The term ‘data mining’ refers to automated data analysis of large amount of data stored in a data warehouse. This is similar to extracting valuable metals from mountains of mined ore. The purpose is to unearth – with the help of modern computing power – meaningful patterns of information that might be missed or remain undiscovered.
Data mining creates customer database, which is extremely important for all narrowly defined target-marketing efforts. Data mining also leads to build database on resellers, distribution channels, media, etc. Data warehousing refers to storing subject-based, integrated, nonvolatile, time variant data in support of managerial decisions.
It can be viewed as a central collection of clean, consistent, and summarised information gathered from several operational systems. With increasing computing capabilities, organisations are collecting large amounts of a variety of information or data possibly faster than they can use, and for this reason all the collected data or information needs to be sorted, classified and warehoused, so that it can be retrieved when needed in a meaningful manner.