SYSTEM CONCEPTS

Systems theory involves the study of the behaviour and interactions within and between systems.
It provides a powerful means of analysing and improving business processes. It can be applied to
a wide variety of different areas and is fundamental to gaining a good understanding of the
managerial application of information systems.

What is a system?
A system can be defined as a collection of interrelated components that work together towards a
collective goal. The function of a system is to receive inputs and transform these into outputs.
Business systems usually have multiple goals such as profit or improving the quality of a
product/service. The overall goal of a business is often described within a mission statement ( a
statement intended to encapsulate the overall goal(s) of an organisation). Systems are a group of
interrelated or interacting elements forming a unified whole. Many examples of systems can be
found in the physical and biological sciences, in modern technology, and in human society. Thus,
we can talk of the physical system of the sun and its planets, the biological system of the human
body, the technological system of an oil refinery, and the socioeconomic system of a business
organization.

An example can be to illustrate this concept and aid understanding. The concept of a
transformation process can be used to explain how data can be converted into information. Using
the Basic model shown in the diagram below, it can be said that data are used as the input for a
process that creates information as an output.
Input Process Output

Such a system has three basic interacting components or functions:

• Input involves capturing and assembling elements that enter the system to be processed. For
example, raw materials, energy, data, and human efforts must be secured and organized for
processing.

• Processing involves transformation process that convert input into output. Examples are a
manufacturing process, the human breathing process, or mathematical calculations.

• Output involves transferring elements that have been produced by a transformation process
to their ultimate destination. For example, finished products, human services, and
management information must be transmitted to their human users.
Example
A manufacturing system accepts raw materials as input and produces finished goods as output.
An information system also is a system that accepts resources (data) as input and process them
into products (information) as output.

However, this model illustrates a system that is essentially static. The performance of the system
cannot be adjusted and there are no checks to ensure that it works correctly. In order to monitor
the performance of the system, some kind of feedback mechanism is required. In addition,
control must be exerted to correct any problems that occur and ensure that the system is fulfilling
its purpose.
If these additional components are added to the basic model of the system, it can be illustrated as
shown in the diagram below. The Generic model of a system, shown in the diagram below is
sometimes referred to as an adaptive system, in order to signify that it has the ability to monitor
and regulate its own performance.

Control

Feedback

Input Process Output

FEEDBACK AND CONTROL

A system with feedback and control components is sometimes called a cybernetic or adaptive
system, that is, a self-monitoring, self-regulating system.
• Feedback is data about the performance of a system. For example, data about sales
performance is feedback to a sales manager.
• Control involves monitoring and evaluating feedback to determine whether a system is
moving toward the achievement of its goal. 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 he or she reassigns salespersons
to new sales territories after evaluating feedback about their sales performance.
Feedback is frequently included as part of the concept of the control function because it is
such a necessary part of its operation.
Example
A familiar example of a self-monitoring, self-regulating system is the thermostat controlled
heating system found in many homes; it automatically monitors and regulates itself to maintain a
desired temperature.
Another example is the human body, which can be regarded as cybernetic system that
automatically monitors and adjusts many of its functions, such as temperature, heartbeat, and
breathing.

SUMMARY OF SYSTEM COMPONENTS

At this point, it can now be argued that a generic system includes five components: input,
process, output, feedback and control.
• The input to a system can be thought of as the raw materials for a process that will produce a
particular output. Inputs can take many forms and are not necessarily purely physical in
nature. Examples of inputs might include data, knowledge, raw materials, machinery and
premises.
• Inputs are turned into outputs by subjecting them to a transformation process.
• The output is the finished product created by the system. Again, the outputs produced by a
system can take many forms. Examples might include information, products and services.
• Information on the performance of the system which can be used to adjust its behaviour is
gathered by a feedback mechanism (sometimes known as a 'feedback loop'). Measurements
taken on a production line, or customer feedback on a web site are examples of feedback
mechanisms.
• If alterations are needed to the system, adjustments are made by some form of control
mechanism. In general, control is exerted as the result of feedback information regarding the
performance of the system. The function of the control component is to ensure that the
system is working to fulfill its objective. Control tends to be exerted by adjusting the process
and input components of the system until the correct output is achieved.

OTHER SYSTEM CHARACTERISTICS

All systems share some or all of these characteristics:

1. The components of a system work towards a collective goal. This is known as the system's
objective. The objective of a system is normally very specific and can often be expressed in a
single sentence. As an example, the objective of a car might be expressed simply as: to transport
people and goods to a specified location.

2. Systems do not operate in complete isolation. They are contained within an environment that
contains other systems and external factors. The scope of a system is defined by its boundary.
Everything outside of the boundary is part of the system's environment, everything within the
boundary forms part of the system itself. The boundary also marks the interface between a
system and its environment. The interface describes exchanges between a system and the envi-
ronment or other systems.

3. Systems can be complex and can be made up of other, smaller systems. These are known as
subsystems. Systems composed of one or more subsystems are sometimes referred to as
suprasystems. The objective of a subsystem is to support the larger objective of the suprasystem.
For an organisation the subsystems such as marketing and finance would lie within the systems
boundary while the following elements would lie outside as part of the business environment:
• customers
• sales channel/distributors
• suppliers
• competitors
• partners
• government and legislation
• the economy.
An organisation will interact with all these elements which are beyond the system boundary in
the environment. We refer to this as an open system. Most information systems will fall into this
category since they will accept input and will react to it. Totally closed systems which do not
interact with their environment are unusual.

4. Subsystems in an information system interact by exchanging information. This is known as

the interface between systems. For information systems and business systems having clearly
defined interfaces is important to an efficient- organisation. For example, sales orders must be
passed from the sales subsystem to the finance subsystem and the distribution subsystem in a
clear, repeatable way. If this does not happen orders may be lost or delayed and customer service
will decline.

5. The linkage or coupling between subsystems varies. The degree of coupling defines how
closely linked different subsystems are. It is a fundamental principle of systems theory and BIS
design that subsystems should be loosely coupled. Systems or subsystems that are highly
dependent on one another are known as close-coupled systems. In such cases, the outputs of one
system are the direct inputs of another.
Decoupled systems (or subsystems) are less dependent on one another than coupled systems and
so are more able to deal with unexpected situations or events. Such systems tend to have higher
levels of autonomy, being allowed more freedom to plan and control their activities.-Although
decoupled systems are more flexible and adaptive than close-coupled systems, this very
flexibility increases the possibility that inefficiencies might occur.

6. Systems are hierarchical. Systems are made up of subsystems that may themselves be made
up of other subsystems. From this, one should realise that the parts of a system are dependent on
one another in some way. This interdependence means that a change to one part of a system
leads to or results from changes to one or more other parts.

Example
Organizations such as businesses and government agencies are good examples of the systems in
society, which is their environment. Society contains a multitude of such systems, including
individuals and their social, political, and economic institutions. Organizations themselves
consist of many subsystems, such as departments, divisions, process teams, and other
workgroups. Organizations are examples of open systems because they interface and interact
with other systems in their environment. Finally, organizations are examples of adaptive
systems, since they can modify themselves to meet the demands of a changing environment.

INFORMATION SYSTEM
An information system is a system that accepts data resources as input and processes them into
information products as output.
Information systems can also be defined as any organized combination of people, hardware,
software, communications networks, and data resources that stores, retrieves, transforms, and
disseminates information in an organization.

Management of Information System (MOIS) is therefore the art or process that involves
planning, organising, leading and controlling of the resources of an information system.
COMPONENTS OF AN INFORMATION SYSTEM

(i) People Resources

People are required for the operation of all information systems. These people resources
include end users and IS specialists.
• End users (also called users or clients) are people who use an information system or the
information it produces. They can be accountants, salespersons, engineers, clerks,
customers, or managers. Most of us are information system end users.

• IS Specialists are people who develop and operate information systems. They include
systems analysts, programmers, computer operators, and other managerial technical, and
clerical IS personnel. Briefly, systems analysts design information systems based on the
information requirements of end uses, programmers prepare computer programs based on
the specifications of systems analysts, and computer operators operate large computer
systems.

(ii) Hardware Resources

The concept of Hardware resources includes all physical devices and materials used in
information processing. Specially, it includes not only machines, such as computers and
other equipment, but also all data media, that is, all tangible objects on which data is
recorded, from sheets of paper to magnetic disks. Example of hardware in computer-based
information systems are:
• Computer systems, which consist of central processing units containing microprocessors,
and variety of interconnected peripheral devices. Examples are microcomputer systems,
midrange computer systems, and large mainframe computer systems.

• Computer peripherals, which are devices such as a keyboard or electronic mouse for
input of data and commands, a video screen or printer for output of information, and
magnetic or optical disks for storage of data resources.

(iii) Software Resources

The concept of Software Resources includes all sets of information processing
instructions. This generic concept of software includes not only the sets of operating
instructions called programs, which direct and control computer hardware, but also the
sets of information processing instructions needed by people, called procedures.
It is important to understand that even information systems that don’t use computers have a
software resource component. This is true even for the information systems of ancient
times, or the manual and machine-supported information systems still used in the world
today. They all require software resources in the form of information processing
instructions and procedures in order to properly capture, process, and disseminate
information to their users.
The following are the examples of software resources:
• System Software, such as an operating system program, which con controls and supports
the operations of a computer system.
 • Application Software, which are programs that direct processing for a particular use of
computers by end users. Examples are a sales analysis program, a payroll program, and a
work processing program.

• Procedures, which are operating instructions for the people who will use an information
system. Examples are instructions for filling out a paper form or using a software package.

(iv) Data Resources

Data is more than the raw material of information systems. The concept of data resources
has been broadened by managers and information systems professionals. They realize that
data constitutes a valuable organization resource. Thus, you should view data as data
resources that must be managed effectively to benefit all end users in an organization.
Data can take many forms, including traditional alphanumeric data, composed of numbers
and alphabetical and other characters that describe business transactions and other events
and entities. Text data, consisting of sentences and paragraphs used in written
communications; image data, such as graphic shapes and figures; and audio data, the
human voice and other sounds, are also important forms of data.
The data resources of information systems are typically organized into:
• Database that hold processed and organized data.

• Knowledge bases that hold knowledge in variety of forms such as facts, rules, and case
examples about successful business practices.
For example, data about sales transactions may be accumulated and stored in a sales
database for subsequent processing that yields daily, weekly, and monthly sales analysis
reports for management. Knowledge bases are used by knowledge management systems
and expert systems to share knowledge and give expert advice on specific subjects.

Data
Information and data are frequently used interchangeably. However, Data are a set of facts
relating to an activity in a given environment. The activity can be accounting, inventory control
etc. Environment can be business, scientific, education, etc.

Data can also be described as raw data, if they are not yet even partially processed, i.e. they
convey no particular meaning to a given activity within any given environment. It means data
are unprocessed information consisting of details relating to business transactions. For example,
in payroll system data examples are employee's name, basic salary, department number, marital
status, etc. Data is thus the raw material that is transformed into information by data processing.

Data Processing
Data processing can be described as the activity of manipulating the raw facts to generate a set or
an assembly of meaningful data, which is described as information because the assembly of data
shall convey some meaning. Data processing may also be defined as those activities which are
concerned with the systematic recording, arranging, filing, processing and dissemination of facts
relating to the physical events occurring in the organisation.
Data processing activity is therefore, very important aspect in any organisation of any size or
nature because it generates information for decision making. Data processing can be described as
electronic data processing, if it uses sophisticated processing tools or aids e.g the computer.

Information
Information means processed data directly useful in decision making. In other words,
information is an assembly of meaningful data items. The information is a very important item
in any organisation’s working strategies because the information generated by the data
processing activities is used by the organisations to make decisions. The information in payroll
activity includes netpay, total tax deductions etc. In stock control, the information generated
includes closing stock, total item cost, purchases, issues, etc. The information is achieved by
applying some processing procedures onto the input raw data. For example, the net pay in
payroll activity can be arrived at by applying the following procedure.
Net pay = (Basic salary + Overtime pay if any) + Allowance – total deductions/taxes.
Characteristics of good information:
For information to convey any meaning to the end-user, it must have the following
characteristics;
a) It should be relevant for its purpose.
a. This refers to the current utility of information in decision making or problem
solving. For example, a typical professor who collects book after book on the
assumption that some day they will be useful in preparing a lecture is not
collecting the relevant information for the current problem at hand, but is merely
filling the book shelf. Thus, information gains in value if it is relevant.
b) It should be sufficiently accurate and comprehensive.
a. Information, if it is to be of value, should be accurate and should truly reflect the
situation or behaviour of an event as it really is. Otherwise, the user will take the
incorrect information as correct and may use it for decision-making that may lead
to disastrous results.
c) It should be complete enough for its purpose
a. Information is considered as complete if it tells its user all that he wishes to know
about a particular situation/problem. The more complete the information, the
higher its value.
d) It should be obtained from a reliable source.
a. Good Information should be obtained from a source in which the user has
confidence. The information should be reliable and the external source relied
upon should be clearly indicated.
e) It should be understandable by the user.
a. Information is of value if it is provided to the user in the form that is
useful and best understood by him/her. For example, top management may
require information on key matters in a summerised form and the operation
managers in detailed form. The language used should also be that which is
understood by the recipient.
f) It should be communicated in time and should be up to date
a. Information should be made available when it is needed for a particular purpose
and not before and in any case not after. Delayed information has far less value to
be considered a good resource.
g) It should be communicated by an appropriate channel of communication.
a. Good information should be communicated through the right channel to avoid any
changes being made to the information. The channels used can be telephone, face-
to-face talk, electronic mail, postage, fax, etc
h) It should be communicated to the right person.
a. For the validity of information to be relied upon, it should be communicated to
the right person that it is intended for, for example information meant for a
manager should be directed to him/her without passing through several people,
who may subject it to change.
(v) Network Resources
Telecommunications networks like the Internet, intranets, and extranets have become
essential to the successful operations of all types of organizations and their computer-based
information systems. Telecommunications networks consist of computers, communications
processors, and other devices interconnected by communications media and controlled by
communications software. The concept of Network resources emphasizes that
communications networks are a fundamental resource component of all information
systems. Network resources include:
• Communication media, Examples include twisted pair wire, coaxial cable, fiber-optic
cable, microwave systems, and communication satellite systems.

• Network Support, This generic category includes all of the people, hardware, software,
and data resources that directly support the operation and use of a communications
network. Examples include communications control software such as network operating
systems and Internet packages.