Delving Further into the Data Mine

Trying to lessen the workload and cost of data mining can be a tricky matter. One of the few ways companies can do this is through the use of an application service provider (ASP).

Recently, ASPs such as digiMine Inc. ( have begun offering services that let organizations outsource their data mining needs.

“We realized there was a problem in the market place,” says Nick Besbeas, executive vice president of sales and marketing at digiMine. “The idea is to make it  easy to deploy and inexpensive. Where data management is today, the right way to solve the problem is to make it a service. It’s veneficial to be able to get reports and mining.”

Other ASPs such as WhiteCross Systems Ltd. ( have been doing this work longer than digiMine – the company is only 6 months old – but the new-comer says it is taking a different angle on traditional data mining by offering more specific and in-depth services.

DigiMine pulls enterprise data – such as Web logs, SQL Server transactions data, and user profiles – over the wire at night and then uses SQL Server 2000’s data mining and OLAP services to analyze it and prepare reports for its customers by the next morning.

“We are able to define multiple data sources, campaign data, and set up a batch process,” says Bassel Ojjeh, COO at digiMine. “We are focusing on data mining and warehousing as a service. It’s a hosting service as opposed to a packaged product. It’s because we take advantage of the hosting model that we can offer such quick deployment and new features every three weeks,” Ojjeh says.

Normally mining your own company’s data could take weeks or months before any benefits are seen. DigiMine promises that it can offer results in days.

“We set up a data warehouse, then we have a slurper that pulls data into the warehouse. The typical install is about 24 to 72 hours. Up until now that was unheard of,” Ojjeh says.

DigiMine is also promising to odder these services for a fraction of internal data mining costs. “The range is from $5,000 to $15,000 per month. We’ve come up with a basic cost, and the customer will see an ROI within a few weeks,” Besbeas says.

Since data mining is so complex and difficult, the company is also excited about the service’s ease of use.

“A lot of other hosting environments need to get IT involved. We collect data and fles that are collected on the Web from doing regular transactions,” Besbeas says.

While speedy deployment, low cost, and ease-of-use are key angles, digiMine’s big focus is on Web traffic analysis, says Dan Vesset, senior research analyst at IDC ( “DigiMine is really concentrating on analyzing Web data and click stream data.”

Another element that makes digiMine unique is its staff: Its three founders are former, long-time employees of Microsoft Corp. ( DigiMine hopes this pedigree will give them an edge in the market.

While many companies may consider outsourcing their data mining needs, the issue of security is one that weighs heavy with managers and may impede such a decision. But digiMine goes to great lengths to address this concern.

“We offer encryption and privacy. Each company’s data warehouse is separate. Each has its own database. As far as processes, we are using NT security, Active Directory, and Internet security with SQL and Windows 2000,” Ojjeh says. “We audit our back up processes on a regular basis. The goal with all this is that we go in and customers feel secure with our processes,”

As one of the participants in Microsoft’s Rapid Deployment Program, digiMine has been using SQL Server 2000 since it came out in beta, which has been several months now.

Despite digiMine’s promise of tight security and encrypted data transfer, some companies still take issue with letting go of confidential data.

“Security is one of the bigger issues,” IDC’s Vesset says. “Some customers are going to have a philosophical problem with relinquishing their data. For those who are willing to outsource, I don’t think security issues will stop them. But there are others who will say no regardless of what features they offer in terms of security.”

Although outsourcing data mining needs to an ASP seems like a winning solution, this market is still premature in its development. This may leave some wondering whether digiMine is putting all of its eggs in one basket.

Vesset think not. “The market for Web traffic analysis is going to grow pretty rapidly in the next two years. E-commerce is growing and companies need to know what is going on with their Web sites,” he says.

The data mining market is also growing, Vesset says. In a recent report, IDC determined that the traditional data mining market was at $343 million 1999. “We’re forecasting a 32 percent compound average growth rate through 2004,” Vesset says. “However, this is not just for data mining of Web data, but for data mining overall.”

So, what does this growth mean for the ASP data mining space?

“I think there’s some evidence that people are willing to outsource. It’s still very early to say whether it will be successful or not. ASP for business intelligence is still in very early stages, and there’s little evidence to indicate it will be successful. The idea is good, but data mining and data warehousing is complicated,” Vesset says. “The attraction is for companies that don’t want to do data mining internally, plus there’s the upfront lower cost, although I am not sure about the long-term costs. It’s just too soon to tell.”

By: Alicia Costanza

Source: DM Review


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