Unformatted text preview: eal-world problems in science
and in business.
In science, one of the primary application 38 AI MAGAZINE areas is astronomy. Here, a notable success
was achieved by SKICAT, a system used by astronomers to perform image analysis,
classiﬁcation, and cataloging of sky objects
from sky-survey images (Fayyad, Djorgovski,
and Weir 1996). In its ﬁrst application, the
system was used to process the 3 terabytes
(1012 bytes) of image data resulting from the
Second Palomar Observatory Sky Survey,
where it is estimated that on the order of 109
sky objects are detectable. SKICAT can outperform humans and traditional computational
techniques in classifying faint sky objects. See
Fayyad, Haussler, and Stolorz (1996) for a survey of scientiﬁc applications.
In business, main KDD application areas
includes marketing, ﬁnance (especially investment), fraud detection, manufacturing,
telecommunications, and Internet agents.
Marketing: In marketing, the primary application is database marketing systems,
which analyze customer databases to identify
different customer groups and forecast their
behavior. Business Week (Berry 1994) estimated that over half of all retailers are using or
planning to use database marketing, and
those who do use it have good results; for example, American Express reports a 10- to 15percent increase in credit-card use. Another
notable marketing application is market-basket analysis (Agrawal et al. 1996) systems,
which ﬁnd patterns such as, “If customer
bought X, he/she is also likely to buy Y and
Z.” Such patterns are valuable to retailers.
Investment: Numerous companies use data mining for investment, but most do not
describe their systems. One exception is LBS
Capital Management. Its system uses expert
systems, neural nets, and genetic algorithms
to manage portfolios totaling $600 million;
since its start in 1993, the system has outperformed the broad stock market (Hall, Mani,
and Barr 1996).
Fraud detection: HNC Falcon and Nestor
PRISM systems are used for monitoring creditcard fraud, watching over millions of accounts. The FAIS system (Senator et al. 1995),
from the U.S. Treasury Financial Crimes Enforcement Network, is used to identify ﬁnancial transactions that might indicate moneylaundering activity.
Manufacturing: T he C ASSIOPEE troubleshooting system, developed as part of a
joint venture between General Electric and
SNECMA, was applied by three major European airlines to diagnose and predict problems for the Boeing 737. To derive families of
faults, clustering methods are used. CASSIOPEE
received the European ﬁrst prize for innova- Articles tive applications (Manago and Auriol 1996).
Telecommunications: The telecommunications alarm-sequence analyzer (TASA) was
built in cooperation with a manufacturer of
telecommunications equipment and three
telephone networks (Mannila, Toivonen, and
Verkamo 1995). The system uses a novel
framework for locating frequently occurring
alarm episodes from the alarm stream and
presenting them as rules. Large sets of discovered rules can be explored with ﬂexi...
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- Spring '14