Chapter I Introduction to Systems

Why Do Systems Fail?

More than of all IS development projects Fail.
Canceled before completion System is never used once finished Doesn't provide the expected benefits

Most of the ones that don't fail:

Are delivered late Are over budget Don't provide the features promised

Why Do Systems Fail?

Many systems fail because analysts try to build wonderful systems without understanding the organization. The primarily goal is to create value for the organization.

Recent Significant IT Failures

Company Year Outcome

Hudson Bay (Canada)

UK Inland Revenue Avis Europe PLC (UK) Ford Motor Co.

2005
2004/5 2004

Inventory system problems lead to $33.3 million loss.

$3.45 billion tax-credit overpayment caused by software errors. Enterprise resource planning (ERP) system cancelled after $54.5 million spent. Purchasing system abandoned after deployment costing approximately $400 M ERP system problems contribute to $160 million loss. Customer relations management system upgrade problems lead to $100M loss

2004

Hewlett-Packard Co. AT&T Wireless

2004 2004

1.1 System Definition & Concepts

A SYSTEM is a set of:
interrelated components
working together
for a common purpose Even when each component is well-designed, efficient, and simple, the system will malfunction if the components do not work together.

Further, a change in one component may affect other components. For

example, suppose marketing (one component of the system that is the organization) sells more of some product than expected, then production (another component) would have to special-order materials or pay overtime to produce more than the planned amount. The likely result would be a rise of the costs of goods sold and the company might actually lose money from this apparently successful selling spree.

1.1.1 Characteristics Of A System

A System has the following characteristics:
(a) All systems have predetermined objectives. For example, the educational system has the objective of converting young students into qualified civilized persons. (b) Systems consists of interrelated and interdependent components. For example, our biological system contains bones, organs and various bio-chemicals. (c) Systems can be divided into sub-systems. For example, a business system can contain production, marketing, accounting and finance sub-systems. (d) Sub-systems may be further subdivided. For example, accounting sub-system may contain subsystems for inventory control, payroll, accounts payable and accounts receivable.

1.1.1 Characteristics Of A System

A System has the following characteristics:
(e) Different components in a system depend on one another to perform their functions. For example, one company may need the input from another company to be able to perform its function. This characteristic is called interdependence. (f) The way each component of a system functions with the other components of the system is named as interaction. Various sub-systems of a system interact with each other to achieve the objective of the system. In a business system, for example, marketing sub-system would interact with production sub-system to achieve target. (g) Interrelationships and interdependence would exist among the components of a system. This is referred to as integration.

A System
input Environment boundary

System

interrelationship

subsystem output

output

A Generic System Model (with Six Components) SYSTEM

boundary inputs feedback outputs Examples: Automobile Student Registration System Others...

processing

controls

An Organizational System

A fast food restaurant as a system: Example

Environments: customers, food distribution, banks, etc.

Storage Office Inputs: Food ,labor, cash, etc.

Kitchens

Outputs: Prepared food Dining Room Trash Etc.

Counter

Boundary

interrelationship

1.2 General Systems Theory

Developed by a biologist named Ludwig von Bertalanffy. Theory emphasizes on a close look on different components of a system. Thus, an organization is viewed as a total system.

1.3 Elements Of A System

A simple way of looking at a system is as follows: Input Process Output

A systems objectives are expressed in terms of the outputs the system needs to produce. A system takes the inputs, processes them to generate the outputs. Inputs for information system are raw facts. These are processed of manipulated. The output i.e. information is the outcome of the processing. In addition to the above components, two or more components play an important role in any system. These are:
a) b) Control Feedback

1.3.1 Control
A system is guided by the control operations. Every system may contain an element for control. This element makes the system to operate within performance levels. For example, the normal temperature of human body is 98.60F. When there is a slight deviation in this temperature, there is imbalance in the health conditions. So our body operates on a control system to bring temperature within limits. ** Control of the system is done by the decision-maker. It controls the activities of accepting input, processing and producing the output

1.3.2 Feedback
Feedback of a system is the information indicating how well a system is performing. Information for user control Control To control processing Input (data) Processing Output (Information) Feedback

Systems may use feedback controls. The information generated by feed back results are compared with acceptable level of performance (standard) and then control elements operate based on feedback. ** In feedback control, the output is fed back to input and/or to the control. The fed back output allows it to be measured against standards and finally making adjustments in the processing accordingly.

1.3.2 Feedback
Every system uses a basic control model consisting of: a) Standards for acceptable performance b) Methods of measuring actual performance c) Means for comparing actual performance against standards d) Methods for feedback and controls

1.4 Computer-Based Business Systems

Business refers to industry and commerce. An effective business information system may contain a set of manual or computerized components for gathering, storing and processing data and converting such data into useful, decisionoriented information. A computer-based business system has in addition, the entire process done by the electronic machine such as computers. A computer-based business system involves six independent elements namely:
a) b) c) d) e) f) Hardware Software People Data Information Procedure

1.4 Computer-Based Business Systems

Business refers to industry and commerce. An effective business information system may contain a set of manual or computerized components for gathering, storing and processing data and converting such data into useful, decisionoriented information. A computer-based business system has in addition, the entire process done by the electronic machine such as computers. A computer-based business system involves six independent elements namely:
a) b) c) d) e) f) Hardware Software People Data Information Procedure

1.4 Computer-Based Business Systems

a) Hardware: Computer equipment or machines, that we can touch and feel. b) Software: Programs that instruct computer how to process or manipulate facts or data. c) People: May be programmers, managers or the users who work on the computer resources in accomplishing their daily tasks. d) Data: Raw facts or figures which need to be manipulated or processed using computer hardware and software e) Information: Processed or manipulated data. f) Procedures: The rules that govern the activities

Components of Computer-Based Business System

Hardware Software Procedures

Input

Processing
Feedback

Output

Use and Evaluation

Data

People

1.5 Types Of Systems

Physical Systems
Are tangible or visible systems that we can see. Such tangible systems can be touched, counted, etc.

Abstract Systems
Are conceptual or non-physical entities. Involve abstract conceptualization of physical situations. A business model is an abstract system. An algorithm to solve a problem or equation is an abstract system.

1.5 Types Of Systems

Open system
A system that interacts freely with its environment, taking input and returning output. When the environment changes, an open system must also change in order to adapt itself to the environment. For example, our body system is an open system. It takes input and returns output to the surroundings.

Closed system
A system that is cut off from its environment and does not interact with it. Unaffected by the changes in the environment. Very limited in numbers because in our daily life, we mostly deal with open systems only.

1.5 Types Of Systems

Deterministic & Probabilistic System
A deterministic system operates in a predictable manner. If one can the state of the system at a given point of time then the system is a deterministic system. However, if one can only predict the next state with or without error, then it is probabilistic system. The economic forecasting of a country namely GDP growth is a probabilistic system. In a computer system, the outputs are deterministic as you know what value of the outputs for the inputs.

1.5 Types Of Systems

Information Systems
An information system is a system which provides information for decision making and/or control of the organization. Information is a material or non-material entity which reduces uncertainty about a situation or about an event. For example, information that that the weather will be fine tomorrow reduces our uncertainty about if the football game will be played or not. Banks use information systems to process customer cheques and produce statements.

1.6 Manual and Automated Systems

Systems may be manual or automated. Data may be processed manually or by using computers. We use computers as tools to process data because computers are powerful and suitable for such purpose. Manual systems use human beings as processors because human beings can think, analyze and learn. Disadvantages: Human beings have the following disadvantages as information processors:
a) They get tired easily: Human beings cannot work for continuous hours without making mistakes. b) The capacity to accept input is limited: They cannot accept input from too many sources at the same time and their speed for accepting input is low. c) They make many mistakes: Even if they know what is to be done, they make many mistakes. Their work becomes unreliable due to long hours of working. d) Even under the most ideal working situations, the speed of human being is insufficient for processing large amount of data.

Because of the above limitations, there is need to supplement human beings as information processors, or replace them at places in a short term. * Automated systems today use computers or microprocessors for their efficient functioning. * Computers have made it possible to carry out processing or manipulation of facts which would have been either too cumbersome or too time-consuming to do them manually.

1.6 Manual and Automated Systems

Systems may be manual or automated. A manual system is where human beings are used to process data. An automated system is where computers or machines are used to process data. Manual systems use human beings as processors because human beings can think, analyze and learn. Disadvantages Of Using Human Beings As Information Processors: a) They get tired easily: Human beings cannot work for continuous hours without making mistakes. b) The capacity to accept input is limited: They cannot accept input from too many sources at the same time and their speed for accepting input is low. c) They make many mistakes: Even if they know what is to be done, they make many mistakes. Their work becomes unreliable due to long hours of working. d) Even under the most ideal working situations, the speed of human being is insufficient for processing large amount of data.

1.7 Real Life Business Sub-Systems

We make use of a number of systems such as the transportation system, telephone system, accounting system, production system, business system, computer system, in our day-to-day life. A system usually consists of interrelated departments which are known as its sub-systems. Each sub-system may be part of a larger system For example a business system may have the following subsystems
a) b) c) d) e) Production Department Sales and Marketing Department Personnel Department Material Procurement Department Finance & Human Resource Department