An Introduction to Concepts of
Systems and Organizations
Systems and Subsystems
Outputs and Inputs
Subsystem Interfaces and Interface
A system is an integrated set of components
(tangible / intangible) to achieve a
Boundaries depict the scope of activities for
Boundaries delineate areas of
You must define the boundaries for
Systems often consist of numerous
Each subsystem has elements, interactions
with other subsystems, and objectives.
Subsystems perform specialized tasks for
the overall system.
In business, functions such as marketing,
finance, and manufacturing are subsystems.
Outputs and Inputs
Systems produce Outputs from Inputs --
that is the Inputs are converted to Outputs.
Outputs of one subsystem become inputs to
Outputs must adhere to standards to be
useful or acceptable to the next subsystem.
Subsystem Interface and Interface
An Interface connects each system or
subsystem at its boundaries.
It serves to convey the output of one system
to the input of another system.
Review the example in your textbook
where the Inventory subsystem produces
inputs to the Purchasing subsystem.
Systems and Their Environments
Open and Closed Systems - Open systems
receive feedback from outside its
System Feedback - indicates if the system
performance is meeting standards.
System Stress and Change - as systems
change over time they become stressed as
new problems arise –
for example untrained new workers in a
system within a firm.
An Information System as a System
Outputs and Inputs
Hierarchy of Subsystems
The Structure of an Enterprise
An enterprise is organized into subsystems.
An example is shown in Figure 2-9.
Note the three major systems and their
subsystems in this microcomputer
Think about how information is used by the
dealership owner/managers to monitor and
control business activities.
Prod-1 Prod-2 Sup Pers Pur Acc
Logis Sal Sup
Using the Systems Approach in
1. Define the Problem
2. Gather Data Describing the Problem
3. Identify Alternative Solutions
4. Evaluate These Alternatives
5. Select and Implement the Best Alternative
6. Follow Up to Determine if the Solution is
Define the Problem
This critical step requires you to
differentiate between the “problem” and
“symptoms” of the problem.
You must gather data describing the
Example problem: Sales are low - low
sales is usually a symptom of some other
problem such as poor advertising.
Gather Data Describing the
Study the following in order to gather data:
– Environment, current standards (as compared
to outputs produced), management skills, input
resources, and internal procedures.
Understand the environment first -
customers, competitors, local community.
Brainstorm about a low sales problem -
what are the data to be gathered?
Identify Alternative Solutions
Alternatives may be based on different
strategies for solving a problem. Example
business strategies include:
– low-cost strategy
– Cost cutting strategy
– value-added strategy
Do not rule out alternatives at this point -
those that seem infeasible may be feasible
with additional resources.
Evaluate alternatives from a quantitative
Evaluate alternatives from a qualitative
Link the alternatives to the firm’s
objectives and strategic direction where
Select and Implement the Best
Often requires an implementation plan.
May require new personnel or equipment
May require new information systems
Follow up to ensure that the solution is
Is the system meeting its goals?
Evaluate success/failure in terms of the
Using Information Systems for
Information systems can provide feedback
to enable the firm to respond to customer
Response to customers must often be on a
real-time basis - information systems must
provide the information needed to respond.
This is termed “Manage by Wire”
Discuss different examples