CHAPTER 1

1.1 THE SYSTEM CONCEPT

System analysis and design emphasizes a close look at all parts of a system. Here, a system is a way
of thinking about organizations and their problems. It also involves a set of techniques that helps in
solving problems. The term ‘system’ is derived from the Greek word ‘systema’, which means an
organized relationship among functioning units or components. A system is a orderly grouping of
interdependent components linked together according to a plan to achieve specific objectives.

System concept has three basic implications:

1. A system must be designed to achieve a predetermined objective.
2. Interrelationship and interdependence must exist among the components.
3. The objectives of the organization as a whole have a higher priority than the objectives of its
subsystems.

1.2 CHARACTERISTICS OF A SYSTEM

There are some characteristics that are common in all systems:

a. Organization: Organization implies structure and order. It is the arrangement of the

components that helps to achieve objectives.
b. Interaction: Interaction refers to the manner in which each component functions with
other components of the system.
c. Interdependence: Interdependence means that parts of the organization or computer
system depend on one another. They are coordinated and linked together according to a
plan.
d. Integration: Integration refers to the holism of systems. It is concerned with how a system
is tied together.
e. Central Objective: The last characteristic of a system is its central objective. Objectives
may be real or stated. Although a stated objective may be the real objective, it is not
uncommon for an organization to state one objective and operate to achieve another.

1.3 ELEMENTS OF A SYSTEM

To reconstruct a system, the following key elements must be considered:

a. Outputs and Inputs: A major objective of a system is to produce an output that has value to
its user. Inputs are the elements that enter the system for processing. Output is the outcome
of processing. Whatever the nature of the output is, it must be in line with the expectation of
the intended user.
b. Processor(s): The processor is the element of a system that involves the actual
transformation of input into output. It is the operational component of a system. Processors
may modify the input totally or partially, depending on the specifications of the output.

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 c. Control: The control element guides the system. It is the decision making subsystem that
controls the pattern of activities governing input, processing and output.
d. Feedback: Control in a dynamic system is achieved by feedback. Feedback measures output
against a standard in some form of cybernetic procedures that includes communication and
control. Feedback may be positive or negative, routine or informational.
e. Environment: The environment is the “suprasystem” within which an organization
operates. It is the source of external elements that impinge on the system. It often
determines how a system must function.
f. Boundaries and Interface: A system should be defined by its boundaries- the limits that
identify its components, processes and interrelationships with another system.

1.4 TYPES OF SYSTEMS

Systems have been classified in different ways. Common classifications are:

1. Physical or Abstract Systems
2. Open or Closed Systems
3. Man-made Information Systems

1.4.1 PHYSICAL OR ABSTRACT SYSTEMS

Physical systems are tangible entities that may be static or dynamic in operation. For example, the
physical parts of the computer center are the offices, desks and chairs that facilitate operation of
the computer. They can be seen and counted; they are static. Again, a programmed computer is a
dynamic system.
Abstract systems are conceptual or nonphysical entities. They may be straight forward as formulas
of relationship among sets of variables or models- the abstract conceptualization of the physical
situation.

System Models:
Various system models are used to show the benefits of abstracting complex systems to model
form. The major models discussed here are as followed:

a. Schematic Models: A schematic model is a “two dimensional” chart depicting system

elements and their linkages.
b. Flow System Models: A flow system model shows the flow of the material, energy and
information that hold the system together. There is an orderly flow of logic in such models.
c. Static System Models: This type of model exhibits one pair of relationships such as
activity-time or cost-quantity.
d. Dynamic System Models: Business organizations are dynamic systems. A dynamic model
approximates the type of organization or applications that analysis deal with. It depicts an
ongoing, constantly changing system. It consists of 1) Inputs that enter the system, 2) the
processor through which transformation takes place, 3) the programs required for
processing and 4) the outputs result from processing.

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1.4.2 OPEN OR CLOSED SYSTEMS

An open system has many interfaces with the environment. It permits interactions across its
boundary; it receives input from and delivers output to the outside. For Example, an information
system falls into this category.
A closed system is isolated from environmental influences. In reality, a completely closed system is
rare.

Characteristics of open systems:

Five important characteristics of open systems can be identified as followed:
a. Input from Outside: Open systems are self-adjusting and self-regulating. When functioning
properly, an open system reaches a steady state or equilibrium.
b. Entropy: All dynamic systems tend to run down over time, resulting in entropy or loss of
energy. Open systems resist entropy by seeking new inputs or modifying the process to
return to a steady state.
c. Process, Output, and Cycles: Open systems produce useful output and operate in cycles,
following a continuous flow path.
d. Differentiation: Open systems have a tendency toward an increasing specialization of
functions and a greater differentiation of their components.
e. Equifinality: The term implies that goals are achieved through differing courses of action
and a variety of paths.

1.4.3 MAN MADE INFORMATION SYSTEM

An information system may be defined as a set of devices, procedures, and operating systems
designed around user-based criteria to produce information and communicate it to the user for
planning, control and performance. The major information systems are formal, informal and
computer based.

1.4.3.1 FORMAL INFORMATION SYSTEM

A formal information system is based on the organization represented by the organization chart.
The chart is a map of positions and their authority relationships, indicated by boxes and connected
by straight lines. It is concerned with the pattern of authority, communication and work flow.

Categories of Information: There are three categories of information related to managerial levels
and the decisions managers make. They are:
1. Strategic: It relates to long range planning policies that are of direct interest to upper
management. This type of information is achieved with the aid of decision support system
(DSS).
2. Managerial: It is of direct use to middle management and department heads for
implementation and control. It is maintained with the aid of Management Information
System (MIS).

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 3. Operational: The final level of information is operational information. It is short termed
daily information used to operate departments and enforce the day-to-day rules and
regulations of the business.

Figure-1: Management and information levels in a typical organization

1.4.3.1 INFORMAL INFORMATION SYSTEM

It is an employee based system designed to meet personnel and vocational needs and to help solve
work related problems. It is a useful system because it works within the framework of the business
and its stated policies.

1.4.3.2 COMPUTER BASED INFORMATION SYSTEM

A third class of information system relies on the computer for handling business applications. The
computer is now a required source of information. Different types of computer based information
systems are described below:

Management Information System (MIS): MIS is a person machine system and a highly integrated
grouping of information functions designed to provide management with a comprehensive picture
of specific operations. It is actually a combination of information systems. But Management
information systems are distinct from regular information systems in that they are used to analyze
other information systems applied in operational activities in the organization.
A key element of MIS is the database- a non-redundant collection of interrelated data items that can
be processed through application programs and available to many users. This information must be
accessed through a database management system (DBMS). There are several advantages of a data
base system:

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 1. Processing time and number of programs written are substantially reduced.
2. All applications share centralized files.
3. Storage space duplication is eliminated.
4. Data are stored once in the data base and are easily accessible when needed.

The two primary drawbacks of data base are the cost of specialized personnel and the need to
protect sensitive data from unauthorized access.

Decision Support System: A decision support system (DSS) is a computer-based information

system that supports business or organizational decision-making activities. DSSs serve the
management, operations, and planning levels of an organization and help to make decisions, which
may be rapidly changing and not easily specified in advance.

DSSs include knowledge-based systems. A properly designed DSS is an interactive software-based

system intended to help decision makers compile useful information from a combination of raw
data, documents, personal knowledge, or business models to identify and solve problems and make
decisions.

Typical information that a decision support application might gather and present are:
1. Inventories of information assets,
2. Comparative sales figures between one period and the next,
3. Projected revenue figures based on product sales assumptions.

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