System Analysis and Design
What is System?
A system is a collection of components (subsystems) that work together to realize some
objective. For example, the library system contains librarians, books, and periodicals as
components to provide knowledge for its members.
Fig: Basic System Model
Every system has three activities or functions. These activities are input, processing and
It involves capturing and assembling elements that enter the system to be
processed. Inputs to the system are anything to be captured by the system from its
environment. For example, raw materials.
• Processing: It involves transformation processes that convert input to output. For
example, a manufacturing process.
• Output: It involves transferring elements that have been produced by a
transformation process to their ultimate destinations. Outputs are the things produced
by the system and sent into its environment. For example, finished products.
The system also includes other two additional activities. These activities include feedback
• Feedback: It is data about the performance of a system. It is the idea of monitoring
the current system output and comparing it to the system goal. Any variation from the
goal are then fed back in to the system and used to adjust it to ensure that it meets its
goal. For example, data about sales performance is feedback to a sales manager.
• Control: It involves monitoring and evaluating feedback to determine whether a
system is moving toward the achievement of its goals. The control function then
makes necessary adjustments to a system’s input and processing components to
ensure that it produces proper output. For example, a sales manager exercises control
when reassigning salespersons to new sales territories after evaluating feedback about
their sales performance.
Theoretical approaches to systems have introduced many generalized principles. Goal
setting is one such principle. It defines exactly what the system is supposed to do. There
are principles concerned with system structure and behavior. System boundary is one
such a principle. This defines the components that make up the system. Anything outside
the system boundary is known as system environment. A system can be made up of any
number of subsystems. Each subsystem carries out part of the system function i.e. part of
the system goal. The subsystems communicate by passing messages between themselves.
Several systems may share the same environment. Some of these systems may be
connected to one another by means of a shared boundary, or interface. A system that
interacts with other systems in its environment is called open system. Finally, a system
that has the ability to change itself or environment in order to survive is called an
What is an Information System?
In a simplest sense, a system that provides information to people in an organization is
called information system (IS).
Information systems in organizations capture and manage data to produce useful
information that supports an organization and its employees, customers, suppliers and
partners. So, many organizations consider information system to be the essential one.
Information systems produce information by using data about significant people,
places, and things from within the organization and/or from the external environment to
make decisions, control operations, analyze problems, and create new products or
services. Information is the data shaped into a meaningful form. Data, on the other
hand, are the collection of raw facts representing events occurring in organizations or the
environment before they have been organized and arranged into a form that people can
understand and use.
The three activities to produce information in an information system are input,
processing, and output. Input captures or collects row data from within the organization
or from its external environment for processing. Processing converts these row data into
the meaningful information. Output transfers this information to the people who will use
it or to the activities for which it will be used. Information systems also require feedback,
which is used to monitor the current information system output and compare it to the
The two types of information systems are formal and informal. Formal information
systems are based on accepted and fixed definitions of data and procedures for collecting,
storing, processing, disseminating, and using these data with predefined rules. Informal
information systems, in contrast, relay on unstated rules.
Formal information systems can be manual as well as computer based. Manual
information systems use paper-and-pencil technology. In contrast, computer-based
information systems (CBIS) relay on computer hardware and software for processing
and disseminating information.
Types of Information Systems
In practice there are several classes of information systems in organizations. Each class
serves the needs of different types of users. These are:
1. Transaction processing system (TPS)
2. Management information system (MIS)
3. Decision support system (DSS)
4. Executive information system (EIS)
5. Expert system
6. Communication and collaboration system
7. Office automation system.
Transaction Processing Systems (TPSs)
These are the computerized systems that perform and records the daily routine
transactions necessary to conduct business. These systems serve the operational level of
the organization. Some examples include sales order entry, hotel reservation systems,
payroll, employee record keeping, and shipping.
Transaction processing systems are central to a business. TPS failure for a few hours
can cause a firm’s demise and perhaps other firms linked to it. Managers need TPS to
monitor the status of internal operations and the firm’s relations with external
environment. TPS are also major producers of information for the other types of systems.
Online transaction processing systems (OLTPS) is an interactive data processing
system that involves a direct connection between TPS programs and users. As soon as a
single transaction is entered into a computer system, the program interacts immediately
with the user for that transaction. It is often known as the live system where there is no
time lag between data creation and its processing. A good example of this system is
online ticket reservation system.
Management Information Systems (MISs)
These are the information systems at the management level of an organization and serve
management-level functions like planning, controlling, and decision-making. These
systems provide reports that are usually generated on a predetermined schedule and
appear in prearranged format. Typically, these systems use internal data provided by the
transaction processing systems. These systems are used for structured decision-making
and in some cases for semi-structured decision making as well. Salary analysis and sales
reporting are the examples in which MIS can be used.
Decision Support Systems (DSSs)
These systems also serve at the management level of the organization. These systems
combine data and sophisticated analytical models or data analysis tools to support semistructured and unstructured decision-making. These systems use internal information
from TPS and MIS, and often information from external sources, such as current stock
prices or product prices of competitors. DSS have more analytical power than other
systems. Contract cost analysis is an example in which DSS can be used.
Executive Information Systems (EISs)
These systems are also called executive support systems (ESSs) and serve the strategic
level of the organization. These systems are designed to address unstructured decision
making through advanced graphics and communication. These systems incorporate data
about external events such as new tax laws or competitors, but they also draw
summarized information from internal MIS and DSS.These systems are not designed to solve a specific problem but they provide ageneralized computing and telecommunication capacity that can be applied to a changing
array of problems. 5-year operating plan is an example in which EIS can be used.
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