Role of Data Mining and Its Utilities For Business Intelligence

Abstract

In this paper we argue that data mining can make a significant contribution to knowledge management initiatives. We use two studies to show how data mining can make the difference during the knowledge management process. First, we describe how data mining was used as part of the knowledge management initiative in a major company. Currently, banks and other financial institutions are maintaining huge electronic data repositories. Valuable bits of information are embedded in these data repositories. The huge size of these data sources make it impossible for a human analyst to come up with interesting information that will helpful in the decision making process. Most of commercial enterprises have been quick to recognize the value of this concept, as a consequence of which the software market itself for data mining is expected to be in excess of 10 billion USD. In this note, I have discusses broad areas of application, like risk management, portfolio management, trading, customer profiling and customer care, where data mining techniques can be used in banks and other financial institutions to enhance their business performance. We demonstrate how implementation of data mining for generating new knowledge about credit risk improved the company performance. Secondly, we carry out a feasibility study of a knowledge management project in a major Finnish engineering company. We explore how data mining can improve the quality and responsiveness of reporting in corporate communications unit. The results of the studies allow us to conclude that data mining has strong functional capabilities to support knowledge management initiatives.