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SYSTEM ANALYSIS AND DESIGN INTRODUCTION TO SYSTEM & BUSINESS SYSTEM CONCEPT
UNIT 1: INTRODUCTION TO SYSTEM & BUSINESS SYSTEM CONCEPT
1. Meaning of System
Definition
A system is a set of interrelated and interdependent components arranged in an organized manner to achieve a specific objective by accepting inputs, processing them, and producing outputs.
Explanation
The word "system" comes from the Greek word systema, which means an organized whole. A system is not just a collection of parts; it is a structured combination of parts that are connected and work together for a common purpose.
Every system must have:
- Components (Sub-systems) – Individual parts that form the system.
- Boundary – The limit that separates the system from its environment.
- Environment – External elements that influence the system.
- Input – Resources or data entering the system.
- Process – Activities that transform input into output.
- Output – Final result produced.
- Feedback – Information used for control and improvement.
- Control Mechanism – Ensures the system operates according to goals.
Input–Process–Output (IPO) Model
Every system follows the basic structure:
Input → Processing → Output → Feedback
This is called the IPO Model.
Example: Examination System
Input:
- Question paper
- Students
- Invigilators
Process:
- Writing answers
- Evaluating answer sheets
Output:
- Marks
- Results
Feedback:
- Revaluation requests
- Performance analysis
This shows how different components are connected to achieve the goal of evaluating students.
2. Characteristics of a System
A system has certain basic characteristics that make it structured and functional.
1. Organization
A system is organized in a structured way. Each component has a specific role and position.
Example:
In a university system, there are departments, faculty members, administration staff, and students. Each has a defined role.
Without organization, the system becomes chaotic.
2. Interaction
The components of a system must communicate or interact with each other.
Example:
In a banking system, when a customer withdraws money, the cashier interacts with the banking software, which interacts with the central database.
If interaction fails, the system stops functioning.
3. Interdependence
Each part of the system depends on other parts.
Example:
In a payroll system:
- Attendance department provides attendance data.
- HR provides salary structure.
- Accounts department processes payments.
If attendance data is missing, payroll cannot be calculated.
4. Integration
All parts are integrated to work as a single unit.
Example:
In an e-commerce system:
- Order processing
- Payment gateway
- Inventory management
- Delivery tracking
All modules work together to complete one transaction.
5. Central Objective
Every system has a goal or objective.
Example:
The objective of a hospital system is to provide healthcare services efficiently.
If there is no clear objective, the system cannot function effectively.
6. Feedback Mechanism
A system must collect feedback to improve performance.
Example:
Customer feedback in an online shopping system helps improve service quality.
3. Types of Systems
Systems are classified based on different criteria.
1. Physical System
A system that has physical existence and can be seen or touched.
Examples:
- Computer hardware system
- Transportation system
- Human body system
2. Abstract System
A system that exists in conceptual or theoretical form.
Examples:
- Mathematical equations
- Software programs
- Accounting principles
3. Open System
A system that interacts with its environment by taking input and giving output.
Example:
A business organization:
- Takes raw materials from suppliers.
- Produces goods.
- Sells products to customers.
It continuously interacts with the external environment.
4. Closed System
A system that does not interact with its environment.
Example:
A mechanical clock operates independently once wound.
However, in reality, completely closed systems rarely exist in business.
5. Deterministic System
The output can be predicted accurately.
Example:
Tax calculation system. If income is known, tax can be calculated exactly.
6. Probabilistic System
The output cannot be predicted with complete certainty.
Example:
Stock market system. Market behavior depends on many uncertain factors.
4. Business System Concept
Definition
A business system is an organized combination of people, procedures, technology, and resources that interact to achieve business goals such as profit generation, customer satisfaction, and growth.
Detailed Explanation
A business organization is itself a system. It does not operate randomly. It has structured departments, workflows, policies, and goals.
A business system converts resources into goods or services.
Business System Model:
Input → Process → Output → Feedback → Control
Example: Manufacturing Company
Input:
- Raw materials
- Labor
- Machines
- Capital
Process:
- Production planning
- Manufacturing
- Quality checking
Output:
- Finished goods
- Revenue
Feedback:
- Customer satisfaction reports
- Sales analysis
Control:
- Management supervision
- Budget control
Environment:
- Government rules
- Market competition
- Economic conditions
5. Elements of a Business System
A business system has the following core elements:
1. Input
Resources required for operation.
Types of Inputs:
- Material input
- Human input
- Financial input
- Information input
Example:
In a college management system:
- Student data
- Faculty data
- Fee information
2. Process
Activities that transform inputs into outputs.
Examples:
- Data processing
- Manufacturing
- Teaching
The process must be systematic and controlled.
3. Output
Final results produced by the system.
Examples:
- Products
- Services
- Reports
- Financial statements
4. Feedback
Feedback provides information about system performance.
Examples:
- Customer complaints
- Profit/loss report
- Performance reviews
Feedback helps management take corrective actions.
5. Control
Control ensures the system operates within set standards.
Examples:
- Budget control
- Quality control
- Supervision
Without control, the system may deviate from objectives.
6. Environment
External factors that influence business operations.
Examples:
- Government regulations
- Competition
- Technology changes
- Economic conditions
A business system must adapt to environmental changes.
6. Relationship Between System and Information System
A business system may use an information system to improve efficiency.
Example:
Manual attendance system → Computerized attendance system.
System Analysis and Design focuses on improving business systems through better information systems.
7. Important Exam Points
- A system consists of interrelated components.
- Every system follows IPO model.
- Business system converts inputs into outputs for achieving objectives.
- Feedback and control are essential elements.
- Environment influences business systems.
8. Conclusion
A system is an organized set of interrelated components working together toward a common objective. In the context of business, systems help organizations manage resources, perform activities efficiently, and achieve their goals. Understanding the system concept is fundamental to System Analysis and Design because every new information system is developed to improve an existing business system.
Practice MCQs – Unit 1
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Test your knowledge of the System and Business System Concepts with this interactive mock test.