UA Builds Strong Data-mining Rep

Retailers were perplexed.r

Across the United States, customers were buying beer and diapers together.r

It just didn’t make sense — until number crunchers did some serious data mining.r

“What we find is that when guys run into a store to buy diapers — when their wives send them to the store — they also pick up a six pack of beer,” said Bill Hardgrave, executive director of the Information Technology Research Center in the University of Arkansas’ Sam M. Walton College of Business. “If we’re a store that sells beer, we might put a beer display at the end of the diaper aisle …r

“We do that type of stuff, but I can’t take credit for [discovering] the beer and diapers [connection]. But if we torture the data long enough, it will confess to something.”r

Since 1998, the Walton College has become one of the best schools in the nation at torturing data and getting useful information from it. The catch phrases for this data analysis are “business intelligence,” “data mining” and “data warehousing.” In the shadow of Wal-Mart Stores Inc., the “data warehouse” has become the “data mart.”r

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Drowning in Datar

Collecting data is one thing. Deciphering it is another.r

For years, companies have been very good at gathering information. But gathering data is only the beginning.r

“Companies are drowning in data,” said Hardgrave, who also holds the UA’s Edwin and Karlee Bradberry Chair in Information Systems. “Wal-Mart is not alone in that. All companies are drowning in data.”r

Hardgrave is talking about the kind of data that, if analyzed, would tell a retailer why customers in certain areas prefer particular products (such as powdered laundry detergent in the South) or that a telephone company should target rural customers, even though they have a lower income, because fewer competitors are scouring the backwoods.r

By combining data from several different sources, data mining can tell a trucking company, for example, that routing trucks 100 miles out of the way on a cross-country trip might save the company thousands of dollars a year if gas is 2 cents per gallon cheaper along that route.r

“It’s not just that one single data point,” Hardgrave said. “Sometimes data can be deceiving if you look at only that one single thing. Business intelligence is designed to tell you why, and that’s the toughest part … When you look at it on the surface, it doesn’t really mean anything. But when we drill beneath the surface, we can understand it better and manipulate it. Mining data for richness and intelligence is what we’re going for now.”r

“There’s a problem with information overload that takes place,” said Fred Davis, professor and chairman of the UA’s Information Systems Department, which began in the mid-1970s as the Department of Data Processing and Quantitative Analysis. “We’re able to do research on data mining, business intelligence and decision support that would eventually enable us to secure funding from federal grants to support the programs.”r

Davis also holds the David Glass Chair in Information Systems. Glass, the former CEO of Wal-Mart, told Davis that Wal-Mart is basically a simple company.r

“We buy things, and we sell things,” Davis recalls Glass saying in 1998. “We’re probably the best in the business at capturing data and learning from it, but we’re not as good as we’d like to be.”r

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Wal-Mart Connectionr

The proximity of the UA’s main campus in Fayetteville to the headquarters of Wal-Mart in Bentonville 25 miles to the north helped spawn a close alliance in 1998. That year, the Walton Family Charitable Support Foundation gave $50 million to the business college, which was subsequently renamed for Sam Walton, the late founder of Wal-Mart.r

A year later, $4 million of that $50 million was used to start the Information Technology Research Center. The Walton money also beefed up the Information Systems Department, which graduates about 100 students a year (not including those receiving master’s degrees and doctorates). The theory is, those students should be able to hit the ground mining at that first job at a large company without requiring much on-the-job training in high-tech data analysis.r

IS students in the Walton College work with computer mainframes that have data sets with more than 1 billion records, Hardgrave said. That’s comparable to what many large companies have.r

“They ask the companies what kind of technologies they use and use the same ones,” Dan Huddleston said of the UA. Huddleston, a native of Jessieville, graduated from the Walton College in May and is now a program analyst at Dillard’s Inc. in Little Rock. He said Dillard’s uses the same IBM DB2 software that he used as a student at the UA.r

“They’re counting on us to create a level of expectation in the student that meets their requirements,” Davis said, referring in particular to Wal-Mart, which partnered with IBM to donate a computer mainframe to the Walton College. “They’re on the cutting edge of technology … All of these things are intended for us to be able to train our students and create value right out of the chute.”r

“A lot of the time, we are seeing the problem [through data mining] before it appears,” Hardgrave said. “Ideally, that’s what we want to do.”r

Davis was hired away from the University of Maryland with money from the Walton donation.r

Since 1998, the UA has quietly been becoming one of the top schools in the nation in the field of information systems and data mining. The IS department was ranked No. 30 this year by Indiana University’s “Academy of Management,” but Davis said it will be in the top 20 by 2010 if not considerably earlier.r

The ITRC mines data for a wide variety of partners including Wal-Mart, Tyson Foods Inc., J.B. Hunt Transport Services Inc., Acxiom Corp., Alltel Corp., Arvest Bank Group Inc., ConocoPhillips Co. and Dell Inc.r

UA students helped Wal-Mart set up its Retail Link software, which provides information to the company’s vendors.r

“The word is getting out,” Davis said. “In this case, it’s taking a while I think because they don’t expect it from Arkansas.”r

“Since 1999, the changes have been unbelievable,” Hardgrave said. “The trajectory is so steep that we’re going up right now.”r

The IS department and ITRC concentrate on not only analysis of the partnering company’s data, but also the data of its competitors, Davis said.r

The Walton College is also examining “information visualization,” a graphical way of presenting information that is easily understood by human beings but not always possible for computers.r

The information gathered by researchers at the UA isn’t only used by the university and contributing partners.r

“We publish that in journals,” Davis said. “It doesn’t just go to our students. It goes to the whole world … It enables the entire economy to function more efficiently in a way that helps everyone.”r

Davis mentioned that the UA has also done pro bono data mining. One example is work the school did to help a battered women’s shelter find funding. r

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