A system is a collection of elements and procedures that interact to accomplish a goal. The function of many systems, whether manual or computerized, is to keep an organization well managed and running smoothly. Systems development is a process that consists of analyzing a system, designing a new system or making modifications to the old one, acquiring the needed hardware and software, and getting the new or modified system to work.

There are many systems used in business. Transaction processing systems generally perform tasks that involve tedious recordkeeping that organizations handle regularly. Information systems, which fall into two classes - information reporting systems and decision support systems - provide decision makers access to needed information and to tools that generate information. The term office automation refers to a wide range of systems, including those involving document processing, electronic mail, desk accessories, decision support tools, teleconferencing, and telecommuting. Computers are also used to improve productivity both at the design stage, Computer Aided Design (CAD), and the manufacturing stage, Computer Aided Manufacturing (CAM). The ability of some computer systems to perform ways that would be considered intelligent if observed in humans is called Artificial Intelligence (AI). Main applications areas of AI are expert systems, natural languages, vision systems, and robotics.

Systems development is often divided into five phases: preliminary investigation, systems analysis, system design, system acquisition, and system implementation. These phases are often collectively referred to as the Systems Development Life Cycle (SDLC), since they describe a system from the time it is first studied until the time it is put into use. When a new business pressure necessitates a change in a system, the steps of the cycle begin anew.

The first thing the system analyst does when confronted with a new project assignment is to conduct a preliminary investigation which addresses the nature of the problem under study, the potential scope of the project, possible solutions, and the cost and benefits of these solutions. Next, the system analysis phase begins. Here, the main objective is to study the application in depth to assess the needs of users, and to prepare a list of specific requirements the new system must meet. The system design phase consists of developing a model of the new system and performing a detailed analysis of benefits and costs. Once the system is designed, the analyst must decide from which vendors to buy the necessary hardware and software. This decision is made in the system acquisition phase. Once the required resources have been delivered by the engaged vendors, the system implementation phase begins. This phase includes all the remaining tasks that are necessary to make the system operational and successful, including converting files, debugging, training, and performance appraisal.

There are various approaches to systems development. In the traditional approach, the phases of the SDLC are carried out in the predetermined order. Another approach which is called prototyping is to develop small models of the target system in a series of graduated steps. End-user development is a systems development approach in which the user is primarily responsible for building the system. This method is feasible only in cases where the system being acquired is relatively inexpensive.