System concepts underlie all business processes, as well as our understanding of information systems and technologies. That’s why we need to discuss how generic system concepts apply to business firms and the components and activities of information systems. Understanding system concepts will help you understand many other concepts in the technology, applications, development, and management of information systems that we cover in this text.
For example, system concepts help us understand:
1. Technology. Computer networks are systems of information processing components that use a variety of hardware, software, data management, and telecommunications network technologies.
2. Applications. E-business and e-commerce applications involve interconnected business information systems.
3. Development. Developing ways to use information technology in business includes designing the basic components of information systems.
4. Management. Managing information technology emphasizes the quality, strategic business value, and security of an organization’s information systems. Read the Real-World Case about how some companies are turning to IT to help them develop new products and services. We can learn a lot from this case regarding the various ways in which IT can be used to foster innovation.
What Is a System?
We have used the term system more than 100 times already and will use it thousands more before we are done. It therefore seems reasonable that we focus our attention on exactly what a system is, a system is defined as a set of interrelated components, with a clearly defined boundary, working together to achieve a common set of objectives by accepting inputs and producing outputs in an organized transformation process. 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.
Systems have three basic functions:
1. Input involves capturing and assembling elements that enter the system to be processed. For example, raw materials, energy, data, and human effort must be secured and organized for processing.
2. Processing involves transformation processes that convert input into output. Examples are manufacturing processes, the human breathing process, or mathematical calculations.
3. 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 is a system that accepts resources (data) as input and processes them into products (information) as output. A business organization is a system in which human and
economic resources are transformed by various business processes into goods and services.
Feedback and Control
The system concept becomes even more useful by including two additional elements: feedback and control.
A system with feedback and control functions is sometimes called a cybernetic system, that is, a self-monitoring, self-regulating system.
a) Feedback is data about the performance of a system. For example, data about sales performance are feedback to a sales manager. Data about the speed, altitude, attitude, and direction of an aircraft are feedback to the aircraft’s pilot or autopilot.
b) Control involves monitoring and evaluating feedback to determine whether a system is moving toward the achievement of its goal. The control function then makes the 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. An airline pilot, or the aircraft’s autopilot, makes minute adjustments after evaluating the feedback from the instruments to ensure that the plane is exactly where the pilot wants it to be.
Example. Figure 1 illustrates a familiar example of a self-monitoring, self-regulating, 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 a cybernetic system that automatically monitors and adjusts many of its functions, such as temperature, heartbeat, and breathing. A business also has many control activities. For example, computers may monitor and control manufacturing processes, accounting procedures help control financial systems, data entry displays provide control of data entry activities, and sales quotas and sales bonuses attempt to control sales performance.