files, and on the web), many ODM
mining functions can mine both structured and unstructured (text) data.
ODM provides PL/SQL and Java application programming interfaces (APIs) for model building
and model scoring functions. An optional Oracle Data Miner graphical user interface (GUI) that
is available for download from OTN is available for data analysts who want to use a point and
click GUI. The Oracle Spreadsheet Add-In for Predictive Analytics implements a predictive
analytics PL/SQL package within Microsoft Excel. The Add-In enables automated predictive
analytics functionality within a spreadsheet environment. The ODM graphical user interface(s)
and APIs provide an analytical platform for data analysts and application developers to deliver
data mining’s results to BI dashboards and enterprise applications.
Ranges of Business Intelligence
Now let’s describe what data mining is and how it both differs from and complements other
business intelligence (BI) products — query and reporting, OLAP, and statistical tools. Let’s
also look at some common definitions of business intelligence tools.
Figure 1. BI, OLAP, Statistics and Data Mining. Oracle Data Mining differs from query and reporting (BI), and OLAP tools by automatically
discovering new information that was previously hidden in the data and the ability to make predictions.
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BI and query and reporting tools help you to get information out of your database or data
warehouse. These tools are good at answering questions such as “Who purchased a mutual fund
in the past 3 years?”
OLAP tools go beyond basic BI and allow users to rapidly and interactively drill-down for more
detail, comparisons, summaries and forecasts. OLAP is good at drill-downs into the details to
find, for example, “What is the average income of mutual fund buyers by year by region?”
Statistical tools are used to draw conclusions from representative samples taken from larger
amounts of data. Statistical tools are useful for finding patterns and correlations in “small to
medium” amounts of data, but when the amount of data begins to overwhelm the tool,
traditional statistical techniques struggle. Because statistical tools cannot analyze all the data, they
force data analysts to use representative samples of the data and to eliminate input variables from
the analysis. However, eliminating input variables and using small samples of data, makes you
throw away valuable information.
Oracle Data Mining runs in the kernel of the Oracle Database and doesn’t suffer from the same
limitations. Oracle Data Mining uses machine-learning techniques developed in the last decade
to automatically find patterns and relationships hidden in the data. Oracle Data mining goes
deep into the data and finds patterns from the data. Oracle Data Mining is good at providing
detailed insights and making individual predictions, such as “Who is likely to buy a mutual fund
in the next six months and why?”
Data Mining Deep Dive

Oracle Data Mining provides a collection of data mining algorithms that are designed to address
a wide-range of business and technical problems. Different algorithms are good at different
types of analysis. Oracle Data Mining supports classification, regression, clustering, associations,
attribute importance and feature extraction problems. (For a full listing of algorithms, see Oracle
Data Mining 11g Release 2 Algorithms table on page 9.)
Sequence for Determining Necessary Data. Wrong: Catalog everything you have, and decide what data is important.
Right: Work backward from the solution, define the problem explicitly, and map out the data needed to populate the
investigation and models.
—James Taylor with Neil Raden, authors, Smart (Enough) Systems
The Data Mining Process
Before we start mining any data, we need to define the problem we want to solve and, most
importantly, gather the right data to help us find the solution. If we don’t have the right data, we
need to get it. If data mining is not properly approached, there is the possibility of “garbage in—
garbage out”. To be effective in data mining, you will typically follow a four-step process:
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Defining the Business Problem
This is the most important step. In this step, a domain expert determines how to translate an
abstract business objective such as “How can I sell more of my product to customers?” into a
more tangible and useful data mining problem statement such as “Which customers are most
likely to purchase product A?” To build a model that predicts who is most likely to buy product
A, we first must acquire data that describes the customers who have purchased product A in the
past. Then we can begin to prepare the data for mining.
Gathering and Preparing the Data
Now we take a closer look at our data and determine what additional data may be necessary to
properly address our business problem. We often begin by working with a reasonable sample of
the data. For example, we might examine several hundred of the many thousands, or even
millions, of cases by looking at statistical summaries and histograms. We may perform some data
transformations to attempt to tease the hidden information closer to the surface for mining. For
example, we might transform a “Date_of_Birth” field into an “AGE” field, and we might derive
new field such as “No_Times_Amt_Exceeds_N” from existing fields. The power of SQL
simplifies this process.
Model Building and Evaluation
Now we are ready to build models that sift through the data to discover patterns. Generally, we
will build several models, each one using different mining parameters, before we find the best or
most useful model(s).
Knowledge Deployment
Once ODM has built a model that models relationships found in the data, we will deploy it so
that users, such as managers, call center representatives, and executives, can apply it to find new
insights and generate predictions. ODM’s embedded data mining algorithms eliminate any need
to move (rewrite) the models to the data in the database or to extract huge volumes of unscored
records for scoring using a predictive model that resides outside of the database. Oracle Data
Mining provides the ideal platform for building and deploying advanced business intelligence
applications.
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The data mining process involves a series of steps to define a business problem, gather and prepare the data, build and evaluate mining
models, and apply the models and disseminate the new information.
Exadata and Oracle Data Mining

Oracle Exadata is a family of high performance storage software and hardware
products that can improve data warehouse query performance by a factor of 10X or
more. Oracle Data Mining scoring functions in Oracle Database 11g Release 2 score
in the storage layer and permit very large data sets to be mined very quickly, thus
further increasing the competitive advantage already gained from Oracle's in-
database analytics.
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A Wide Range of Cutting Edge Algorithms
Oracle Data Mining provides a broad suite of data mining techniques and algorithms to solve
many types of business and technical problems:
ORACLE DATA MINING 11G RELEASE 2 ALGORITHMS
TECHNIQUE APPLICABILITY ALGORITHMS
Classification Classification techniques Logistic Regression (GLM)—

use historical data to classic statistical technique inside
build models that can be the Oracle Database. Supports
used to classify new data thousands of input variables, text
and make predictions and transactional data
about class membership
(e.g. 0 or 1) or class Naive Bayes—Fast, simple,
value (numerical value). commonly applicable
Support Vector Machine—Cutting

edge algorithm that supports
binary and multi-class problems.
SVMs also excel at handling
shallow, yet wide, and nested data
problems e.g. transaction data or
gene expression data analysis.
Supports text mining use cases.
Decision Tree—Popular algorithm

useful for many classification
problems that that can help explain
the model’s logic using human-
readable “If…. Then…” rules.
Regression Technique for predicting Multiple Regression (GLM)—
a continuous numerical classic statistical technique available
outcome such as inside the Oracle Database
customer lifetime value, Supports thousands of input
house value, process variables, text and transactional
yield rates. data
Support Vector Machine —

Cutting edge algorithm that
supports regression problems.
Supports text mining and
transactional data use cases.
Attribute Importance Ranks attributes Minimum Description Length—
according to strength of Considers each attribute as a
relationship with target simple predictive model of the
attribute, for example target class. Attribute Importance
finding factors algorithm finds the attributes that
associated with people have the most influence on a target
who respond to an offer. attribute.
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Anomaly Detection Identifies unusual or One-Class Support Vector

suspicious cases based Machine —Unsupervised learning
on deviation from the technique that trains on “normal
norm. Common cases” to build a model. Then
examples include health when applied, it flags unusual cases
care fraud, expense with the probability that they are
report fraud, and tax not “normal”.
compliance.
Clustering Useful for exploring Enhanced K-Means—Supports

data and finding natural text mining, hierarchical clustering,
groupings within the distance based
data. Members of a
cluster are more like Orthogonal Partitioning
each other than they are Clustering—Hierarchical
like members of a clustering, density based
different cluster.
Common examples
include finding new
customer segments, and
life sciences discovery.
Association Finds rules associated Apriori—Industry standard for
with frequently co- market basket analysis.
occurring items, used for
market basket analysis,
cross-sell, root cause
analysis. Useful for
product bundling, in-
store placement, and
defect analysis.
Feature Extraction Produces new attributes Non-negative Matrix Factorization

as linear combination of (NMF)— Creates new attributes
existing attributes. that represent the same
Applicable for text data, information using fewer attributes
latent semantic analysis,
data compression, data
decomposition and
projection, and pattern
recognition.
Supervised Learning Algorithms
Most data mining algorithms can be separated into supervised learning and unsupervised learning
data mining techniques. Supervised learning requires the data analyst to identify a target attribute
or dependent variable with examples of the possible classes (e.g., 0/1, Yes/No, High/Med, Low,
etc.). The supervised-learning technique then sifts through data trying to find patterns and
relationships among the independent attributes (predictors) that can help separate the different
classes of the dependent attribute.
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For example, let’s say that we want to build a predictive model that can help our Marketing and
Sales departments focus on people who are most likely interested in purchasing a new car. The
target attribute will be a column that designates whether each customer has purchased a car—for
example, a “1” for yes and a “0” for no. The supervised data mining algorithm sifts through the
data searching for patterns and builds a data mining model that captures the relationships found
in the data. Typically, for supervised learning, the data is separated into two parts — one for
model training and another hold out sample for model testing and model evaluation. Because we
already know the outcome — who purchased a car and who hasn’t — we can apply our ODM
predictive model to our hold out sample to evaluate the model’s accuracy and make decisions
about the usefulness of the model. ODM models with acceptable prediction capability can have
high economic value. Binary and multi-class classification problems represent a majority of
common business challenges addressed through Oracle Data Mining, including database
marketing, response and sales offers, fraud detection, profitability prediction, customer profiling,
credit rating, churn anticipation, inventory requirements, failure anticipation, and many others.
Oracle Data Mining also provides utilities for evaluating models in terms of model accuracy and
“lift” — or the incremental advantage of the predictive model over the naïve guess.
Naïve Bayes
Naïve Bayes (NB) is a supervised-learning technique for classification and prediction supported
by Oracle Data Mining. The Naive Bayes algorithm is based on conditional probabilities. It uses
Bayes' Theorem, a formula that calculates a probability by counting the frequency of values and
combinations of values in the historical data. Bayes' Theorem finds the probability of an event
occurring given the probability of another event that has already occurred. If B represents the
dependent event and A represents the prior event, Bayes' theorem can be stated as follows.
Bayes' Theorem: Prob(B given A) = Prob(A and B)/Prob(A)
To calculate the probability of B given A, the algorithm counts the number of cases where A and
B occur together and divides it by the number of cases where A occurs alone.
After ODM builds a NB model, the model can be used to make predictions. Application
developers can integrate ODM models to classify and predict for a variety of purposes, such as:
• Identify customers likely to purchase a certain product or to respond to a marketing campaign
• Identify customers most likely to spend greater than $3,000
• Identify customers likely to churn
NB affords fast model building and scoring and can be used for both binary and multi-class
classification problems. NB cross-validation, supported as an optional way to run NB, permits
the user to test model accuracy on the same data that was used to build the model, rather than
building the model on one portion of the data and testing it on a different portion. Not having to
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hold aside a portion of the data for testing is especially useful if the amount of build data is
relatively small.
Decision Trees
Oracle Data Mining supports the popular Classification Tree algorithm. The ODM Decision
Tree model contains complete information about each node, including Confidence, Support, and
Splitting Criterion. The full Rule for each node can be displayed, and in addition, a surrogate
attribute is supplied for each node, to be used as a substitute when applying the model to a case
with missing values.
Support Vector Machines
ODM’s Support Vector Machines (SVM) algorithm supports binary and multi-class classification,
prediction, and regression models, that is, prediction of a continuous target attribute. SVMs are
particularly good at discovering patterns hidden in problems that have a very large number of
independent attributes, yet have only a very limited number of data records or observations.
SVM models can be used to analyze genomic data with only 100 patients who have thousands of
gene expression measurements for each patient. SVMs can build models that predict disease
treatment outcome based on genetic profiles.
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Generalized Linear Models (Logistic and Multiple Regression)
ODM 11g Release 2 adds support for the multipurpose classical statistical algorithm, Generalized
Linear Models (GLM). ODM supports, as two mining functions: classification (binary Logistic
Regression) and regression (Multivariate Linear Regression). GLM is a parametric modeling
technique. Parametric models make assumptions about the distribution of the data. When the
assumptions are met, parametric models can be more efficient than non-parametric models.
Oracle Data Mining’s GLM implementation provides extensive model quality diagnostics and
predictions with confidence bounds.
Oracle Data Mining supports ridge regression for both regression and classification mining
functions. ODM’s GLM automatically uses ridge if it detects singularity (exact multicollinearity)
in the data. ODM supports GLM with the added capability to handle many hundreds to
thousands of input attributes. Traditional external statistical software packages typically are
limited to 10-30 input attributes.
Attribute Importance
Oracle Data Mining’s Attribute Importance algorithm helps to identify the attributes that have
the greatest influence on a target attribute. Often, knowing which attributes are most influential
helps you to better understand and manage your business and can help simplify modeling
activities. Additionally, these attributes can indicate the types of data that you may wish to add to
your data to augment your models.
Attribute Importance can be used to find the process attributes most relevant to predicting the
quality of a manufactured part, the factors associated with churn, or the genes most likely related
to being involved in the treatment of a particular disease.
Unsupervised Learning Algorithms
In unsupervised learning, the user does not specify a target attribute for the algorithm.
Unsupervised learning techniques, such as associations and clustering algorithms, make no
assumptions about a target field. Instead, they allow the data mining algorithm to find
associations and clusters in the data independent of any a priori defined business objective.
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Clustering
Oracle Data Mining provides two algorithms, Enhanced k-Means and Orthogonal Partitioning
Clustering (O-Cluster), for identifying naturally occurring groupings within a data population.
ODM’s Enhanced k-Means (EKM) and O-Cluster algorithms support identifying naturally
occurring groupings within the data population. ODM’s EKM algorithm supports hierarchical
clusters, handles numeric and categorical attributes and will cut the population into the user
specified number of clusters.
ODM’s O-Cluster algorithm handles both numeric and categorical attributes and will
automatically select the best cluster definitions. In both cases, ODM provides cluster detail
information, cluster rules, cluster centroid values, and can be used to “score” a population on
their cluster membership. For example, Enhanced k-Means Clustering can be used to find new
customer segments or to reveal subgroups within a diseased population.
Association Rules (Market Basket Analysis)
ODM’s Association Rules (AR) finds co-occurring items or events within the data. Often called
“market basket analysis”, AR counts the number of combinations of every possible pair, triplet,
quadruplet, etc., of items to find patterns. Association Rules represent the findings in the form
of antecedents and consequents. An AR rule, among many rules found, might be “Given
Antecedents Milk, Bread, and Jelly, then Consequent Butter is also expected with Confidence
78% and Support 12%. Translated in simpler English, this means that if you find a market
basket having the first three items, there is a strong chance (78% confidence) that you will also
find the fourth item and this combination is found in 12% of all the market baskets studied. The
associations or “rules” thus discovered are useful in designing special promotions, product
bundles, and store displays.
AR can be used to find which manufactured parts and equipment settings are associated with
failure events, what patient and drug attributes are associated with which outcomes or which
items or products is a person who has purchased item A most likely to buy?
Anomaly Detection
Release 2 of Oracle Data Mining 10g introduced support for a new mining application—anomaly
detection, that is, the detection of “rare cases” when very few or even no examples of the rare
case are available. Oracle Data Mining can “classify” data into “normal” and “abnormal” even if
only one class is known. ODM uses a special case of the Support Vector Machines algorithm to
create a model of known cases. When the model is applied to the general population, cases that
don’t fit the profile are flagged as anomalies (that is, abnormal or suspicious). ODM’s anomaly
detection algorithm is extremely powerful in finding truly rare occurrences when you have a lot
of data but need to find needles in the haystacks.
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Feature Extraction
ODM’s Nonnegative Matrix Factorization (NMF) is useful for reducing a large dataset into
representative attributes. Similar in high level concept to Principal Components Analysis (PCA),
but able to handle much larger amounts of attributes and create new features in an additive
nature, NMF is a powerful, cutting-edge data mining algorithm that can be used for a variety of
use cases.
NMF can be used to reduce large amounts of data, e.g., text data, into smaller, more sparse
representations that reduce the dimensionality of the data, i.e., the same information can be
preserved using far fewer variables. The output of NMF models can be analyzed using
supervised learning techniques such as SVMs or unsupervised learning techniques such as
clustering techniques. Oracle Data Mining uses NMF and SVM algorithms to mine unstructured
text data.
Text Mining and Unstructured Data
Oracle Data Mining provides a single unified analytic server platform capable of mining both
structured, that is, data organized in rows and columns, and unstructured data. ODM can mine
unstructured data, that is, “text” as a text attribute that can be combined with other structured
data, for example, age, height, and weight to build classification, prediction, and clustering
models. ODM could add, for example, a physician’s notes to the structured “clinical” data to
extract more information and build better data mining models.
This ability to combine structured data with unstructured data opens new opportunities for
mining data. For example, law enforcement personnel can build models that predict criminal
behavior based on age, number of previous offenses, income, and so forth, and combine a police
officer’s notes about the person to build more accurate models that take advantage of all
available information.
Additionally, ODM’s ability to mine unstructured data is used within Oracle Text to classify and
cluster text documents stored on the Database, e.g. Medline. Oracle Data Mining’s NMF and
SVM models can be used with Oracle Text to build advanced document classification and
clustering models.
Oracle Data Mining for Data Analysts

Oracle Data Mining empowers you to analyze your data like never before. With Oracle Data
Mining you can build more models faster, and deploy those models more quickly and easily. With
Oracle Data Mining, you can mine more sources and types of data, scale to high dimensional and
large volumes of data, use state of the art algorithms, and build, evaluate and deploy models
immediately throughout the enterprise. Oracle Data Mining provides disruptive technology that
changes the way you extract information from data and reduces your dependence on traditional
statistical environments. With Oracle Data Mining, you can now mine the data you want to mine.
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Oracle Data Mining provides a graphical user interface, Oracle Data Miner, with easy-to-use
wizards that guide data analysts through the data exploration, data preparation, data mining,
model evaluation, and model scoring process. Intelligent defaults are provided to aide the data
analyst to successfully mine their data. Power users may optionally change advanced settings or
use the APIs.
Oracle Data Miner, available for download from the Oracle Technology Network (OTN) guides the data miner through the mining process
using wizards.
Oracle Data Miner can automatically generate PL/SQL code for mining activities to transform
the data mining steps into an integrated data mining/BI application. SQL Developer and
JDeveloper also provide Oracle Data Mining extensions for automatic model code generation.
Oracle Data Mining for Applications Developers
Oracle Data Mining empowers IT departments, and application vendors by making data mining a
natural extension of the Oracle Database. Many companies already rely on Oracle Database to
store and manage their data. Now, companies can leverage in-database analytics and perform
data mining right where the data exists: in the database. In-database mining, as provided by
Oracle Data Mining, keeps not only the data in the database where it is safe and secure, but also
keeps the data mining models and results there as well, where they are immediately usable in SQL
queries and applications. The Oracle Database with the ODM Option, Oracle Business
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Intelligence and Oracle Applications Oracle Data Mining provide a complete platform for data
management, data analysis and end user applications.
With ODM's SQL and Java APIs, you can integrate data mining into existing business processes,
workflows, and applications. Oracle Data Mining provides numerous sample code examples that
can be used as starting points for quickly building data mining applications. Additionally, the
Oracle Data Miner graphical user interface generates PL/SQL code that helps you to
operationalize your mining activities.
drop table CLAIMS_SET;

exec dbms_data_mining.drop_model('CLAIMSMODEL');
create table CLAIMS_SET (setting_name varchar2(30), setting_value varchar2(4000));
insert into CLAIMS_SET values ('ALGO_NAME','ALGO_SUPPORT_VECTOR_MACHINES');
insert into CLAIMS_SET values ('PREP_AUTO','ON');
commit;
begin
dbms_data_mining.create_model('CLAIMSMODEL', 'CLASSIFICATION',
'CLAIMS', 'POLICYNUMBER', null, 'CLAIMS_SET');
end;
/
-- Top 5 most suspicious fraud policy holder claims
select * from
(select POLICYNUMBER, round(prob_fraud*100,2) percent_fraud,
rank() over (order by prob_fraud desc) rnk from
(select POLICYNUMBER, prediction_probability(CLAIMSMODEL, '0' using *) prob_fraud
from CLAIMS
where PASTNUMBEROFCLAIMS in ('2 to 4', 'more than 4')))
where rnk <= 5
order by percent_fraud desc;
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Competing on In-Database Analytics
“Any company can generate simple descriptive statistics about aspects of its business—average revenue per employee, for
example, or average order size. But analytics competitors look well beyond basic statistics. These companies use predictive
modeling to identify the most profitable customers—plus those with the greatest profit potential and the ones most likely to
cancel their accounts”
Havard Business Review, “Competing on Analytics”, by Thomas Davenport.
Successful companies must go beyond basic BI dashboards and reporting. They must harvest
maximal information from their data and leverage it for competitive advantage. Traditionally,
this process of extracting information from data has been left to the purview of highly technical
data analyst specialists using specialized data analysis tools and extracted copies of data.
Oracle Data Mining removes this barrier, allows data analysts direct access to the data and
enables them to more rapidly build, evaluate and deploy predictive analytics throughout the
enterprise in dashboards and next-generation applications “powered by Oracle Data Mining”.
With Oracle Data Mining companies can:
• Eliminate data movement and collapse information latency
• Transform their database repository into an “analytical database”
• Deliver new insights and predictive analytics throughout the enterprise
Oracle Data Mining’s Predictions & probabilities available in Database for Oracle BI EE and other reporting tools
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Beyond a Tool; Enabling Predictive Applications

The true value of data mining is best realized when the new insights and predictions are
integrated and operationalized into existing business applications. Oracle Data Mining provides
an ideal data and business intelligence IT platform to enable companies to be successful
competing on analytics. With Oracle Data Mining users can deploy predictive analytics into
business applications, call centers, web sites, campaign management systems, automatic teller
machines (ATMs), enterprise resource management (ERM), and other operational and business
planning applications. With Oracle Data Mining, special departments of advanced data analysts
working in silos far away from the database are no longer needed. The Database becomes more
than just a data repository—it becomes an analytical database that can undergird many new
advanced BI use cases.
ODM eliminates the extraction of data from the database for data mining, thus significantly
reducing total cost of ownership. With ODM, there is no need for multiple data storage
hardware and software environments, multiple data analysis tools, and multiple support
resources. With ODM, there are fewer “moving parts” resulting in a simpler, more reliable, and
more efficient data management and data analysis environment.
Automation of data mining tasks is facilitated by Oracle Data Mining’s application programming
interface (APIs). Oracle Data Mining supports both PL/SQL and Java-based APIs. Application
programmers can control all aspects of data mining — they can expose complex settings for
advanced users or completely automate the process for business users. Programmatic control
extends from data preparation through model build and to model apply for scoring of single
records (on-demand) and batch scoring of large data sets. ODM model predictions may be called
on demand as in the following example SQL query and/or stored in relational tables for access
by other business applications:
SELECT * from(
SELECT A.CUSTOMER_ID, A.AGE,
MORTGAGE_AMOUNT, PREDICTION_PROBABILITY (LIKELY_RESPOND, ‘YES'
USING A.*) prob
FROM CUSTOMER_DATA.INSUR_CUST_LTV A)
WHERE prob > 0.85;
Oracle Data Mining’s APIs provide direct, asynchronous access to ODM’s functionality. Oracle
Data Mining’s PL/SQL and Java-based APIs enable application developers to enhance, for
example, a call center application to highlight a customer’s likelihood to churn or to become a
profitable customer. The probability that the customer will accept the special offers can be
displayed for the customer service representative as a window pop-up to provide better service
the customer.
19
Because all results are created and stored in an open relational database, users have access to data
mining results using a wide variety of business intelligence tools including Oracle Business
Intelligence EE, Oracle OLAP, Oracle Reports, Oracle Portal, and Oracle Applications.
Oracle Data Mining powering the Oracle CRM OnDemand Sales Prospector with embedded and automated predictive analytics.
Oracle now delivers applications and industry data models that have integrated data mining.
Oracle’s CRM OnDemand Sales Prospector application mines the purchases and demographics
of previous customers and then make suggestions to the Sales Rep about which customers in
their territory are most likely to purchase what next, the estimated dollar amount, and which
customer references are most likely to work best.
Oracle’s Industry Data Models delivers a standards-based data model, designed and pre-tuned for
Oracle data warehouses. Oracle Retail Data Model combines market-leading retail application
knowledge with the power of Oracle’s Data Warehouse and Business Intelligence platforms.
With pre-built Oracle Data Mining, Oracle OLAP and dimensional models, it delivers industry-
specific metrics and insights you can act on immediately. With Oracle Retail Data Model, you can
jump-start the design and implementation of a retail data warehouse to quickly achieve a positive
ROI for your data warehousing and business intelligence project with a predictable
implementation effort.
20
Oracle Retail Data Models delivers pre-built integrated data mining and standard dashboards and reports from automated data mining.
Oracle Data Mining is part of Oracle’s family of business intelligence products and features. With
Oracle, the data can come from the same “single source of truth” accessed by enterprise users
and protected by database security schemes. Oracle Data Mining makes it easy to build
enterprise applications that automate data mining and distribute new insights within the
organization.
Spend Less
Oracle Data Mining, an Option to the Oracle Database Enterprise Edition (EE) provides a cost
effective alternative to expensive traditional statistical analysis software. Savings are realized in
avoiding additional hardware purchases for computing and storage environments, redundant
copies of the data and multiple versions of the data, duplication of personnel who perform
similar functions but unnecessarily use different software packages. Whereas traditional
statistical software is rented under an annual usage fee (AUF) pricing scheme, companies can
reduce their overall data analysis costs by making the specialized statistical software available for
21
only those individuals who really need it. Production analytical applications can be implemented
now inside the Oracle Database for in-database analytics.
Eliminate Redundant Data and Traditional Analytical Servers

Oracle Data Mining significantly reduces the cost of data mining. It reduces the need for
separate, dedicated mining servers since the data does not need to be extracted outside of the
Oracle Database.
Additionally, by utilizing the same data and a “single source of truth”, Oracle Data Mining makes
it easy to properly select the data and to always work with the most up to date version of the
data.
Oracle Data Mining eliminates data movement, data duplication and security exposures.
Conclusion
Oracle Data Mining provides a powerful, scalable in-database data mining engine for data
analysts seeking to harvest valuable new information and an industry-standard infrastructure for
application developers looking to build applications that automate the discovery and deployment
of predictive analytics throughout the enterprise.
Oracle Data Mining’s wide range of data mining algorithms, completely embedded in the Oracle
Database, solve a wide variety of business problems and provide a powerful infrastructure for
building, automating and deploying advanced enterprise business intelligence applications.
By automating, integrating, and operationalizing the discovery and distribution of predictive
analytics and new business insights, companies can leverage their Oracle Database technology
investment, to operate more intelligently, and most importantly, to gain competitive advantage.
22
23
Oracle White Paper—Data Mining with Oracle
Database 11g Release 2: Competing on In-
Database Analytics
September 2009
Author:Charlie Berger
Copyright © 2009, Oracle and/or its affiliates. All rights reserved. This document is provided for information purposes only and
the contents hereof are subject to change without notice. This document is not warranted to be error-free, nor subject to any other
Oracle Corporation
warranties or conditions, whether expressed orally or implied in law, including implied warranties and conditions of merchantability or
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fitness for a particular purpose. We specifically disclaim any liability with respect to this document and no contractual obligations are
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An Oracle White Paper

—Tom Davenport, author, Competing on Analytics

In-Database Data Mining

Oracle Data Mining enables you to:

• Leverage your data to discover patterns and valuable new insights

Key Benefits of Oracle Data Mining

• Understand and target select customer groups

-- Herb Edelstein, Two Crows Corporation

Oracle Data Mining

Ranges of Business Intelligence

Data Mining Deep Dive

—James Taylor with Neil Raden, authors, Smart (Enough) Systems

The Data Mining Process

Defining the Business Problem

Gathering and Preparing the Data

Model Building and Evaluation

Exadata and Oracle Data Mining

A Wide Range of Cutting Edge Algorithms

ORACLE DATA MINING 11G RELEASE 2 ALGORITHMS

TECHNIQUE APPLICABILITY ALGORITHMS

Classification Classification techniques Logistic Regression (GLM)—

Support Vector Machine—Cutting

Decision Tree—Popular algorithm

Support Vector Machine —

Anomaly Detection Identifies unusual or One-Class Support Vector

Clustering Useful for exploring Enhanced K-Means—Supports

Feature Extraction Produces new attributes Non-negative Matrix Factorization

Supervised Learning Algorithms

Support Vector Machines

Generalized Linear Models (Logistic and Multiple Regression)

Unsupervised Learning Algorithms

Association Rules (Market Basket Analysis)

Text Mining and Unstructured Data

Oracle Data Mining for Data Analysts

Oracle Data Mining for Applications Developers

drop table CLAIMS_SET;

Competing on In-Database Analytics

Havard Business Review, “Competing on Analytics”, by Thomas Davenport.

Beyond a Tool; Enabling Predictive Applications

Eliminate Redundant Data and Traditional Analytical Servers

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