Difference Between Predictive Analytics and Data Mining
Today’s leading organizations are looking at their data, examining it, and processing it to search for ways to better understand their customer base, improve their operations, outperform their competitors, and better position themselves in the marketplace. They are looking into how they can use that information to increase their market share and sharpen their competitive edge.
Data mining is the discovery of hidden patterns of data through machine learning — and sophisticated algorithms are the mining tools. Predictive analytics is the process of refining that data resource, using business knowledge to extract hidden value from those newly discovered patterns
Data mining + Domain knowledge => predictive analytics => Business Value
Head to Head Comparison between Predictive Analytics vs Data Mining
Below is The 5 Comparison between Predictive Analytics vs Data Mining
Key Differences Between Predictive Analytics vs Data Mining
Below is the difference between Predictive Analytics and Data Mining
●Process – Process of Data Mining can be summarised into six phases-
a.Business/Research Understanding Phase – Clearly enunciate the project objectives and requirements in terms of the business or research unit as a whole
b.Data Understanding Phase – collect and use exploratory data analysis to familiarize yourself with the data, and discover initial insights.
c.Data Preparation Phase – Clean and apply a transformation to raw data so that it is ready for the modeling tools
d.Modeling Phase – Select and apply appropriate modeling techniques and calibrate model settings to optimize results.
e.Evaluation Phase – Models must be evaluated for quality and effectiveness before we deploy.Also, determine whether the model, in fact, achieves the objectives set for it in phase 1.
f.Deployment Phase – Make use of models in production.might be a simple deployment like generate a report or a complex one like Implement a parallel data mining process in another department.
High-level steps of Predictive Analytics process area
a.Define Business Goal – What business goal to be achieved and how data fits.For example, business goal is more effective offers to new customers and data needed is segmentation of customers with specific attributes.
b.Collect Additional Data – Additional data needed might be user profile data from online system or data from third-party tools to better understand data.This helps to find a reason behind the pattern.Sometimes Marketing surveys are conducted to collect data
c.Draft Predictive Model – Model created with newly collected data and business knowledge.A model can be a simple business rule like “There is a greater chance to get convert the users from age a to b from India if we give offer like this” or a complex mathematical model.
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●Business Value – Data Ming itself adding values to business like
a.Deeply understand customer segments across different dimensions
b.Get performance pattern specific to KPIs (Eg. Is subscription increasing with active users count?)
c.Identify Fraudulent activity attempts and prevent it.
d.System performance patterns (Eg -Page loading time across different devices – any pattern?)
Predictive analytics empowers organization by providing three advantages:
a.Vision – Helps to see what is invisible to others.Predictive analytics can go through a lot of past customer data, associate it with other pieces of data, and assemble all the pieces in the right order.
b.Decision – A well made predictive analytics model provides analytical results free of emotion and bias.It provides consistent and unbiased insights to support decisions.
c.Precision – Helps to use automated tools to do the reporting job for you — saving time and resources, reducing human error, and improving precision.
●Performance measure – Performance of Data Mining process measured on how well the model finding patterns in data.Most of the time it will be a regression, classification or clustering model and there is a well-defined performance measure for all these.
Performance of predictive analytics is measured on business impact.For example – How well the targeted ad campaign worked compared to a general campaign?. No matter how well data mining finding patterns, to work predictive models well, business insight is a must.
●Future – Data Mining field is evolving very fast.Trying to find patterns in data with lesser data points with a minimum number of features with help of more sophisticated models like Deep Neural Networks. Lot of pioneers in this field like Google also trying to make the process simple and accessible to everyone.One example is Cloud AutoML from Google.
Predictive analytics expanding to a wide variety of new areas like Employee Retention prediction, Crime Prediction (aka predictive policing) etc.At same time organizations trying to predict more accurately by collecting maximum information of users like where are they going, what type of videos watching etc.
Comparison Table between Predictive Analytics vs Data Mining
Below are the lists of points, describe the comparisons between Predictive Analytics vs Data Mining:
|Basis of comparison||Data Mining||Predictive Analytics|
|Definition||Data mining is the process of discovering useful patterns and trends in large data sets.||Predictive analytics is the process of extracting information from large datasets in order to make predictions and estimates about future outcomes.|
|Importance||Help to understand collected data better. Eg:
●Better understanding of customer segments
●Purchase pattern across geography or time
●Behaviour analytics through clickstream
●Stock price timeline analysis.
●GPS street data analysis
|Predict on top of data mining result by applying domain knowledge –
●What customer will buy next?
●What will be customer churn rate?
●How many new subscriptions will be started if this offer is given?
●What is an amount of stock of a product needed for the coming month
|Scope||Apply Machine Learning algorithms like Regression, Classification on collected data to find hidden patterns||Apply business knowledge on data mine patterns with any additional data needed to get business valid predictions|
|Outcome||Output of data mining will be a pattern in data in the form of a timeline varying distribution or clusters.But it won’t answer why this pattern occurred?||Predictive analytics trying to find answers to the pattern with applying business knowledge and thus making it ma ore actionable piece of information.|
|People involved||Mostly done by statisticians and Machine Learning engineers, who have a strong mathematical background to do feature engineering and create ML model||Business-specific knowledge and a clear business objective are must here.Business analysts and other domain experts can analyze and interpret the patterns discovered by the machines, making useful meaning out of the data patterns and deriving actionable insights|
Conclusion -Predictive Analytics vs Data Mining
As Rick Whiting said in InformationWeek What’s next is what’s next.Predictive analytics is where business intelligence is going.Data Mining helps organizations in any way and one of the most important in that is created a good foundation for Predictive Analytics
This has been a guide to Difference between Predictive Analytics and Data Mining, their Meaning, Head to Head Comparison, Key Differences, Comparison Table, and Conclusion. You may also look at the following articles to learn more –