CHAPTER STUDY GUIDE

This is a “big picture” course, focusing on systems, and the role information plays in those systems.
System boundaries frame the big picture, and we adjust the size of the systems we examine by redrawing
the boundaries. While studying the chapter keep in mind that the system approach seeks to optimize
outputs of entire systems, not individual components. Give some thought to the characteristics of General
System Theory and become familiar with the definitions of a system, and an information system. Finally,
try to gain an appreciation for the complexity of modern systems, particularly the life cycle of current
information systems, and the great effort required by system analysis, design, and project management.

HISTORIC PRELUDE

At the beginning of the 20 th century, there were no airplanes, radio stations, mass-produced cars – even
the zipper had yet to be invented. Within one human lifetime, scientists have unlocked some of nature’s
deepest secrets, leading to television, home computers, genetic engineering, space exploration, weapons
of mass destruction, telecommunications, satellites, Velcro, Teflon, and Viagra. Most of these products
are outcomes of sophisticated systems, created with a systems approach. Historic milestones of the
system approach include:
Early European philosophy which developed from ancient Greeks who described an order, or kosmos, in
the experience of life. One definition of this cosmic order was given by Aristotle (384-322 BC) who
described a holistic notion that “the whole is more than the sum of its parts.”
The Scientific Revolution in the 16th and 17th centuries that replaced the descriptive-metaphysical
conception of the universe by mathematical descriptions of events in causal mathematical laws.
The second maxim of Descartes’ (1596-1650) Discours de la Methode: “break down every complex
problem into as many separate (isolated) simple elements as might be possible.” Simple elements are the
“primitives” of architectural design. Descartes made important contributions to understanding component
parts of systems during the Scientific Revolution. Useful scientific, mechanistic, or informational
architecture models require an understanding of the nature and capacities of primitive elements as well as
knowledge of their relationships and interactions in systems.
German philosopher Frederick G. W. Hegel (1770-1831) who offered the following concepts:
the whole is more than the sum of the parts
the whole determines the nature of the parts
parts cannot be understood if considered in isolation from the whole
parts are dynamically interrelated or interdependent.
The concept of an organism, introduced at the beginning of the 20 th century, whose complexity cannot be
explained in terms of isolated elements. In the late 1920s Ludwig von Bertalanffy wrote that the chief
task of biology must lead to the discovery of the laws of biological systems at all levels of their
organizations. Descartes’ simple elements were not sufficient to understand organisms. Simple elements
could not be studied in isolation without losing appreciation for properties that existed only in the holistic
organism. Bertalanffy called this method the system theory of the organism, which analyzes holism.
The emergence of cybernetics, defined by Norbert Wiener in 1948 as a dynamic tool involving feedback
and artificial intelligence modeling living organisms.
The emergence of computers, networks, and the Internet in the second part of the 20 th century, which has
accelerated the development of information systems and services.

GENERAL SYSTEM THEORY

Just as Information Ecology examines information as an entity apart from the human mind in the
Information Reservoir, General Systems Theory focuses on the organization of collections of
interdependent components rather than their individual properties. This does not mean that properties of
individual components are unimportant, but rather that knowledge of component properties is not
sufficient to effectively design a system. Interactions are critical in systems. General Systems Theory
often involves multiple disciplines and concentrates on the interactions and relationships of components
with each other, and with the system environment. Well-designed systems require architecture, and this
is a formidable challenge when those systems are complex. Applying intelligent and efficacious
architecture to systems produces synergy i.e. the interaction of component parts generates an outcome
more beneficial than the sum of each component individually. System properties emerge from this
synergy. Rigorous, disciplined studies of open, complex systems began in the biological sciences.
Ludwig von Bertalanffy first formulated the notion of General Systems Theory orally in the 1930s, and in
various publications after World War II. Bertalanffy wanted to create theories that would benefit systems
across multiple disciplines. The study of systems has formally introduced system characteristics of:
wholeness
the whole is greater than the sum of its parts.
differentiation
systems bring together components with different properties.
order
systems operate on hierarchical levels.
equifinality
objectives can be achieved with varying inputs and in different ways.
progression
systems evolve in stages with time.
primitiveness
generic components assembled in optimum relationships.

The properties of component parts are still valuable to systems. Architecture and engineering require
primitive components. When they are optimally assembled, the natures and capacities of those primitive
components interact to produce outcomes that are only possible through systems. Many engineering and
scientific phenomena can be best understood and explained by creating small, closed systems where there
is no interaction with an outside environment. Mathematical models can accurately describe these
occurrences, and permit reliable design and construction of subsystems that support modern societies.
But general systems theory tackles large, complex systems that change as a result of interactions with the
environment. These are open systems. System activity, organization, and constitution evolve with time.
Open systems dynamically react to their environments. Although general systems theory was developed
to explore biological complexity, it can also be used to examine economic systems, particularly when the
environments that frame those systems are changing. Major contributions to General Systems Theory
were made by:
John von Neumann (1948): developed a general theory of automation and laid the foundation for
Artificial Intelligence.
C. E. Shannon (1948): introduced new ways of perceiving information in communication theory.
Norbert Wiener (1948): introduced cybernetics relating entropy, disorder, amount of information, and
uncertainty to each other in the context of systems.
Ross W. Ashby (1956): furthered the development of cybernetics, self-regulation, and self-direction.
Cybernetics is the interaction of people and machines. The ideas of system theory and cybernetics have
shown how closed systems can be expanded into open systems through feedback and information
exchange with the environment.

CYBERNETICS

Norbert Wiener (1948) is generally considered to be the father of cybernetics. He defined cybernetics as
“the science of effective communication and control between man and machine.” Cybernetics is a Greek
term, meaning pilot, steersman, or governor. Cybernetics involve systems that steer themselves with
time. Cybernetic concepts cluster around:
Systems (animal or machine) of organized complexity and holistic properties
Feedback-driven communication between systems
Control and self-regulation of systems.
Cybernetics is the science of regulation and control – purposeful regulation for adaptive system survival
(Beer 1962). A cybernetic system has two properties (Ashby 1970):
observable data over a period of time (the protocol)
inference from the protocol of some stable configuration or regularity as conditions or states of the system
change.
In order to be successful, cybernetic systems must have a “normal” state. They must be predictable. The
control mechanism of cybernetics reacts to input from the environment and attempts to bring the system
to a “normal” state. Cybernetics cannot work with uncontrollable systems, but the inclusion of variety in
regulators permits adaptation to variety in the environment. In cybernetic systems, time is the principal
independent variable while “variety” is the principal dependent variable. Ashby (1970) defined three
basic laws of cybernetics. They are shown in Table 4-1.

Table 4-1
Ashby Laws of Cybernetics
Law I complex systems organize themselves (like hospitals and universities)
Law II the output of a complex system is dominated by feedback, and within wide limits, the input is
irrelevant. Good schools result from dedicated teachers who rely on feedback rather than the inputs of
improvement programs
Law III Given a system and a regulator of that system, attainable regulation is limited by the variety
of the regulator. Capable, sophisticated controllers comprise the heart of successful cybernetic systems.

Self-organizing capabilities of complex systems make them evolutionary in nature, and very difficult to
predict in the long-term. Quality management expert W. Edwards Deming tells us that management is
prediction (Rienzo, 1993). As managers wrestle with complex business systems and the difficulties
inherent in making predictions within complex frameworks, they increasingly depend upon information
systems to discern their progress toward strategic objectives, and help them to decide upon competing
alternatives when systems need adjustments. According to Ashby’s third law, management processes
which regulate complex systems must possess variety, i.e. they must be capable of coping with change.
The variety of the regulator must at least match the variety present in the systems managers are
attempting to regulate, or in the words of Jack Welch, former CEO of General Electric, “If the rate of
change on the outside exceeds the rate of change on the inside, the end is near” (“Leadership,” 2004) .
Complexity of the information economy is gradually forcing businesses to become learning organizations
capable of adapting to changing economic environments. Feedback is absolutely critical in setting the
direction of change. The self-steering capabilities of cybernetic systems elevate information processing
beyond data and information sections of the semantic ladder. They begin the automation of the areas
involving concepts, knowledge, and wisdom.

SYSTEM DEFINITION

The dictionary definition of a “system” is “a set or arrangement of things so related or connected as to

form unity or organic whole” (Webster). Systems are broadly defined but always associated with
component parts and the relationships between those parts. A more precise definition of a system
follows:

A system is a goal-driven set of elements and their purposely-oriented, structured relations that produce
measurable results outside the system, despite obstacles.
This definition recognizes that systems serve goals, their relationships are intentionally designed,
outcomes are measurable, and they adapt when they encounter obstacles. Important definition concepts
include:

System Item Example

Goal The goal of an automotive system is efficient transportation from point A to
point B
Elements An enterprise business system is composed of divisions, departments, and
sections in a holistic and hierarchical design
Structure The structure of an information system includes connections between data, files,
reports, and queries
Purposely-oriented relations Tables and joins in relational databases insure updates are distributed
appropriately throughout the database.
Measurable results Measurable results of a college are its graduates
Obstacles Competition is a frequent obstacle to business strategies and plans

System elements have the following properties:

Properties and behavior of each element of a system set has an effect on the properties and behavior of the
set as a whole.
Properties and behavior of each element of a system set depends upon the properties and behavior of at
least one other element in the system set.
Each possible subset of elements cannot be divided into independent subsets.
A system is more than the sum of its parts; however, the elements of a system may themselves be
systems, since systems exist in hierarchies. A production facility subsystem is an element of a corporate
system. System boundaries define the scope of elements and relationships that are considered when
systems are designed or evaluated.

GOAL-DRIVEN SYSTEMS
In goal-driven systems, processes are explicit. Inputs are converted through subsystems, functions,
and activities into value-added outputs. A goal-driven manufacturing model is shown in Figure 4-1 with
inputs, processing, and outputs shown for both information and material levels. Information inputs
involve data while raw materials constitute inputs to the physical manufacturing system. Information
processing is accomplished by the interaction of files and computer processing instructions.
Manufacturing processing occurs on the factory floor. Finally, information systems generate a report as
output. Manufacturing systems produce finished goods. Decision-makers interact with the material level
of the system by means of the information level. On the basis of information feedback, decision-makers
may adjust system design or instructions.
GOAL-SEEKING SYSTEMS
Goal-seeking systems are information-based systems that aid in decision-making through
optimization mathematical models like linear programming. A model is shown in Figure 4-2. Users
communicate with the system through a Graphical User Interface (GUI), which connects the user to an
optimization software package. If problems occur, a semi-expert system provides method support. This
system categorizes potential problems according to their computational requirements. A knowledge base
contains scientific data, principles, rules, laws, and systems of rules and laws that can facilitate the goal-
seeking objective.

Implementation of goal-seeking systems yields Decision Support Systems (DSS), Expert Systems
(EXS), and Knowledge Management Systems (KMS). Techniques involved include linear programming,
goal programming, dynamic programming, data mining, network models, inventory models, queuing
theory, neural networks, and expert systems. These are sophisticated systems concerned with the higher
levels of semantic processing, i.e. transforming data and information into concepts, knowledge, and
wisdom.

ORGANIZATION DIMENSIONS AND VIEWS

Managers and workers of a business organization system deal with enormous system complexity. Why?
Because, a business organization is a social system – the most intricate and involved arrangement of all
human connections. Business system complexity is illustrated in Figure 4-3. Any business organization
operating in contemporary economies of developed nations is affected by conditions and events that can
be categorized in business, behavior, and world dimensions. Pursuit of system goals requires managers to
adopt perspectives that recognize the existence of all views in every dimension, even though some views
may require more attention than others. System optimization has never been more complex than it is
right now for large business enterprises in the global economy. Success demands holistic approaches that
optimize entire systems, rather than isolated solutions sub-optimizing individual components. Some of
the complexity present in modern economies was created by information technology. Creative use of
information technology is also the key to coping with complexity. Dimensions and views of an enterprise
can be categorized as follows:

A. World Dimension (external business environment):

Civilization View. Enterprises can belong to one or several contemporary civilizations, such as;
Western, Eastern, Chinese, Japanese, Buddhist, Hindu, Islamic, and African. Each civilization has its
own value system and development strategies. For example all civilizations support trade and
modernization, but African, Chinese, and Islamic Civilizations reject westernization, restrict freedom and
education, particularly in the social sciences. Only Western, Japanese, and Chinese Civilizations support
population control, and only the first two support ecological control.
Political View. An enterprise might operate in one or more of the following political systems:
democracy, quasi-democracy (Western-Latin), authoritarian (Buddhist), authoritarian-theocratic
(Islamic), dictatorship (Islamic-Iraq, Iran), quasi-totalitarian (Chinese), transitional (African, Eastern).
Economic View. An enterprise might function in a market economy, central planned economy, or a
mixed economy. Each type of economy influences the decisions and performance of the business.
Geographic View. An enterprise can be local, national, international, multi-domestic, and/or global.
Every enterprise must have an organization that suits its needs and nature.

B. Business Dimension (business internal environment created by business functions):

Every business view exists in a larger world and behavior context. Even when focusing on a specific
business dimension view, managers must recognize constraints imposed by world and behavior
dimensions, and by other business views. The process of dealing with these constraints and
limitations is called views integration. Views integration should be applied to every business view.
Financial View. The language of this view is money, and it reflects a firm’s profitability and return on
investment.
Accounting View. The language of the accounting view is similar to that of the financial view, but its
purpose is the support of a firm’s financial stability through bookkeeping, cost control, balance sheet and
income statement analysis.
Product View. This view reflects the image of the enterprise through its product portfolio. If there is no
product, there is no business.
Marketing View. This view must “penetrate” all other views to make a firm successful in the
marketplace. Marketing forecasts and plans are multi-factor calculations and predictions, where holistic
approaches are needed.
Technology View. Contemporary businesses are driven by advanced technology applications in all
processes, such as product construction (embedded technology like chips in smart machines),
manufacturing processes, or information systems and services. The right technology can provide
competitive advantage in the marketplace.
Logistic View. In most successful companies logistics is integrated among suppliers, producers,
distributors, and customers through its supply-chain. By definition, the chain is inter-organizational,
inter-civilization, and multi-perspective.
Production View. Contemporary American industries allocate production capacity all over the globe. By
its very nature, the global economy is multi-dimensional and multi-viewing.
Service View. Service is an important activity of a company’s value chain (see chapter 5) that provides
optimum use of its product portfolio. It is critical to customer satisfaction.
Human Resources View. In the global economy, corporations look for the best professional and
management talent, crossing borders and facilitating immigration procedures.
Legal View. To function in the global economy companies must learn and function according to laws of
different countries.
Information Resource Management (IRM) View. Successful firms develop system strategies that
support business strategies. Since business strategy is now driven by the global economy, the global
economy and its systems must drive system strategies too.
Administrative View. Corporate administration must be considered from a global perspective for
companies with global operations.
Management View. This view is the most comprehensive view, which must develop appropriate
management systems and cultures to support all previous business functions.

C. Behavior Dimension (the art of reading and understanding organization dynamics):

System View: Organizations are focused on limited tasks, and they are designed to accomplish those
tasks in an efficient, reliable, and predictable manner. Corporate activity is guided by bureaucracy (first
defined by German sociologist Max Weber in the 19th century), which standardizes company processes
much like a machine standardizes production. Besides bureaucracy, another “machine” was invented in
the 20th century – technocracy, based on engineering knowledge and expertise applied to industrial
problems. Both bureaucracy and technocracy attempt to create stable, predictable systems that allow
managers to understand and optimize their businesses. Management is prediction, and rational prediction
is possible only in stable systems (Deming, 1986). But technology tools and the global economy are
bringing sweeping changes to markets all over the world. Businesses are in the unenviable position of
simultaneously attempting to stabilize systems for improved prediction, and destabilizing systems for
innovation and competitive advantage. With both phenomena occurring at the same time, modern
managers must be prepared to contend with paradox in their professional lives.
Cybernetic View: This view analyzes an organization as an organism, which must be adaptive to change
through relationships with the marketplace, environment, and stakeholders. Here, the focus is not on
“parts” but on “processes,” such as worker needs, motivation, productivity, innovations, improvements,
and change management.
Culture View: Culture is a value-driven process of rituals which establishes the patterns of behavior of
an enterprise and its stakeholders. In the Industrial Age, efficiency and hierarchical administration drove
organizational culture. In the Information Age, organizational culture is based on mutual benefits for
companies and workers (see chapter 8). A modern executive is not an omnipotent boss but a visionary
and facilitator of workers’ tasks and continuous learning. The focus is on group dynamics and problem
solving, worker satisfaction and attitudes, member attendance, member retention, and individual learning.
Management must create a culture compatible with its strategic business model.
Power View: Power dynamics are embedded in enterprise management, which not only plans, organizes,
implements, and controls production/service tasks but also is engaged in leadership, conflict resolution,
consultations, negotiations, coalitions (cliques), and check and balance policies. Beneficial and positive
uses of power are among the greatest management challenges executives face.
Psychic View: This view reflects the idea that organizations are psychic phenomena, in the sense that
they are ultimately created and sustained by conscious and unconscious processes. The psychic view is
closely related to the cultural view and concerns itself with psychological phenomena like repression,
denial, displacement, fixation, projection, rationalization, reaction formation, regression, idealization, and
splitting. The focus is on the physical and mental well being of the worker. This view increases awareness
of human significance of almost every aspect of organizational life (Morgan 1986).
Communication View: This view reflects a firm’s nervous system and its ability to communicate goals,
objectives, strategies, policies and feedback that determine positive or negative performance. A company
can use many methods of communication. A few examples are interpersonal, business, professional,
managerial, cross-cultural, and organizational communication. Modern enterprises apply these methods
in mediated channels, like e-mail and Intranets. Effective communication is a major challenge for any
business.

SYSTEM COMPLEXITY

In January 2000, astrophysicist Steven Hawking said “I think the next century will be the century of
complexity”. (Chui, 2000). Complexity arises when system elements establish dynamic relationships and
adopt different conditional states with respect to those relationships. As the number of relationships
grows, so does complexity. The information economy, with its prolific processing power, global reach,
and new communication tools, creates complexity with new systems, new components, and new
relationships. Mathematics can provide one perspective of system complexity through formulae for
relationships (r) and behavior states (s). Both are calculated directly from the number of elements
involved, and are shown in equations 4-1 and 4-2. A state is a current condition of a relationship (e.g.
normal, conflict, crisis).
Eqn 4-1 Relationships ( e−1 ) e
r=
2
Eqn 4-2 States e
s=2

The complexity of relationships and states is shown in Figure 4-4. As the number of elements increases,
relationships grow proportionately and states grow exponentially. Business systems have many elements
that produce very complex systems.

Measures of system complexity can be applied to the enterprise system model shown in Figure 4-3.
There are two possible approaches to this issue. The first approach is a “complete” system calculation
provided in Table 4-2. In the “complete’ approach, element relationships in each dimension are confined
to that specific dimension. An assumption is made that each view contains 7 elements, producing a total
of 161 intra-view elements (7 elements per view, 23 views). Each dimension view is considered an
element, adding 23 more elements. Finally, the dimensions establish relationships with each other
supplying 3 final inter-dimensional elements. Elements total 187 with resulting relationship and state
calculations yielding 585 and 11,224 respectively. The second approach is a “holistic” system calculation
shown in Table 4-3. In the “holistic” approach, elements from all dimensions establish relationships with
each other, crossing dimensions. The same assumption of 7 elements per view is made in Table 4-3,
intra-view relationships and states remain the same, but dropping the dimension segmentation increases
total relationships to 736, and states to over 8 million.

Table 4-2
Complexity of a Business Enterprise System – “Complete” (3-Tier)
System Level Element Relationships State Entities Elements Relationship States
s s s
Intra-view 7 21 128 23 161 483 2944
Business 13 78 8192 1 13 78 8192
Dimension
Behavior 6 15 64 1 6 15 64
Dimension
World Dimension 4 6 16 1 4 6 16
Inter-Dimension 3 3 8 1 3 3 8
Total 27 187 585 11224

Table 4-3
Complexity of a Business Enterprise System – “Holistic” (2-Tier)
System Level Element Relationships States Entities Element Relationships States
s s
Intra-view 7 21 128 23 161 483 2944
Inter-view 23 253 838860 1 23 253 8388608
8
Total 24 184 736 8391552

In “complete” management of a business enterprise, executives responsible for so called “big-picture”

decisions must take into account 27 entities, 187 elements, 585 relationships, and more than 11,000
system states in a three-tier hierarchy. This is a huge number of “things” to supervise. In order to make
the “big-picture” manageable, it is divided into a series of “small pictures” that are associated with senior,
middle, and lower levels of management. In addition, automation of information systems takes care of
the majority of well-structured relationships and element states. This allows individual managers to
“process” system complexity without becoming overwhelmed.
“Holistic” management of a business enterprise system has emerged as a new mode of management in the
1990s. Relationships are taking place in a two-tier hierarchy with resulting complications of relationships
and states. At the first level, relationships are established for elements in each view. At the second level,
relationships are established among all views of three system dimensions. “Big-picture” executives have
responsibility for hundreds of relationships, and literally millions of states – an impossible situation to
optimize and control. Fortunately, it is not necessary to control every system relationship and state. We
do not have to control every muscle in our body in order to walk. Complexity theory tells us that
complex systems can generate simple outcomes. But there are many important relationships and states
that managers must optimize to be successful. Information systems help managers cope with the
increasing complexities of their business processes.
The complexity of “holistic” management is much bigger than the complexity of “complete”
management. Executives must contend with global system interactions far too extensive to ponder in one
human mind. The need for automation of global information systems is acute. Although technology
increases enterprise system complexity by making it possible to design interactions of many more
components, technology is also essential to enable businesses to cope with these intricate and complicated
associations. New institutions are emerging to reduce the complexity of the global economy, for example
the World Trade Organization and regional treaties like NAFTA and the European Union.

INFORMATION SYSTEM DEFINITION

Information systems support and integrate business activities in a corporate value chain (see chapter 5).
As information systems evolved, an entire discipline of information management was created. Modern
information systems (IS) are considered tools of this discipline, utilizing computers and computer
networks. Information systems accept cognition units from the information reservoir, process it in some
way, and provide output in the form of cognition units, usually on a higher level of the semantic ladder
(see chapter 3). Figure 4-5 illustrates an information system model that processes units of cognition for
its users, in order to direct a material or/and service-oriented process.

An information system is a goal-driven set of elements, including: input, storage, procedures, and
output, and their purposely-oriented, structured relations (software) that produce measurable results under
the form of process performance measurements (data), change (information), assessments (concepts),
awareness (knowledge), and choice (wisdom).
Software acts as a “syntax” of the information system, providing symbols and rules to process system
“semantics” of data, information, concepts, knowledge, and wisdom, which support management
decision-making. The design and programming of IS determines information quality, assessed by
relevance, timeliness, exclusiveness,accessibility, accuracy, format, and price. Information quality is
subject to constraints. IS cannot effectively compete with person-to-person contact in environments that
demand rich information communication channels. Traditional computerized information systems are
not well suited to unstructured problems that are not thoroughly understood or known to wide audiences.
Emerging research in artificial intelligence is addressing unstructured problems, but most information
systems operate under well defined parameters.

SYSTEM APPROACH – SYSTEM THINKING

The system approach attempts to optimize a whole system rather than maximize the performance of
isolated system elements. The value of system thinking is the recognition that the whole defines the role
of each element. A simple example is the relationship between purchasing and manufacturing. If
purchasing is rewarded for obtaining the lowest raw material price without regard for the performance of
that material in production, purchasing optimizes its system “element” by buying cheap. If low-priced
materials increase off-quality goods in manufacturing, the company as a whole loses money even though
purchasing has reduced its “element” costs.
 Delivery of enterprise-wide information depends upon systems. Initial questions raised when
applying the system approach to an information need is “What is the system, what is its goal, and what is
its role in the context of a larger system?” These questions mark the beginning (conceptualization) of the
System Life Cycle shown in Figure 4-6.

The Systems Life Cycle has five stages.

Conceptualization
The problem or opportunity to be addressed by the system is defined, and feasibility studies are
conducted. Needs are analyzed and alternative ways of satisfying those needs are proposed. Evaluation
criteria are determined, alternatives selected, and a system is designed.
Implementation
All elements of the system design are procured and constructed. Tests insure that predicted outcomes are
achieved. System users are trained in its operation.
Growth
Early users become familiar with system attributes and benefits. More users are introduced to the system
with further recognition of its usefulness. Increasing popularity makes the system available to all who
can profit from its attributes.
Maturity
The characteristics and benefits of the system are widely recognized, and become part of normal business
practices.
Decline
Eventually system characteristics are no longer adequate to support company objectives. The user
community declines. New needs prompt the conceptualization stage of new replacement systems.

Rapid development of computer processing power, and improved programming techniques, are
compressing the maturity stage of information system life cycles. Companies are initiating
conceptualization stages of replacement systems as soon as current systems are in the maturity stage.
Businesses are continuously striving to improve the productivity and efficiency of early stages of their
system life cycles.
The Waterfall Model, presented in Figure 4-7, also represents stages of the information system life cycle,
although it concentrates upon the conceptualization and implementation phases of the bell curve model
shown in Figure 4-6. Beginning with the identification of a problem or opportunity, each component
stage provides inputs to its successor in the waterfall. Every stage requires significant time and effort.
The Waterfall Model also emphasizes the role of feedback from all stages providing inputs to either make
adjustments or identify new problems or opportunities to be addressed by new information systems.
 Stages of each representation of the system life cycle are compared in Table 4-4. Waterfall Model
concentrates on the early development stages. It is often called the systems development life cycle. The
first four stages of the Waterfall Model fit into the Conceptualization stage of the Bell Curve model, and
all the post-implementation stages of the Bell Curve Model are represented in the Maintenance section of
the Waterfall Model. Insuring that information systems appropriately address business strategies is
critical. System analysis and design provide this insurance.

Table 4-4
Comparison of System Life Cycle Representations
Bell Curve System Life Waterfall System Life Cycle Model Stages
Cycle Model Stages
Conceptualization Problem ID
Feasibility
System Analysis
System Design
Implementation Implementation, Testing, Conversion
Growth
Maturity Maintenance
Decline

SYSTEM ANALYSIS

System analysis is a product of the Cold War, developed to improve the quality and capability of air
weapons systems. Shortly after World War II, the United States Air Force became a distinct branch of
military service, separate from the US Army. The RAND Corporation was created in 1948 in Santa
Monica, California, as an Air Force research center. A RAND group headed by economist Charles Hitch
was assembled to develop new rigorous and rational methods of evaluating weapons systems in complex
environments with high levels of uncertainty. These methods gave birth to modern systems analysis.
RAND included the following activities in system analysis:
symptom identification
determination of the reality of a problem
definition of a problem
definition of system objectives
disposition of the system structure and its defective elements
discovery of solution alternatives
evaluation of alternatives
formulation of a solution
acceptance of a solution by executive management
setting in motion the process of solution implementation
management of solution implementation
evaluation of the installed solution and its consequences.
As system analysis matured, activities involved in building and implementing solutions were categorized
as part of system design and implementation rather than system analysis.
Early in the 1950s, the concept of “weapon systems,” and the practice of “system management” became
widely known. The development of the B-52 supersonic bomber, which began in 1952, was among the
first outcomes of systems management. Systems analysis techniques later brought about SAGE (Semi-
Automatic Ground Environment) weapons in the 1950s and Intercontinental Ballistic Missiles (ICBM) in
the 1960s.
At President Kennedy’s assumption of office in 1961, changes at Harvard University and MIT, and the
selection of Robert McNamara as Secretary of Defense, created favorable circumstances for the
implementation of “system management” throughout the United States military. Charles Hitch was
nominated Assistant Secretary of Defense and Defense Department Comptroller and his colleague from
RAND, Alain Enthoven, was nominated Deputy Secretary for System Analysis and Head of the System
Analysis Office at the Pentagon. They brought more young system analysts from RAND to the Defense
Department.
As a result of these appointments, a regularly functioning system of armaments planning and financing
was created and called the Planning, Programming, and Budgeting System (PPBS). Military budgets
were prepared on the basis of system analysis. Furthermore, system analysis techniques categorized
weapons systems according to their mission and objectives. In practice that meant that cities, industrial
sites, and military installations in the Soviet Union were targeted by “alternatives” such as bombers, land-
based missiles, and submarine-based missiles evaluated by the most cost-effective criterion. System
analysis did not replace political and professional debate, but it did provide a framework for it.
Pilot applications of system analysis for problem solving in civilian life emerged in the U.S. in the mid
1950s. Then, system analysis was used in the development of government policy on water resources. In
1959 several papers were published on the applications of Electronic Data Processing (EDP) in urban
planning. In the 1960s RAND was influential in organizing the Systems Development Corporation
(SDC) and Stanford Research Institute (SRI). The former studied issues that would lead to advancement
in education, medicine, urban systems, and law enforcement. The latter applied system analysis to the
problems of industrialization of developing nations, and food supplies for humankind.
In 1964 system analysis was brought to the National Aeronautics and Space Administration (NASA). In
1965, President Johnson ordered the implementation of PPBS in all Federal agencies. His program to
create the Great Society was developed with the system approach. For example, in 1965-1966 the
Democratic Congress formed the Housing and Urban Development Department (HUD), passed the
Demonstration Cities and Metropolitan Area Redevelopment Act, and created the Task Force on
Antipoverty Programs. All these actions were based on system analysis techniques.
It took about 10 years to transfer system analysis techniques to private commercial practice. In the late
1960s reorganizations along the lines suggested by system analysis have been performed in American
hospitals, commercial corporations, high-tech corporations, and construction companies. Many
investigations have been conducted on supersonic transport aviation as a total system. The TEMPO
Division of General Electric completed several system-oriented projects in the 1960s. This research unit
applied system analysis to the formulation of corporate business strategies, marketing strategies, and the
evaluation of the effectiveness of marketing expenditures.
Computer information systems (CIS) have been highly responsive to system analysis In the early 1960’s
IBM used system analysis to introduce a very popular 1400 computer series. IBM also used similar
techniques to create a new computing standard in 1965, the IBM 360. Since then, system analysis has
been applied in hundred of thousands of CIS projects.
System analysis is a problem-solving methodology, which integrates all necessary, inter-disciplinary
methods and activities for an effective (optimal) problem solution. It has been used to study sociology,
politics, economics, businesses, and population control. There are many methods of system analysis. The
most popular are listed below:

General System Theory (system versus subsystems)

Cybernetics
Graphic modeling of systems
Theory of Sets, including Fuzzy Sets
Statistical techniques
Optimization techniques (Operation Research, Management Science)
Game Theory, Queuing Theory
Models of behavior (cybernetic and psychological)
Models of classification and ordering
Marginal Analysis
Forecasting techniques
Planning and Programming techniques
Organization Theory
Management Theory
Hierarchy Theory
Social Psychology
Sociology.

System analysis is a method that replaces or augments intuition, and is especially useful in the broad
context of problems. A typical system analysis depends on numerous technological, economic,
management, social, and political factors, as well as their intrinsic relationships. No one is an expert in
more than one or two disciplines, and no one is expert in a whole system. System analysis is used to
integrate different types of expertise in problem solving.

SYSTEM DESIGN – SYSTEM ENGINEERING

System analysis is the first phase of problem solving. The next phase is system design, followed by
system implementation. System design methods were developed by the discipline of system engineering
from 1954 to 1964 in the Atlas Project, devoted to the development of Inter-Continental Ballistic Missiles
(ICBM). ICBMs are large land-based missiles with a range of about 5,000 miles that carry an 8000-
pound atomic warhead. The project was undertaken in 1954, when the Cold War enemy of the United
States, the Soviet Union, replaced its bomber-based defense strategy with a missile-based strategy. The
Atlas Project required the coordination of 17 contractors, 200 subcontractors, 200,000 suppliers, and
nearly 19,000 engineers - all together about 70,000 people in offices and factories. The contractors and
subcontractors were designing and producing thousands of “subsystems” that were supposed to fit into
one “system.” To manage such complexity, project managers created a special organization unit, which
planned and scheduled tasks according to system engineering stages. The mission of this unit was to
perceive “interconnections” and insure that component pieces would fit into the “total system.” A new
job description had been created – a system engineer, whose task was to monitor the interfaces.
According to Hughes (1998) the duties of a system engineer include:
direct system-driven contractors’ operations
review designs
coordinate the updating of related specifications affected by a change
“optimize” the system’s overall characteristics, such as efficiency, reliability, range, and
accuracy of a missile
resolve technical controversies
provide quality control policies and checks
provide trouble shooting
provide computerized control information.
System engineering developed during the Atlas project has now spread to other industry and government
undertakings, generally under the heading of project management.
In the 1960s IBM adapted system engineering for the design of computer and software configurations
sold by that company. Now many computer hardware and software firms employ systems engineers who
offer technical configurations of computers, networks, and software. Targowski (1990) defined the
principles of system engineering:
Cybernatization
A good system is “viable” and capable of growing, learning, and adapting to complex, dynamic
environments. Cybernatization applies the principles of cybernetics: feedback, self-organization, and
requisite variety.
Systematization
A good system is planned as a set of elements and relationships in order to attain a given objective and to
promote measurable results outside the system, despite the obstacles.
Cohesiveness
A good system makes all elements of a system stick together and it supports the processes of the
environment and the user in a harmonious manner.
Categorization
A good system requires that its elements are self-contained, independent of each other, and planned
without repetition in different forms.
Primitiveness
A good system is based on generic elements and relationships. Development of a system’s functionality
should have roots in primitive, generic models. These primitive models provide the raw materials of
system architecture.
Completeness
A good system perceives all major and possible elements and relationships of system logic and technical
orientation.
Value engineering
A good system does not contain unnecessary components but only includes those that are proper to the
system’s needs.
Open-ended structure
A good system is open for future improvements and for the insertion of elements that are perceivable
though not yet available.
The application of these principles in system engineering determines the reliability, quality, and
efficiency of systems.

SYSTEMS AND QUALITY MANAGEMENT

Systems thinking was re-invigorated in the United States in the 1980s with the quality movement
spearheaded by large American automotive companies who were facing stiff competition from Japanese
car manufacturers, and a general escalation in oil prices beginning in 1973 and peeking in the early 1980s.
The most influential quality consultant during that period was Dr. W. Edwards Deming who had
advocated an understanding of systems since before World War II. The post-war American economy was
extremely robust, and few American companies paid attention to Dr. Deming’s perspectives, but Japanese
executives received his message with enthusiasm. Figure 4-8 illustrates Deming’s vision of production as
system which he presented to Japanese business leaders in 1951. Following system thinking, and
aggressively reducing variation, Japanese manufacturing companies set world standards for quality in the
1970s making them formidable competitors to their American counterparts. The American quality
movement in the 1980s increased worker participation in business processes setting the stage for high
performance work teams, and organizational changes described in chapters 7 and 8. Quality management
practices have long focused on system optimization as opposed to suboptimization of individual
components.

SYSTEM MANAGEMENT - PROJECT MANAGEMENT

Project management plans, organizes, and manages the myriad of tasks associated with complex
systems. Its origins are ancient, appearing in the Egyptian pyramids, the Parthenon of Greece, and the
Coliseum and aqueducts of Rome. Modern project management dates back to the late 19 th century when
railroad managers had to organize thousands of workers to build the transcontinental railroad. Frederick
Taylor started the discipline of project management at the beginning of the 20 th century when he began to
formally apply knowledge to work. His study of work systems in the steel industry produced remarkable
increases in productivity. Taylor’s associate, Harvey Gantt, diligently examined the order of operations
in shipbuilding. He developed bar charts, which now bear his name, outlining the sequence and duration
of every task in a project.
All project managers attempt to balance the so-called project triangle, consisting of:
time
money
scope.
Changes in one area of the triangle almost always produce changes in the others, so project managers
spend substantial time tracking all three, and communicating with people charged with task completion
and also with company management. Numerous software packages exist to assist project managers in
tracking and re-calculating schedules, budgets, and critical tasks. Schwalbe (2002) lists defining
attributes of a project:
unique purpose
temporary
requires resources, often from various areas
has a primary sponsor or customer
involves uncertainty.
Oversight of complex projects is a formidable task. They almost always require resources and people
from many functional areas of a business, and as more virtual organizations are created, large projects
may involve workers from multiple businesses. Organizations must establish reporting systems and lines
of authority that fit the temporary and inter-departmental or inter-company requirements of projects. The
movement from hierarchical to networked organization structures is covered in chapter 7.
Just as Egyptians, Greeks, and Romans built grand projects that defined the civilizations of their times,
20th century builders have made big project statements in concrete and technology. Time Magazine
(December 1998) described some of the most magnificent:

Panama Canal (1914)

This $380 million project, like the Suez Canal that preceded it, was an epic assault on nature that
employed as many as 43,000 workers at a time – many of whom succumbed to yellow fever while
clearing the mosquito-infested swamps of Panama. More than 211 million cubic yards of earth and rock
were moved to unite the Atlantic and Pacific oceans. The canal cut the voyage from New York to
California by 7,800 miles.
Empire State Building (1931)
Opened in the teeth of the Depression as a mighty symbol of rebirth, the 102-floor building was
developed by General Motors executive John Raskob. Its Art Deco crown, intended as a mooring mast
for blimps, served as a handy perch for King Kong in the movies. A few skyscrapers have since soared
higher, but none has surpassed its limestone majesty.
Tennessee Valley Authority (TVA – 1933)
TVA is America’s largest public power company, with more than 29,000 megawatts of generating
capacity. It contains a basin area of 39,000 sq. miles and 48 dams.
Hoover Dam (1936)
A massive engineering undertaking along the Colorado River, the dam has a reservoir capacity of 29,827,
000 cu. ft., height 726 ft., and crest length of 1,244 ft. It was constructed in 22 years.
Interstate Highway System (1956)
Created by President Dwight Eisenhower, the 43,000-mile, $330 billion (and still counting) network is the
greatest road system ever. It made the U.S. an automobile society, created millions of jobs and laced the
country with superhighways that increased mobility, spurred trade, and opened the countryside to
development. It also doomed passenger trains.
Apollo Program (1969)
$25 billion put a man on the Moon. The first moon landing was watched by 600 million spectators.
English Channel Tunnel (1994)
Napoleon thought of one, but not until 192 years later would a tunnel under the Channel, linking England
and the European Continent be finished. Beginning on their shores, teams of French and English
sandhogs used 1,000-ton boring machines to burrow through the 24 miles of chalk, clearing 20 million
tons. The two sides met on December 1, 1990.
Military systems such as SAGE, ICBM, ARPANET (Chapter 2) have been described earlier.

Recent large-scale projects involve the proliferation of wireless networks and exploration of Mars. These
systems were developed as projects, not as products coming from factories. With the exception of the
space programs, most were managed like private industry projects with rigid scheduling, task
management, and substantial efforts to minimize uncertainty. However, great uncertainty and huge
complexity characterized the development of military weapon systems and the Internet.

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