Chapter 1: System: an overview

The world is said to be a complex system comprising of various sub systems. All these
subsystems make up the whole system and for the whole system to work effectively, each and
every sub system should give its best and do the job assigned to it well. If one single system
within the sub system fails, then the whole system fails. So every subsystem is equally important
contributor towards effective functioning of the whole system.
Systems are all around us. For example: we experience physical sensations by means of a
complex nervous system., a set of parts, including our brain, spinal cord, nerves, and special
sensitive cells under our skin that work together to make us feel hot, cold, itchy, and so on. We
communicate by means of language, a highly developed system of words and symbols that
conveys meanings to us and to [Link] following are some of the examples in which systems
play an important role in our life.
 Solar system
 National transport system
 Computer system
 Ecological system
 Biological system etc.
There are various ways by which system can be defined. In a very broad sense, a system is
simply a set of components that interact to accomplish some purpose. Put it another way,a
system can be defined as a collective entity consisting of a group of elements that are
interrelated, interdependent and interacting.
The above definition considers a system as a collection of different sub systems. By this
definition, Ethiopian Government can be considered as a system. This system consists of
subsystems such as federal government and regional governments etc. Each of the subsystem in
turn is a system and consists of several subsystems. For example, the transport and
communication system, which is a subsystem of the main system (Ethiopian Government), will
have many subsystems such as Railways system, airlines system, road transport system,
Telecommunication system, postal system, and so on.
A system, again, can be defined as a set of procedures that constitute activities logically
grouped together to form one unique intersection within an organization. This definition
stresses on unique function within an organization, such as production, marketing, finance and so

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on. By this definition all activities that can be logically related to marketing would form a part
of the marketing system. Similarly all the activities within an organization that can be logically
related to manufacturing would form a part of manufacturing system.
A system can be defined as any collection of components, which respond to inputs to produce
the desired outputs. This definition, an over simplified method of definition, looks at system as a
process. Just as a process responds to inputs to produce the outputs, a system is considered as a
process that responds to the inputs to produce the output.
System Analysis and Design
System analysis
Systems analysis is detailed study of the various operations performed by a system and their
relationships within and outside of the system. In other words, system analysis is the analysis of
the problem that the organization will try to solve with an information system. It consists of
defining the problem, identifying its causes, specifying the solution, and identifying the
information requirements that must be met by a system solution.
The key to building any large information system is a thorough understanding of the existing
organization and system. Thus, the systems analyst creates a road map of the existing
organization and systems, identifying the primary owners and users of data in the organization.
These stakeholders have a direct interest in the information affected by the new system.
In addition to the above mentioned organizational aspects, the analyst also briefly describes the
existing hardware and software that serve the organization. From this organizational analysis, the
systems analyst details the problems of existing systems. By examining documents, work papers,
and procedures; observing system operations; and interviewing key users of the systems, the
analyst can identify the problem and objectives to be achieved by a solution. Often the solution
requires buildings a new information system, doing nothing or improving an existing one.
In addition to suggesting a solution, systems analysis involves a feasibility study to determine
whether that solution is feasible, or achievable, given the organization’s resources and
constraints. Three major areas of feasibility must be addressed:
Technical Feasibility: Whether the proposed solution can be implemented with the available
hardware, software, and technical resources.
Economic Feasibility: Whether the benefits of the proposed solution outweigh the costs.
Organizational Feasibility: Whether the proposed solution is desirable within the existing

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managerial and organizational framework.
Systems design
The most creative and challenging phase of the system life cycle is system design. The term
design describes a final system and the process by which it is developed. It refers to the technical
specifications (analogous to the engineer’s blueprints) that will be applied in implementing the
candidate system. During systems design, analysts convert the description of the recommended
alternative solution into logical and then physical system specifications. You must design all
aspects of the system from input and output screens to reports, databases, and computer
processes. It also includes the construction of programs and program testing.
Systems design has three objectives. First, the systems designer is responsible for considering
alternative technology configurations for carrying out and developing the system as described by
the analyst. This may involve analyses of the performance ofdifferent pieces of hardware and
software, security capabilities of systems, network alternatives, and the portability or
changeability of systems hardware.
Second, designers are responsible for the management and control of the technical realization of
systems. Detailed programming specifications, coding of data, documentation, designers are
responsible for the actual procurement of the hardware, consultants, and software needed by the
system.
Third, the systems designer details the system specifications that will deliver the functions
identified during systems analysis. These specifications should address all of the managerial,
organizational, and technological components of the system solution.
The design for an information system can be broken down into logical and physical design
specifications. Logical design lays out the components of the system and their relationship to
each other, as they would appear to users. It showed what the system solution would do as
opposed to how it is actually implemented physically. It describes inputs and outputs, processing
functions to be performed, business procedures, data models, and controls. (Controls specify
standards for acceptable performance and methods for measuring actual performance in relation
to these standards).
Physical design is the process of translating the abstract logical model into the specific technical
design for the new system. It produces the actual specifications for hardware, software, physical
databases, input/output media, manual procedures, and specific controls. Physical design

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provides the remaining specifications that transform the abstract logical design plan into a
functions system of people and machines.
1.1. System and its Components
A system is a collection of components, which are related to each other and they interact to
accomplish some purpose. Common features of any system can be:
 A set of components
 A goal/objective
 Presence of interaction
Components of a system

Boundary
System boundary is the line that marks the inside and outside of a system and that sets off the
system from its environment. A system should be defined by its boundaries –the limits that
identify its components, processes and interrelationships when it interfaces with another system.
For example, a teller system in a commercial bank is restricted to deposits, withdrawals and
related activities of customer’s checking and saving accounts.
Environment
Is the outside world in which the system exists. It is the source of external elements that impinge
on the system. In fact, it often determines how a system must function. For example,
organization’s environment consisting of vendors, competitors and others may provide
constraints and consequently influence the actual performance of the system
Interface

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Systems in real life do not operate in isolation. Interface is a Point of contact where a system
meets its environment or where subsystems meet each other. One system has interface with one
or more systems that are in their active phase of life cycle. Output of one system is used as an
input by other systems: These interfaces are often expresses in form of information interchange
by way of inputs and outputs. In case of management information systems, it is possible to
identify such interfaces by person, activity, function, department or another system with which
the management information system has interface by way of input, output or both input and
output.
Input
Refers to anything to be captured by the system from its environment. Inputs are the elements
(material, human resources, information) that enter the system for processing.
Outputs
Anything produced and sent into its environment. Outputs are the outcome of the processing.
Feedback
The outputs would be used as a CONTROL element to balance between the actual and standard
performances defined within a system. Feedback may be positive or negative, routine or
informational. Positive feedback reinforces the performance of the system. It is routine in nature.
Negative feedback generally provides the controller with information for action.
1.2. System Concepts
A system can be classified in to three categories, namely:
 Physical or Abstract Systems
 Open and Closed Systems, and
 Deterministic and Probabilistic 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. In contrast, a programmed
computer is a dynamic system. Data, programs, output and applications change as the user’s
demands or the priority of the information requested changes.
Abstract Systems are conceptual or non-physical entities. They may be as straightforward as
formulas of relationship among sets of variables or models-the abstract conceptualization of
physical situations. A model is a representation of a real or a planned system.

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The systems that have interfaces with the environment are considered as open systems. These
systems are either open to inputs from the environment or are open to provide output to the
environment. In real life systems, many have multiple interfaces with the environment. Since,
these systems are interacting with the environment in which they operate; they are called as open
systems.
The systems that do not have any interaction with the outside world are called closed systems. Closed
systems have no interaction with the environment in which they operate. It is very easy to find examples
of open systems. Information systems in general are open systems. They receive input from the
environment and they generate outputs that are given to entities outside the scope of the system that is to
the environment in which they operate. It is, however, difficult to find examples of closed systems. Some
scientific research systems are known to operate without any interaction with the environment in which
they operate. But when we say that there exists a one-man show then you can assume that there exists a
closed system.

Systems can also be classified into deterministic and probabilistic systems based on the
predictability of the results. The systems whose results can be predictedare called as
deterministic system. The systems whose resultscannot be predicted are called as probabilistic
systems.
The solar system is a simple example of deterministic system. The movement of planets can be
predicted to high degree of precision as the planets movement is taking place as per specific
predetermined rules. The solar system is based on specific rules and therefore the outcome can
be predicted. Similarly, computer systems contain programs. Programs contain certain set of
instructions that are followed during its execution. Programs are performing specific operations
in accordance with predetermined set of rules and conditions embedded in the [Link]
computer systems become deterministic systems.
On the other hand, there are systems whose results cannot be predicted with precision. The
results of these systems can be predicted with certain degree of probability. These systems are
probabilistic systems. Sales forecasting system is an example of probabilistic system. One cannot
say with high degree of confidence that the result of the system would match exactly with real
world situation. One can only predict with certain degree of probability. Sales Forecasting,
Budgetary Planning, Revenue projections etc. are some of the examples of probabilistic systems.
Natural Systems

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There are a lot of systems that are not made by people: they exist in nature and, by and large, serve their
own purpose. It is convenient to divide natural systems into two basic subcategories: physical systems
and living systems.

Physical systems include such diverse example as:

Stellar systems: galaxies, solar systems, and so on.
Geological systems: rivers, mountain ranges, and so on.
Molecular systems: complex organizations of atoms.
Man-Made Systems

Man-made systems include such things as:

1. Social systems: organizations of laws, doctrines, customs, and so on.

2. An organized, disciplined collection of ideas.
3. Transportation systems: networks of highways, canals, airlines and so on.
4. Communication systems: telephone, telex, and so on.
5. Manufacturing systems: factories, assembly lines, and so on.
6. Financial systems: accounting, inventory, general ledger and so on.

Automated systems

Automated systems are the man-made systems that interact with or are controlled by one
or more computers. We can distinguish many different kinds of automated systems, but
they all tend to have common components:

1. Computer hardware (CPUs, disks, terminals, and so on).

2. Computer software: system programs such as operating systems, database systems, and
so on.
3. People: those who operate the system, those who provide its inputs and consume its
outputs, and those who provide manual processing activities in a system.
4. Data: the information that the system remembers over a period of time.
5. Procedures: formal policies and instructions for operating the system.
One way of categorizing automated systems is by application. However, this turns out not to be terribly
useful, for the techniques that we will discuss for analyzing, modeling,
designing, and implementing automated systems are generally the same regardless of the
application. A more useful categorization of automated systems is as follows:

1. Batch system: A batch system is one which in it, the information is usually retrieved on a sequential
basis, which means that the computer system read through all the records in its database, processing and
updating those records for which there is some activity.

2. On-line systems: An on-line system is one which accepts input directly from the area where it is
created. It is also a system in which the outputs, or results of computation, are returned directly to where
they are required.

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3. Real-time systems: A real-time system may be defined as one which controls an environment by
receiving data, processing them, and returning the results sufficiently quickly to affect the environment at
that time.

4. Decision-support systems: These computer systems do not make decisions on their own, but instead
help managers and other professional “knowledge workers” in an organization make intelligent, informed
decisions about various aspects of the operation. Typically, the decision-support systems are passive in
the sense that they do not operate on a regular basis: instead, they are used on an ad hoc basis, whenever
needed.

5. Knowledge-based systems: The goal of computer scientists working in the field of artificial intelligence
is to produce programs that imitate human performance in a wide variety of

“Intelligent” tasks. For some expert systems, that goal is close to being attained. For others, although we
do not yet know how to construct programs that perform well on their own, we can begin to build
programs that significantly assist people in their performance of a task.

1.3 Fundamentals of Information Systems

An organization can gather and keep all the data on its customers that a hard drive can hold. You
can get all the output reports that one desk can physically hold. You can have the fastest Internet
connection created to date. But if the organization doesn’t take advantage of customer data to
create new opportunities, then all it has is useless information.
• Information system is defined as “a set of people, procedure, and resources that collects,
transforms and disseminates information in an organization.
Most of us think only of hardware and software when we think of an Information System. There
is another component of the triangle that should be considered, and that’s the people side, or
“persware.” An information system differs from other kinds of systems in that its objective is to
monitor/document the operations of some other system, which we can call a target system.
There are three categories of information related to managerial levels and the decision that
managers make.
 Strategic information: is related to long range policy planning that is a direct interest of
top level management. Activities in this area include population growth forecast, HR
changes, trends in financial investments, allocating resources, etc. top level managers are
responsible to determine and develop policy and long term goals by the aid of EIS and
DSS.
 Managerial information: is directly used by middle level management and department

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 heads for implementation and control such as sales analysis, budget analysis, annual
financial statement, cash flow projection, etc. it is maintained by the help of MIS.
 Operational information: is very short term, daily information used to operate
departments and enforce the day to day rules and regulations of the business. It includes
employee attendance sheet, payroll preparation, etc with the help of TPS.
1.3. Types of Information System Overviews (DSS, MIS, ES TPS)
Different types of information systems have been developed to meet a variety of business needs.
These systems are collectively known as computer based information systems. As we have
different types of transportation systems such as railway systems, highway systems and, airline
systems, computer based information systems are also of many types. They are classified as:
 Transaction Processing Systems (TPS)
 Management Information Systems (MIS)
 Decision Support Systems(DSS)
 Expert system (ES)
1. Transaction Processing Systems (Data Processing)
It is an information system that is used to:

 convert raw data from transactions into a machine readable form,

 store the transaction details, process the transactions and if needed,
 Print out the details of the transaction.
Classification of TPS

• Batch processing: Accumulating transaction data over a period of time & processing the data
periodically. Example. The preparation of payroll
• Online processing: can be:
 Transactional processing: data is processed immediately after a transaction occurs.
Example: printing a receipt
 Real time processing: a control or feedback system is used in processes like
regulating the temperature. Example, the connection of a thermometer to
computerized ventilation and heating system of a house.
2. Management Information Systems (MIS)
• MIS is a federation of subsystems developed & implemented to provide information

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 for managerial planning, controlling and decision making.
• Subsystems of MIS are defined based on the organizational functions, to which the
information system gives support and, the managerial activities for which the
information systems are used.
2.1. Marketing information Subsystem
• Provides information to solve marketing problems related to the four “P”s: Pricing,
Product, Promotion and Placement (Distribution).
Sources of information
• Internal sources: the accounting information system and the production information
system (transaction processing system).
• External: data about customers, competitors, competitor products and sales force
requirements.
2.2. Production (Manufacturing) Information System
• dual purposes of computers in manufacturing;
– To transform physical inputs into finished products; Example: CAM
(Computer Aided Manufacturing) assist in assembling parts.
– To prepare production schedules; to control inventory, to prepare performance
reports to fill job orders, etc.
• Produces information about production, inventory, quality and cost status of the
production process.
Example: Inventory Control Systems, Production Scheduling Systems
Sources of Information
• Internal sources are production orders, work orders (based on sales orders &
inventory requirements), assembly orders, etc.
 cost of material and labor from AIS
 The Marketing IS on demands, customer tastes and preferences
• External sources: data and information on suppliers.
2.3. Human Resource Management Information Systems
• Provides information on labor, personal data for recruitment and selection, job
placement, performance appraisal, employee benefit analysis, training and
development; and health safety and security of employees.

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Sources of Information
• Employment agencies, colleges, and executive search firms that channel personnel to
the firm.
• The government, which passes legislation supporting and administering Equal
Employment Opportunity (EEO), Affirmative action program (AAP), and
occupational safety and health Administration (OSHA) programs.
3. Decision Support Systems (DSS)
• Is an “interactive computer based information system that uses decision models and
specialized databases to assist the decision making processes of managerial end user”.
Elements of DSS
• The database to provide data used in the models,
• The model base: comprises different managerial mathematical models developed by
management science that are used to analyze data,
• The user interface handles the interaction between the computer system and the
user.
DSS applied in different sectors such as:-
• Banks to assess customer profile
• Insurances to examine customer buying and fraud detection
• Corporations for investment evaluation etc
Specific DSS and GDSS software tools include the following:-
• Electronic questionnaires
• Electronic brain storming tools
• Ideal organizers
• Tools for voting or setting priorities
• Optimization tools
4. Expert system
 It is knowledge based information system that uses knowledge about a specific
area to act as an expert consultant to users.
 In general “the concept of expert systems is based on the assumption that an
expert’s knowledge can be captured in computer storage and then applied by
others when the need arises. Example: using computers for medication.

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  It is costly to develop the system.
1.6. Information System Resources
• Hardware resources – physical devices and materials used in information
processing. Computers and calculators, sheets of paper, magnetic disks, filing
cabinets and paper trays.
• Software resources – all sets of information processing instructions. Ex. Programs,
which are the sets of operating instruction that direct & control computer hardware;
procedures: the sets of information processing instruction needed by people.
Manuals, Instructions how to fill a certain application form or a material requisition
form.
• People resources – include specialists (people who develop and operate information
systems) (Ex.) system analysts (SA), programmers, computer operators; and end
users; accountants, salespersons, engineers, clerks, customers or managers or all who
use an information system or the product of information system.
• Data Resources – data & information constitute valuable organizational resources.
For example: supplier’s name, the sales transaction (on account/on cash), customer’s
name, total sales, total expenditures, etc., are data resources.
Roles of a system analyst
A system analyst is a person or group of persons that communicate with users and
management. Roles of system analyst are;
 Consultant: SA act as a consultant and address issues within the system.
 Supporting experts: SA applies his/her professional knowledge about
hardware and software as well as their uses for business.
 Agent of change: SA acts as a catalyst of change, identify business needs and
develop business plan for change.

Participants to System Development

In the role of a systems analyst, you will work on systems development projects
with a variety of other people. The cast of characters will change from project to project,
the personalities will differ dramatically, and the number of people that you interact with
will range from as few as one to as many as several dozen. However, the roles are fairly
consistent, and you will see them over and over again.

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In a typical systems development project, there are the following major categories of players:
User
Management
Auditors, quality assurance people, and ‘standards bearers”
Systems analyst
Systems designers
Programmers
Operations personnel

a. Users
The user, the most important player in the systems game, is the person (or group of
people) for whom the system is being built. He or she is the person, whom will be
interviewed, often in great detail, to learn what features the new system must have to be
successful. The user is the “owner” in the sense that he or she receives, or inherits-and
thus owns- the system when it is finally built.
b. Management
The systems analyst is likely to come into contact with several different kinds of managers:
User managers: managers in charge of several people in the operational area where the
new system will be used. These are usually middle-level managers who want systems that
will produce a variety of internal reports and short-term trend analyses.
Executive development project (EDP)/MIS managers: the person in charge of the
systems development project itself, and the higher-level managers who are concerned
with the overall management and allocation of resources of all the technical staff in the
systems development organization.
General management: top-level managers who are not directly involved in the EDP
organization or in the user organization. This might include the president and/ or
chairman of the organization.

The primary interaction between the systems analyst and all these managers has to do
with the resources that will be assigned to the project. It is the systems analyst’s job to
identify and document the user’s requirements and the constraints within which the system
must be built.

c. Auditors
Depending on the size of the project and the nature of the organization you work in, you may or
may not have auditors.
d. Systems analysts
The system analyst is a key member of any systems development project. In a broader sense, the
systems analyst plays several roles

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e. Systems Designers
The systems designer is the person (or group of people) who will receive the output of
the systems analysis work. His or her job is to transform a technology-free statement of user
requirements into a high-level architectural design that will provide the framework within
which the programmer can work. In many case, the systems analyst and the systems
designer are the same person, or member of the same unified group of people. It is important
for the systems analyst and systems designer to stay in close touch throughout the project.
f. Programmers
Particularly on large systems development projects, the systems designers are likely to
be a “buffer” between the systems analysts and the programmers. The systems analysts
deliver their product to the system designers, and the system designers deliver their product
to the programmer. There is another reason why the systems analyst and the programmer
may have little or no contact with each other: work is often performed in a strictly serial
sequence in many systems development projects. Thus, the work of systems analysis takes
place first and is completely finished before the work of programming begins.

g. Operations Personnel
The operations personnel who are responsible for the computer center,
telecommunications network, security of the computer hardware and data, as well as the
actual running of computer programs, mounting of disk packs, and handling of output
from computer printers. All this happens after a new system has not only been analyzed
and designed, but has also been programmed and tested

In the role of a systems analyst, you will work on systems development projects
with a variety of other people. The cast of characters will change from project to project,
the personalities will differ dramatically, and the number of people that you interact with
will range from as few as one to as many as several dozen. However, the roles are fairly
consistent, and you will see them over and over again.
In a typical systems development project, there are the following major categories of players:
User
Management
Auditors, quality assurance people, and ‘standards bearers”
Systems analyst
Systems designers
Programmers
Operations personnel

h. Users
The user, the most important player in the systems game, is the person (or group of
people) for whom the system is being built. He or she is the person, whom will be
interviewed, often in great detail, to learn what features the new system must have to be

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 successful. The user is the “owner” in the sense that he or she receives, or inherits-and
thus owns- the system when it is finally built.
i. Management
Management is a rather loose term. The systems analyst is likely to come into contact with
several different kinds of managers:
User managers: managers in charge of several people in the operational area where the
new system will be used. These are usually middle-level managers who want systems that
will produce a variety of internal reports and short-term trend analyses.
Executive development project (EDP)/MIS managers: the person in charge of the
systems development project itself, and the higher-level managers who are concerned
with the overall management and allocation of resources of all the technical staff in the
systems development organization.
General management: top-level managers who are not directly involved in the EDP
organization or in the user organization. This might include the president and/ or
chairman of the organization.

The primary interaction between the systems analyst and all these managers has to do
with the resources that will be assigned to the project. It is the systems analyst’s job to
identify and document the user’s requirements and the constraints within which the system
must be built.

j. Auditors
Depending on the size of the project and the nature of the organization you work in, you may or
may not have auditors.
k. Systems analysts
The system analyst is a key member of any systems development project. In a broader sense, the
systems analyst plays several role

l. Systems Designers
The systems designer is the person (or group of people) who will receive the output of
the systems analysis work. His or her job is to transform a technology-free statement of user
requirements into a high-level architectural design that will provide the framework within
which the programmer can work. In many case, the systems analyst and the systems
designer are the same person, or member of the same unified group of people. It is important
for the systems analyst and systems designer to stay in close touch throughout the project.
m. Programmers
Particularly on large systems development projects, the systems designers are likely to
be a “buffer” between the systems analysts and the programmers. The systems analysts

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deliver their product to the system designers, and the system designers deliver their product
to the programmer. There is another reason why the systems analyst and the programmer
may have little or no contact with each other: work is often performed in a strictly serial
sequence in many systems development projects. Thus, the work of systems analysis takes
place first and is completely finished before the work of programming begins.

n. Operations Personnel
The operations personnel who are responsible for the computer center,
telecommunications network, security of the computer hardware and data, as well as the
actual running of computer programs, mounting of disk packs, and handling of output
from computer printers. All this happens after a new system has not only been analyzed
and designed, but has also been programmed and tested.

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