Data Minings Dead; Long Live Analytics

Whatever happened to data mining? Three years ago, it was the hottest thing since VisiCalc.

Whatever happened to data mining? Three years ago, it was the hottest thing since VisiCalc. IBM posted TV ads showing how companies could target their customers with pinpoint accuracy by knowing what type of fruit they ate. Statistics companies rebranded themselves as data mining companies, and new ones sprang forth, all claiming to be the best in the mining business.

Then they faded away.

Theyre not all gone, of course. Technology rarely disappears; it just resurfaces with a new name. Data mining is now called real-time analytics, and its the hottest thing since Lotus 1-2-3.

One reason data mining as a term failed was because data mining products didnt work. Sure, the technology theoretically allowed companies to dig through historical data. But it never lived up to its promise. Companies never could accurately profile their customers based on the fact that they purchased bananas, for example.

Data mining technologies did not focus at the customer level. In other words, they didnt work with CRM systems and, thus, they didnt help all that much. Thats despite several hundred white papers saying that they could.

Real-time analytics, however, is far more focused. In fact, having analytics in CRM packages is helping those vendors win customers. Siebel, for example, is teaming with DataDistilleries to curtail an onslaught from E.piphany, which was the first mainstream package to integrate analytics.

Meanwhile, SAS and SPSS—two stat companies that are as old as the hills—are now full-fledged analytics companies. (Well, SPSS is still transitioning from data mining, but it just bought the analytics firm NetGenesis.) Theyre partnering with CRM companies left and right.

The reasons are clear: Companies arent buying anything nowadays unless the vendor can prove ROI, can reduce the churn rate of its customers and can show an ability to bring in new customers. CRM cant do these things well without analytics.

So although data mining appears to be dead, its merely been reincarnated as analytics, and its the hottest thing since Microsoft Excel.

Analyze this: Why did data mining disappear? Write to me at [email protected]