2

SYSTEM
CONCEPTS

A system is a group of interrelated components working

together towards a common goal, by accepting inputs and
producing outputs in an organized transformation process.
The interrelated components which are systematically
arranged to form a system are called subsystems. In simple
words, system is a set of elements which operate together to
accomplish an objective. Systems may be physical, like the
sun and its planets; biological like the human body;
technological, like an oil refinery; and socio-economic, like a
business organization. System concepts underlie the field of
information systems.
Definition of a System
System can be defined as a group of interrelated or
interacting elements forming a unified whole. It may be either
physical or abstract. An abstract system is an orderly
arrangement of interdependent ideas or contracts. But a
physical system is defined as a set of elements which operate
together to accomplish a goal; it is made up of objects such
as land, building, machines, people and other tangible things.
A system can also be understood as an organized or complex
whole, an assemblage or combination of things or parts
forming a complex or unitary whole.
20 Management Information System

Characteristics of a System
The characteristic features of a system enable us to
distinguish it from various subsystems. The important features
are:
(i) Orientation towards the objective: A system is
an assembled set of elements, acting together to accomplish
a common goal, purpose or objective. The subsystems are
oriented towards the common objective of the system and
they interact in order to achieve the objective.
(ii) Structure of the system: The component parts
of a system are arranged in a systematic manner, according
to a specific design, and each of them has definite function to
perform in the system. The structure of the system deals
with the design of components in a particular arrangement.
(iii) Inputs: Inputs for a system involve elements that
enter the system to be processed. They include raw materials,
energy, data, information and human efforts.
(iv) Processing of inputs: It is the process of
transformation through which inputs are converted into
outputs, for instance, manufacturing process, data calculation
etc.
(v) Outputs: They are the result of the transformation
process, like human services, finished products, etc.
(vi) Interdependence: The components of a system
are interdependent. They interact with each other to achieve
the common goal. The subsystems cannot exist in isolation;
they are interrelated and the function of one would depend
upon the function of another.
The general model of a physical system is input, process,
and output.
The model of a simple system can be illustrated as:

Input ) Process ----7) Output

Fig. 2.1: General model of a system

System Concepts 21.

In case a system involves a number of inputs and

outputs, its model can be represented as:

Input 1 -----4) -----+) Output 1

Input 2 -----+) -----+) Output 2

) Process )

Input n -----+) -----4) Output n

Fig. 2.2: Complex system

The features, which define and delineate a system form
its boundary. The system is inside the boundary, and the
area outside the boundary is called the environment. Each
system is composed of subsystems, which in turn are formed
by various other subsystems. The interconnections and
interactions between the subsystems are called interfaces. A
subsystem at the lowest level is termed as a black box. The
hierarchy of systems can be represented as:

ISUPER SYSTEM

I
I I
I System 1 II System 2
I I System 3 Ir System n
1
I I I
Iisubsystem 111 Subsystem 21 ISubsystem 3 II Subsystem n I
I I 1
I IBlack Box 1I I Black Box 2 I IBlack Box 3 II Black Box n I
Fig. 2.3: The hierarchy of system
22 Management Information System

Types of Systems
The important system classifications include:
(i) Conceptual and empirical system: Conceptual
systems deal with theoretical structures which mayor may
not have any counterpart in the world. They are composed of .
ideas. They are typified by those of SCience, such as economic
theory, the general system of relativity etc. These are systems
of explanation or classification. They may also take the form
of plans, policies, procedures, accounting system, etc.
Empirical systems are concrete operational systems
made up of people, machines, materials, energy, and other
physical things. Electrical, thermal, chemical, and other such
systems also fall under this category of systems.
(ii) Permanent and temporary systems: Systems
enduring for a long time span, in relation to the operations of
humans in the systems, are called permanent systems.
Temporary systems are designed to last for a specified period
of time and then to dissolve. They are important for the
accomplishment of specific tasks.
(iii) Natural and manufactured systems: Natural
systems are found abundantly in nature, like solar system,
water system etc. They originated from nature itself and are
not the result of any human effort.
Manufactured systems or artificial systems are formed
by human efforts. Transport system, communication system,
etc. are examples.
(iv ) Deterministic and probabilistic systems: In
deterministic systems, the interaction among the parts is
known with certainty. It operates in a predictable manner. It
is possible to predict the outputs accurately, if a description
of the state of affairs at a particular point of time plus a
description of the inputs and the operation is available. A
computer programme which performs exactly according to
the set of instructions is an example of a deterministic system.
The probabilistic system is described in terms of
probable behavior. The output can be predicted only with a
certain degree of error. In such a system, we can predict the
results but the exact values of these results at a given time
are not known. For instance, in an inventory system, we can
predict the average time taken to get the material, average
demand, etc., but the exact values cannot be calculated.
System Concepts 23

(v) Subsystems and super system: Smaller systems

within the system or the components of a system are called
subsystems Super system is the whole complex of
subsystems, or it denotes any extremely large and complex
system.
(vi) Stationary and non-stationary systems: A
stationary system is one whose properties and operations
either do not vary significantly or vary in a repetitive manner.
The automatic factory, super market operations, etc. are
examples.
In non-stationary system, the properties and operations
are subject to variations at a faster rate, for instance, the
human being, research and development laboratory etc.
(vii) Open and Closed system: Open systems interact
with their environment exchange information, and material
energy with it. Open systems adapt themselves to the changes
in environment so as to continue their existence. All living
systems are open systems. Cells, plants, human beings, etc.,
are examples of open systems.
A closed system is a self contain'ed system. It does not
exchange material information or energy with its environment.
For example, chemical reaction in a sealed and insulated
container is a closed system.
(viii) Adaptive and non-adaptive systems: A
system, which reaches out to its environment in such a way
as to improve its functioning, achievement or probability of
survival, is called an adaptive system. Most biological systems
are adaptive systems.
A system which does not change with changes in the
environment is called a non adaptive system. It is free from
environmental influences and may degenarable eventually.
(ix) Social, people-machine, and machine
systems: A social system is a system purely made up of
people. Examples are business organizations, Social clubs,
etc.
People-Machine systems use both people and equipment
to achieve the goal. Information system is an example of
people-machine system. Pure machine systems are made up
of machine only. They have to obtain their own input and
maintain themselves. Electric power generating system is an
example of a pure machine system.
24 Management Information System

Subsystems
Management Information System has several
subsystems, which are interdependent and interrelated. Each
system is made up of a number of smaller units, which came
to be known as subsystems. Each subsystem may have many
inputs and outputs. A number of interconnections are required
among these subsystems to exchange inputs and outputs.
The number of interconnections in a system can algebraically
represented as: Y2 N(N -l),where N is the number of
subsystems. If in a system there are 10 subsystems, then
the number of interconnections in this system is 45. The use
of subsystems as building blocks is basic to analysis and
understanding of the principles, which determine how systems
are built from subsystems.
The subsystems with in Management Information
System are:
(i) Computer system: It includes the hardware, the
operating system, and the software.
(ii) Management: Management system as a
subsystem of MIS includes the managerial tasks relating to
the effective functioning of the organization. It covers
planning, control and coordination of human resources
development etc.
(iii) System engineering: This involves system design
and development as well as system maintenance.
(iv) Application: The application subsystem includes
various application systems which are developed and
implemented, to produce the desired outputs.
Factoring (Decomposition)
The process of dividing a system into lower level
subsystems is called factoring of a system or decomposition
of a system. A complex system is difficult to understand and
evaluate, when it is considered as a whole. Hence, it is
decomposed or factored into various subsystems. The
boundaries and interfaces are clearly defined so that the sum
of the subsystems constitutes the entire system. The factoring
process is continued until the sma "est subsystem of
manageable size is obtained. The decomposition of an
information processing system into various subsystems like
production subsystem, finance, purchase, marketing and
personnel subsystem is an example of factorization. The
SystemConcepts 25

factoring process is continued until the smallest subsystem

is manageable easily. Finance subsystem can again be divided
into imprest cash maintenance subsystem, general ledger
maintenance subsystem, bank transation subsystem, etc. The
question of how to factor the system and where to mark the
boundary is answered on the basis of the objectives of
decomposition and also on the basis of individual differences
among designers. The general principle followed in
decomposition, is known as functional cohesion. According
to functional cohesion, components are considered to be the
part of the same subsystem if they perform, or are related
to, the same function. After identifying the functionally
cohesive subsystems, the boundary needs to be defined,
specified interfaces to be simplified, and appropriate
connections to be established among various subsystems.
Simplification
Factoring leads to a large number of subsystem
interfaces. Each interconnection is a potential interface for
communication among the subsystems. Each interface implies
a definition of a communication part. In simplification,
subsystems are arranged in such a way as to reduce the
number of interconnections. There are two methods of
simplification. They are:
(i) Methods are established for decoupling systems in
order to reduce the need for interconnection:

82

84

Fig. 2.4 : Simplification

26 Management Information System

Number of interfaces = V2 N (N -1) = V2 x 8 (8 -1) = 28

(ii) It is possible to establish clusters of subsystems
(which interact with each other) and a single interface path
is defined from the cluster to other subsystems or clusters.

Ai A2 Bl B2

A3 A4 B3 B4

Fig. 2.5: Cluster of system

Oecoupling
The components of a system constantly interact with
each other, to exchange inputs and outputs. If the connection
between these subsystems is very tight, close co - ordination
is necessary for the smooth functioning of the system. In
other words, exact matching of output of one subsystem with
the input of the next subsystem requires detailed planning
and co-ordination. But it is very difficult to arrange for such
kind of close co-ordination. If raw material is directly put to
the production subsystem, when it arrives in the organization,
it is said to be tightly coupled. In such a situation, the timing
of raw material supply should be precisely arranged in order
to avoid delay in production and to prevent the early arrival
of materials, which may cause storage problems. The problem
of tight coupling can be solved by decoupling the subsystems.
it means that the connection between subsystems is loosened
or decoupled so that the two subsystems may operate in the
short run with some degree of independence. Oecoupling may
be in the following ways:
SystemConcepts 27

(i)
Maintaining inventories, buffers, or waiting lines,
Use of stock and flexible resources, and
(ii)
Maintenance of standards for all subsystems at
(iii)
all times.
Decoupling ensures flexibility and independence and
may encourage self-reliance in individual subsystems.
Control in Systems
A control mechanism is essential to ensure the proper
working of a system. Feedback process is the control technique
used in systems to achieve this purpose, which is provided
through information systems. Feedback process involves
comparison of actual output with the standard and sending
of inputs to compensate for the difference, and to confirm
the output to the standard.
Feedback Loops
Feedback is defined as the return of part of output of a
system into the input for the purpose of modification and
control of output, as in electronic amplifiers, automatic
machines, etc. Control is exercised in organizational systems
with the help of information feedback loops. The feedback
may be either positive or negative.
Positive Feedback Control
Positive feedback control causes the systems to repeat
or amplify an action. It acts in the same direction as the
measured deviation. If advertisement expense brings more
sales than the targeted sales, positive feedback is said to be
caused. Control technique with the help of positive feedback
is called positive feedback control.
Negative Feedback Control
Feedback, which tends to reduce fluctuations around a
standard, is termed negative feedback. The corrective action
would be in the opposite direction to the deviation. It tends
to smoothen the fluctuations and enables the system to
confirm to the norms and standards. Negative feedback
control can be represented as follows:
28 Management Information System

Feedback
control
element
Activating unit ~---I

Fig. 2.6: Negative feedback control

Feedback is the key to system control. The control
system can be divided into three categories. They are:
(i) Closed loop system: It is a system where feedback
based on output measurement is used to make appropriate
alterations to the input. When the stock level control system
has planned level of stock for each item, the actual stock
level of each item is measured and compared with the planned
level. Adjustments are made to bring stock levels up or down
to conform to the planned level.
(ii) Open loop system: They are systems where there
is no feedback loop and where the control is external to the
system. Control action in an open loop system is not
automatic, and may be made without monitoring the output
of a system, for example, a heating system without an
automatic thermostat. Control may be exercised externally
by turning it on and off at appropriate times.
(iii) Cybernetic system: Cybernetics is the science of
communication. Control systems embodying feedback control
are commonly called cybernetic systems. In the strict sense,
the term is used for denoting complex probabilistic self -
regulating systems.
Law of Requisite Variety
This Law, propounded by Ross Ashby, states that
complete control of a system can be achieved only when the
control system has as much variety in response as the number
of control should'f1ave an appropriate response to each control
System Concepts 29

situation. The law argues that the controller of a system must

be able to determine variations of control variable, and to
introduce system change instructions for such change. The
law means that, for a system to be controlled, every controller
must be provided with:
(i) Adequate control response,
(ii) Decision rules, and
(iii) Authority to self - organize the system.
System Concept Applied to Information
System Design
The basic system model of input, process and output is
applicable in the case of information system also, since it
receives input of data and instructions process them and
produces the outputs. The system concept is used in
designing, implementing and maintaining the information
system. Information system design uses the structured design
approach, which requires delineation of subsystems and
setting up of interfaces. As seen in systems, information
system has the following features:
(i) Input,
(ii) Output, and
(iii) Subsystems.
The functional subsystems of an information system
consists of a hard ware system, the operating system, the
communication system and the database system,. It also
includes application subsystems, such as order entry, billing,
payroll, and personnel. The significance of the system concept
is not only applicable at the time of system introduction or
implementation, but is also useful to understand system for
further modification, i.e, each application or subsystem is
analyzed in terms of input, storage, processing and output.
Control in Information System
Management Information System provides extensive
support to management in the planning and control activities.
The plans set the standard for achievement. The system
measures and compares actual achievement with the
standard. The differences are analyzed and the reasons are
identified, for managerial control. The performance is
monitored by the information system on a continuous basis,
30 Management Information System

and is reported to the management on an exceptional basis.

The control process in information system may be of three
types: .
(I) Input control: The general model of any system
consists of three elements input, process and output. While
exercising control in an information system, the first area to
be concentrated on is the input. Control of input is essential
for the proper utilization of the input (where it is energy,
material, information, etc).
(ii) Process control: The process through which the
input is converted into output also needs to be controlled. All
the activities undertaken while transforming the input into
output must be controlled to ensure the effectiveness of the
processes.
(iii) Output Control: It involves the control of the
results of a particular course of action. Output can be
controlled by comparing the actual output with the targeted
output, and then by representing the deviations, if any to
take corrective action.
Conclusion
System concept is one of the modern approaches to
complex phenomena, whose focus is on the whole, though it
is made up of components. The concept is highly significant
in information systems. A system does not exist in a vacuum.
If functions in an environment involving other systems.
Information system can play a major role in support of
strategiC objectives of an organization, which provides a firm
with competitive products and services that give strategiC
advantages over its competitors. This alone can reinforce a
firm to survive and succeed in the long run in the market.

Exercise
Short Answer Questions
1. Define a system.
2. What are the features of a system?
3. Explain the general model of a system.
4. Explain the concepts of subsystem and supra system.
5. Write short note on conceptual arid empirical systems.
6. What do you mean by deterministic and probabilistic
system?
SystemConcepts 31.

7. Describe open and closed systems.

8. Distinguish between open system and adaptive system.
9. Define a temporary system with example.
10. What are the subsystems with in Management Information
System?
11. Define factoring or decomposition.
12. What do you mean by simplification in information system
and how can it be attained?
13. Discuss the concept of decoupling.
14. Explain briefly control in systems.
15. What are feedback loops?
16. Compare and contrast positive and negative feedback
control.
17. Explain the classification of feedback control systems.
18. Describe the law of requisite variety.
19. Explain system concept.
20. Describe control in information system.
Essay Questions
1. Narrate the system concept applied in information system
design.
2. Discuss various types of systems.
3. Explain the concepts of decomposition, decoupling and
simplification.