Research Korner: Systems Thinking

According to Stamatis (2001, p. 7) a system is the interdependent group of people, processes or factors which works in order to achieve common goals and purposes. During the past, organization is viewed as autonomous entity which seeks to tame, monitor and control its environment, at the same time, focuses on conflicts and competitions faced inside within the organization. However, due to the changes in the business environment, which include the development of technology, as well as globalization, this had changed to a more open system, where in an organization is being affected by its external environment (Checkland & Holwell, 1998).             This can be observed in the case of Utility Store. Figure 1 shows the level 0 data flow diagram of Utility Store IS. Data flow analysis was used, because it used a top-down, de-compositional mechanism which involves the process identifying and progressively expanding each process in the system. Figure 1 shows the level 0 or the context diagram. It shows the system as a single process with the data flows to and from the different external entities. This help in order to establish the boundaries of the system that are under study (Annett & Stanton, 2000).             As what figure 1 shows, Utility Store is an open system retailer that is working within the boundaries of business rules and different entities, which include the suppliers, bank, employee, community, government, insurance company, etc. The system of Utility Store takes inputs from all the entities involved, and the other way around. On the other hand, Utility Store offers outputs towards them.             Utility Store is a huge system that is consists of 5,711 stores and different departments, which include operational, marketing, sales, inventory, etc, which are all considered as subsystems. Concept of reductionism provides an independent performance of each department and properties varies when system holism is taken into account as emergent properties. For example an unsatisfactory performance of accounts or marketing department can affects the performance of whole organisation. Emergent properties are important as management on the top level decides the policies so idea of holism-top to bottom approach is applicable to the organisation. Functional decomposition of the said system is top to bottom business environment within the net-work of suppliers, community, law/security and its subsystems from executive to shop floor staff level. Sales depends on marketing and supply so the mechanisms of feedback and feed forwards are relevant as well as useful to keep the organisation homeostasis. For example new stock will not be ordered until sale target at existing stock has not been achieved. Therefore, the management uses open system approach, because it recognizes the impacts of external factors and views internal operations in connection with the changes in the external environment (Singh, 2009).

Use of System Theory at Utility Store

According to Stamatis (2001, p. 7) a system is the interdependent group of people, processes or factors which works in order to ...

Introduction             The paper is basically a project which is the application of what have learned about systems thinking. It is organized as follows: the choice of mess; the planning phase which involves the 4 phases of analysis cycle; the analysis which is the main part of the study; the summary; and the conclusion or what have learned from the study. The Choice of Mess             The Millennium Bug Case File of GCD Security is a good choice of mess, with the problems brought about by the Millennium Bug as the complex situation faced by GCD Security.   A case study of a company that addressed and solved issues on the Millennium Bug is a good way of presenting the application and importance of systems thinking.  Issues on the millennium bug affect the internal and external environment of a business and may have immediate solutions that may worsen the situation. The complexity of these issues made a case study on the millennium bug an interesting topic where systems thinking is evident. It is a mess where all the ideas on systems thinking can be integrated to be able to formulate possible solutions on the problems or simplify the complexity of the situation. An organization is a complex system itself, and was even made more complex because of its external environment, which is composed of the competitors, the customers and the uncontrollable factors such as politics, economy, society, technology and disasters. That is an immediate solution to the problem may cause even bigger problems. This implies that most companies have complex systems thus they are usually in complex situations.   The Plan Concepts The general plan in analyzing the issues in millennium bug is to use leadership as the main concept since the writer will pretend to be the manager of the company in the case study. The ability of the company’s leader to manage the interactions of employees and the company’s interaction with the external environment despite the disaster caused by the bug will be discussed. In relation with the leadership concept, risk management will also be discussed. Defining risk management, it is the intention of improving project performance through early risk identification, mitigation, and project life cycle management, focused on the ideas that risk must be anticipated and planned for; risk and its consequences must be easily displayed; and active management of shared risks by stakeholders will result in better on-time within budget performance (ITIM, 2006). The goal of risk management is to is to obtain understanding by all parties involved and create agreement around the real nature of the risks and how they will be managed (ITIM, 2006). When the nature of the risks is identified, the conflicts involved in the issues are also revealed.             Under leadership, the concept of decision-making and stakeholder participation are unavoidable to be discussed. After the risks are assessed, the control and mitigation of risks need careful decision-making by the leader with agreement on the involved parties. The concepts involved with the analysis will be best described using a Concept Map where the relationships between all the concepts involved are clearly presented:                     Figure 1: Concept Map of the Millennium Bug Mess   Use of the Phases of the Analysis The first step to be done to accomplish the plan is to perform the sensing phase. Sensing phase involves the identification of problems and collection of information needed to establish a clear understanding of the issues. In the Case File: Millennium Bug, most of the necessary materials needed are already provided such as the case study of the GCD Security, GCD documents, backgrounder on millennium bug, and article and newspaper clippings about the millennium bug. Other necessary information that will be needed along the analysis process will come from the internet which has various sources about the main topic and other related topics.   In the understanding phase, all the information collected in the sensing phase will be assessed and classified according to their relevance on the main issue. This is the phase where the purpose behind the analysis of the millennium bug will be discussed whether it is discussed to determine the importance of risk management to systems thinking or the importance or for any other purposes. The main and related issues will be discussed in details. The Spray Diagram will be useful in identifying the arguments in the millennium bug issues while the Influence Diagram will be used in determining the relationships among the parties involved in the case study.   The deciding phase will be basically the part where conclusions are made. The decisions needed to address the issues are taken at this point. On the acting phase, the lessons learned will be summarized, and is where recommended actions are provided. The primary focus of the study will be on the aspect of how companies anticipated and dealt with disaster such as the millennium bug.             In general, and in other studies, the four phases of analysis is the same as the five basic activities in analysis that can serve as a framework for a discussion of the methodology of system analysis (Beimborn, 2003). These activities are: Formulation, Search, Explain, Evaluate, and Interpret (Beimborn, 2003) that has been contained in the four phases of cycle of inquiry mentioned in T205. The relationship of these activities with the four phases of analysis can be best explained using a diagram:                                         Figure 2: Four Phases of Analysis   Analysis The Sensing Phase Background             When the age of computer came, many large and even small businesses took the opportunity and the advantages brought about by the utilization of personal computers in their businesses. GCD Security, a small company in Berkshire, started in 1974 and is providing services security systems such CCTV, intruder alarms, remote sensing and others to the residential and commercial sectors. GCD, having most of its system automated, utilized PCs and considered them as one of its most important physical resources. The company’s human resources include skilled engineers that provide installations and services including follow-ups and maintenance. The company’s major clients include the Royal Borough of Windsor and Maidenhead aside from other businesses within the area and other commercial clients.               GCD, although a small company, has established a well-structured organization. The company’s human resources include skilled engineers that provide installations and services including follow-ups and maintenance. GCD has a good working relationship with its suppliers as well as with its clients.        Statement of the Problem             The Millennium bug issue emerged in 1996 and GCD became aware of it in 1997. The company became concern of the issue since it used PC based solutions for its internal tasks such as accounting, word processing and client contact management. This meant that there was a great possibility of inoperativeness with its internal systems aside from the fact that its products are automated electronic systems that have a great possibility of being inoperative too. Because of these, the millennium bug posed threat to the business operations of GCD and the company needed to face related issues such as how the company should deal with Millennium bug, how they will approach and explain the issues to the customers and how the company, together with the suppliers, will approach the issue.                                                                                                                           Figure 3: The Relationship of the Primary Problem and the Relevant Factors Relevant Factors             In the diagram above, there are several relevant factors mentioned such as miscommunications of staff, poor services and operations of the internal IT system and others. These are the results or risks of the millennium bug; it is necessary that GCD consider all these factors in order to look the situation as a whole and not at millennium bug alone. For example, if the company focused too much on solving millennium bug to be able to maintain its information system and continue servicing the clients, it may overlook the suppliers. That is, GCD may have the solution for millennium bug but its suppliers may have none, then the suppliers can not be able to provide GCD with the products they needed. GCD in effect will have to look for other suppliers causing delay for the company’s business operation. This requires systems thinking and a good system analysis. Data Search             To analyze the probability of these issues, the manager of GCD should search and collect relevant data about the millennium bug. These data may come from news and articles. All relevant materials that can be found are analyzed carefully to determine what more other issues can millennium bug cause. Other materials that will be helpful are case studies of other companies that had coped up with disasters and crisis not necessarily millennium bug but any other crisis. Materials about technological forecasting and changes in the society may also be classified as relevant data.             In search for data, the company may conduct interviews about risk management on established large and complex companies from which GCD may get some idea on managing risks. The company can also coordinate with the other companies within the alarm industries; together the industry can provide advice, risks management strategies, alternatives, and customer information services. Coordination with government agencies is also useful, for they conduct in-depth research about different disasters and crisis; government agencies employ experts and can provide the companies advices, strategies and precautionary measures as well as update the company with the development on the technologies that may address such the issues on millennium bug. The Understanding Phase             The understanding phase is the central phase of analysis. This is where theories are developed to support the explanations. The Millennium Bug             The Millennium Bug which is also referred to as the Year 2000 or Y2K bug is a computer problem, more specifically a problem with the dates in the computer. The problem can be traced back to the earlier computing days, about 1950s, when computer programmers, as result of saving amount and space in the memory of the software they created, they only represented the year in a date with only two digits; 1999 is represented as 99, 1978 as 78, 1982 as 82 and so on.  During those times, the idea was convenient and effective, not until when the new millennium was approaching and the software made by IBM, Microsoft and others became popular resulting to long lives of software. Computer users then realized the possible effects of the dating method, that at the turn of the millennium, year 2000 will be presented as 00 but can be perceived by the computer as 1900. This problem implicated risks, effecting many applications on PCs and on mainframes especially those that had embedded date functions. The following are the applications that can be affected by the Y2K Problem (Kesavan & Kimis, 1997): <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Software calendar utility functions in commercial spreadsheets such as Lotus, Excel, and others used commonly in financial applications; </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Calendar applications embedded in personal information managers (PIM and handheld devices; </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Software on commercial planes, military aircraft, weapon systems and satellites; </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Computer Operating Systems (OS) utilizing calendar and clock routines;</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Production control systems containing embedded systems such as heating and temperature controllers of industrial and chemical plants; </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Software of telephone switching systems and other telecommunication services;</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Software of time-based systems such as security and alarm systems used in residential and commercial buildings and other establishments.</li> </ul>   For some businesses, the immediate solution was to replace their computers. But for some, this was a risky move for there were organizations that have used computers for its internal operations such as in the supply chain and as strategy for maintaining service to customers.             The business operations of the transportation industry were also affected by the bug. In 1998, Railtrack, a train service company, cancelled 44 computer projects which include an integrated asset-management system, which was due to create a database of Railtrack’s stock across the rail network (Parsley, 1998). The airline industry is also affected by the bug. The British Airways (BA) invested on upgrading its computer which involves replacement of equipment in aircraft where there are embedded chips that cannot be reprogrammed (Gribben, 1998). BA also coordinated with other airlines, international organizations and governments to ensure the safety and security of its passengers and employees by the year 2000 (Gribben, 1998). These moves had cost the company to spend about £100 million, £32 million of that went to engine maintenance.             The energy sector was also affected by Y2K for if the bug persisted, it may cause electricity failure. In the UK, the Electricity Association, the UK industry representative body confirmed that electricity companies were spending more than 200 million pounds on fixing the millennium bug (Price, 1999). It has also formed a task force to promote to promote readiness.             Furthermore, the government played an important role for the awareness and prevention of the millennium bug since it has a great effect on the economy of a country. In the UK, the economy is heavily dependent on the Small and Medium Enterprises (SMEs) which generated over 1/3 of the country’s GDP. With over 1.3 million SMEs in UK, each employed about less than 250 staff.             In 1996, the UK government set up the Taskforce 2000 to address the Y2K issue. In 1997, it was a new program called Action 2000 was launched which promoted intensive awareness on Y2K with the support of business organizations and professional institutions to provide advice to businesses in dealing with the problem, especially the SMEs which was found out by a survey that it was the sector that was unprepared the most of the Millennium Bug.             Action 2000 constructed a comprehensive model of the industrial and other processes. The model was used to identify critical interdependencies; that is failure of one utility could cause serious problems for others. These utilities which serve as essential services to businesses and also what comprised the national infrastructure of UK include electricity, gas, water and finance. By the end of the program, it was announced that the UK infrastructure was Millennium-ready. Action 2000 also promoted public information campaign to reassure the public that the problem was under control to preventing panic.              A diagram will further describe the interconnections of industries affected by the bug to show how largely could be the damage of such bug in the business sector especially when there are critical interdependencies among the different industries. The diagram below shows the interdependency of the major industry on the essential utilities such as electricity, water, gas and finance.             It is very noticeable that in diagram, a lost or damage to an essential utility has a significant effect on the other. For example, when the water utility was interrupted by the Y2K, the service and the manufacturing industries will be directly affected and interrupted as well as the transportation and the individual household. Figure 4: Interdependencies of Different Industries on Each other and on the Essential Utilities Risk Management             Due to the above risks brought about by the Millennium bug, it is important for companies especially the SMEs to learn how to manage such risks. Unlike large companies, which have the ability to spend additional expenses and has the experiences on dealing with risks and disasters, SMEs needed further education on managing risk.             Risk management is also a step by step process. The first step to risk management is Risk Planning when the company decides on how risk will be treated (ITIM, 2006). In SMEs, it is the responsibility of the manager to identify and articulate the risk and its possible impacts to the company. Risk Identification follows Risk Planning. At this point, the risk is explicitly identified, involving the identification of potential sources of risks, potential risk events and when research and interviews can be conducted. Risk analysis is the next step. It is the process of anticipating and identifying probable impacts on a project, reviewing assumptions, and taking action to prevent a negative impact or to take advantage of other opportunity (ITIM, 2006). The probability of the risk is also determined at this stage as well as the potential consequence of its occurrence (ITIM, 2006). Risk Mitigation then follows; this involves techniques used to control or transfer risk. Some of the most common techniques are budget management to mitigate cost risk, parallel development and prototyping to mitigate technical risk. Risk Mitigation is followed by Risk Control. At this point, the risk can be considered managed or restrained already. Figure 5: Risk Management Process The Deciding/ Acting Phase             With all the necessary information sated above, GCD can now evaluate on the probable approach on the Millennium bug. It is noticeable that the millennium bug is not a problem within a company only rather it is a global problem which needed to be approached with systems thinking, that is GCD will manage the risk with systems approach.             To do this, GCD should weigh the vulnerability of all the stakeholders involved. First to be done is to assess the vulnerability of the company to its information system since many of its operations are interdependent on its information system (see figure 3). Then understand the vulnerability of the suppliers to the millennium bug because it is from the suppliers that GCD’s products came from and without the products, there will be no point of continuing the business as well as the vulnerability of the clients.             It is important for GCD to coordinate with government agencies such as the Action 2000. Because of interdependency of UK’s economy to SMEs like GCD, the government will be much willing to help GCD overcome the risk. As noted above, the British Airways coordinated with other airlines. GCD can do the same; it should also coordinate with other alarm companies to be able to acquire ideas on how to mitigate the millennium bug risks.             The diagram below shows the stakeholders of GCD and the sectors that have significance in the mitigation of the Y2K bug.   Figure 6: Sectors Involved in GCD’s Mitigation of the Millennium Bug             After evaluation, GCD decided to take the following course of actions: RISK PLANNING: <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Form a committee responsible for the Millennium Bug headed by the manager</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Be sure that the company’s organization is well-structured and is ready for changes that might be brought about by the actions necessary to manage the risk</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Review and documentation of all the hardware and software use by GCD</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Investigation of systems used by the company that can probably be affected by the Y2K bug such as the equipments and the telephone system</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Identification and documentation of the products that are possible to be affected by the Y2K bug ( this can bed done with the coordination form the suppliers)</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Review government regulations</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Formulate strategies on how to mitigate the risks</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Set a timetable for proper scheduling and set a target date when the risks are expected to be mitigated</li> </ul>   RISK IDENTIFICATION: <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Conduct research study about the millennium bug</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Consult IT professionals to assist the company all through out the risk management process</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Coordinate with the industry and government agencies such as Action 2000</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Coordinate with the suppliers and know their actions about the bug</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Determine the reactions and perceptions of the clients by coordinating with each of them and reassuring that the company is taking actions </li> </ul> RISK ANALYSIS: <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Evaluate the overall risks cause by the millennium bug and evaluate each risk on how vulnerable the company to these risks</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Evaluate which products and the corresponding the supplier are vulnerable to which risks</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Determine the possible occurrence of each risk and their corresponding consequences. Rating each risk depending on its impact is necessary for effective evaluation and scheduling</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Schedule each risk and assess the possible solutions and prevention for it</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Determine the costs that are accompanied by the prevention of each risk</li> </ul> RISK MITIGATION: <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Determine the resources needed (Financial, human resources, physical resources) and the resources that are affordable to GCD. This might be very expensive for the company so there should be alternatives.</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%">  Determine which method is suitable for the mitigation of the millennium bug. </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Since the millennium bug is technical in nature, parallel development or prototyping method can be used. Mentioned earlier, BA reprogrammed some of its PCs; GCD may do the same depending on the evaluation of IT professionals. The suppliers will be responsible on updating or reprogramming of their products while the clients of the company who have availed products and services from GCD can have their installed products reprogrammed with the cooperation of the respective suppliers. If reprogramming of installed products is not possible (as specified by the supplier and tested by GCD), GCD may replace the product depending on the negotiations with the supplier. There may also be some government regulations that correspond to this case which can be the bases of the actions of GCD. Each product should be specified, tested and evaluated. </li> </ul>   RISK CONTROL: <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Continuous and periodical review of the risk is important to be updated on the possible outcome of the actions taken by GCD. </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> The committee who “debug” the risk should also be the responsible for monitoring since there may be some associated risks with the actions taken </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Assess the changes that has brought about by the actions taken</li> </ul>   It is important to weigh the vulnerability of each stakeholder involved. That is, for every actions taken by the company, each stakeholder are taken to consideration to determine if the action can damage a stakeholder or damage the structure of the company’s business system (e.g. lose a supplier or a loyal customer). Summary             This study is basically an application of what has learned about systems thinking. The study chose issues on the Millennium Bug with the aid of a case study where systems thinking is applied. There are currently many problems and complex situations encountered especially in organizations where problems do not only affect an individual but systems of individuals and an apparent immediate solution to problems may lead to even bigger problems. The paper then focuses on the importance and applications of systems thinking. With this study, a step by step analysis and the processes that can be used in systems thinking are involved, discussed and put into applications.             The case study of GCD Security on how the company dealt with the millennium bug was chosen for this study for several reasons. First, with the use of a company whose system is a complex one will cover areas on systems thinking. Secondly, a small enterprise like GCD, unlike larger companies, still has no enough experience dealing with risks such as the millennium bug. Therefore, a study on how an SME like GCD managed risks is an interesting study. Also, by using a case study of a company, there are other relevant topics that can also be discussed such as risk management.             The planning part involves diagrams to make the discussion more easily to be comprehended. The planning part serves as the outline on what the analysis part is all about. The analysis section has 4 phases: the sensing phase, the understanding phase, and the deciding and action phase. In the sensing phase, the background of the case study is presented; the problems and issues are presented; and using a diagram, the relevant issues associated with the Millennium bug with respect to the company’s operation are identified.             The understanding phase discusses about the data that were gathered for the study. These data gave an overview of what GCD can do to manage the risks brought about by the millennium bug like the possibility reprogramming and coordination with other companies within the industry that are learned form the British Airways. The understanding phase also gave GCD the overview on what the government can help for the company. This phase also provided a step by step process on how to manage risks in a company systematically.             The deciding phase is the evaluation of the how to start risk management. It was learned that weighing the vulnerabilities of each stakeholder in the GCD business system is necessary to be sure the steps that are taken can not bring damage or much problem to all the parties involved. Conclusions             Generally, the study is helpful in managing complex situations specifically overcoming risk in a complex system. It is learned that in a system where a move to overcome risks or problems can be damaging to a part of the system or to the system as a whole. Therefore careful risk management is necessary. It is learned that risk management is not a task that can be done right ahead that whatever obvious possible solution can help an organization overcome risks. Risk management involves step by step process, each step carefully evaluated and executed, avoiding not to interfere with the other member of the system. Also, risks are also done looking at the system as a whole. Like in the case study, GCD considered the help of people and organizations outside the company since GCD is generally part of the economic system of UK. GCD is part of the system of the alarm industry, that any damage to GCD is may have effect on the entire industry. Therefore the primary objective of the study is to expose the significance of systems thinking as well as the relationship of systems thinking to risk management. It is also noticeable that systems thinking is also applicable in understanding other topics such as sustainable development where the environment is taken as part of the systems of organizations; in change management where the vulnerability of each the department in a company are weighed to determine the effect of the change to each department for the company’s system to be effective; and in economics and politics where country will be affected on the actions of the government. References: Gribben, R. (1998) BA puts £100m into grounding millennium bug, City News Electronic Telegraph, February Issue 991 Online <http://www.telegraph.co.uk/htmlContent.jhtml?html=/archive/1998/02/10/cba10.html>   Information Technology Investment Management Process, Introduction to Risk             Management, accessed online on June 9, 2006             <http://www.rongarlow.com/ITIM/Risk/risk.htm>   Kesavan, J. & Kimis, A. (1997), The Millennium Bug,             Accessed online on June 9, 2006             < http://www.doc.ic.ac.uk/~nd/surprise_97/journal/vol4/ak16/>   Parsley, D. (1998) Bug delays Railtrack, The Sunday Times, 31 May,             Acquired from the T205 Case File 3: Millennium Bug        Price, C. (1999) Questions linger on energy, Financial Times, 3 March             Acquired from the T205 Case File 3: Millennium Bug

Application of Systems Thinking

Introduction The paper is basically a project which is the application of what have learned about systems thinking. It is or...