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Types of Systems

Types of Systems
7.1 What are Systems?

A system is a group of elements that are integrated with the common purpose of achieving an objective.

Purchase & Sales System

7.2 Components of a system
Following are the important components of the system.
Input elements
Raw Data input to the computer system
Computation, analysis, application of any model
Output elements
Results of computation or analysis
Control mechanism
Comparison of actual with expected
Feedback system
Corrective action
Expected/Ideal output

7.3 Types of Systems
7.3.1 Open-Loop System
The determinant factor is in an open loop system is that the information from the system not used for
control purpose. This is done by using the output to generate feed back for control purposes.
The output is not coupled to the input for measurement.
Hence the components of open loop system do not include control and feedback mechanism due to
non-existence of internally defined objectives. That is,
o Input
o Process
o Output

An information system that automatically generates report on regular basis and are not used to monitor
input or activities.

7.3.2 Closed Loop System
Is a system where part of the output is fed back to the system to initiate control to change
Either the activities of the system or input of the system
Has the ability to control the output due to existence of
Control Mechanism
Feedback System

Budgetary control system in a company by which
o The results are communicated through feedback system
o Results are compared with the objectives/budget through controls mechanism

7.3.3 Open Systems
A system that is connected to its environment by means of resource flows is called an open system.
The environment exerts influence on the system and the system also influences the environment.

Business is a system where management decisions are influenced by or have an influence on suppliers,
customers, society as a whole.
Computerized system of a manufacturing entity, that takes influence from the society.

7.3.4 Closed Systems
A system that is not connected with its environment
Neither environment exerts any influence on the system nor does system influence the environment.

An information system designed to control data in a research laboratory is a closed system.
An information system designed to record highly sensitive information is a closed system so as
To accept no input for amendment
To give no output for disclosure

Objective of Having Systems
To subject a predefined amount of input (tangible, intangible) to predefined set of instructions in order
to achieve an expected quality and amount of output.
Effective and efficient utilization of resources

7.4 Level of Planning
There are three levels
Tactical / Functional

Strategic Planning
Is the formulation, evaluation and selection of strategies for the purpose of preparing a long-term plan of
action to attain objectives.

Tactical/Functional Planning
Is the process by which managers assure the resources are obtained and used effectively and efficiently in
the accomplishment of the organization’s objectives?

Operational Planning
It is the process of assuring that the specific tasks are being carried out efficiently and effectively.

Functional Strategic Planning
Commitment by Firm’s executives requires strategic planning for the following functional areas.
o Manufacturing resources
o Financial resources
o Human resources
o Marketing Resources
o Information Resources

7.5 Strategic Planning for Information Resources (SPIR)
When a firm embraces SPIR the strategic plans for information services and the firm are developed
concurrently. Business strategy and IT related strategy should go hand in hand. The IT related strategy
should be driven by business strategy and the former should support the achievement what’s being
mentioned in the latter. Any inconsistencies or deviations between the two should be removed and avoided.
The investment in IT is costly and inflexible. Such investment is also monitored and controlled by the IT
strategy. Hence any investment not supporting the business strategy would be futile.

Business strategy
Modify inventory system to fulfill orders quickly through relocating system to warehouse and efficient
shelf picking.

IS strategy
To identify information resources needed for the successful implementation of business strategy.

Information Value Chain
Raw information is transformed at various points and value is added before passing onwards. Every step of
processing should make the information stored more valuable.

When customer order received, data punched into computerized system, which updates order list, customer
records and store room records. When order has been served, customer orders are filed into records.

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