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Application vendors to dig into data mining

The fragmented data mining market should see some growth in the coming years, thanks in part to application and database software vendors.

Much the way the business intelligence (BI) market has shifted its focus from the IT community to the broader line of business user, expect data mining to do the same.

Data mining technology, tools that cull through large sets of data to provide insight and optimize business processes, is a fragmented market, said Kurt Schlegel, senior research analyst at Stamford, Conn.-based Meta Group Inc.

Over the next few years, data mining technology should significantly grow, thanks to business application and database software vendors like Siebel Systems Inc., Oracle Corp. and Microsoft, Schlegel said.

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 Those companies are already partnering with data mining specialists, he added. For example, San Mateo, Calif.'s Siebel has partnered with Angoss Software Corp., of Toronto, to provide predictive analytics for Siebel eBusiness users. Database software vendors are getting into the game as well, such as Oracle with its Oracle Data Miner and IBM with its DB2 Intelligent Miner.

In fact, when it comes to market leadership in data mining, Cary, N.C.'s SAS Institute is clearly No. 1, followed by Chicago's SPSS Inc., then the major database companies, Schlegel said.

As the technology evolves, it will move toward serving the larger mass audience of less technical business users.

"Embedding data mining algorithms directly into business applications is a perfect conduit to reach them," Schlegel said.

For example, contact center agents can access a scorecard on the likelihood a customer will leave the company or whether an upsell offer will be successful. When that can be accessed through the same graphical interface the agent is used to – the Siebel Call Center, for example -- the tool will become more valuable.

Currently, CRM and security and fraud detection are driving the adoption of data mining, Schlegel said. As vendors create a closed loop between their data warehouses and their enterprise business processes, this will extend to areas like finance and the supply chain.

"BI is a very hot market right now," Schlegel said. "People are spending money on dashboards, OLAP [Online Analytical Processing] and ad hoc query. If data mining gets hot and we see a broader investment, you're going to see further development. The downside is there are so many vendors, it dilutes the overall market growth."

Meta expects the data mining market to expand 10% annually over the next few years.

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