Context Diagram In A Nutshell

A context diagram is a model illustrating the interaction between a product and external people, organizations, or systems. The context diagram is used by business analysts to understand the context and boundaries of the systems within a project. The structural elements of a context diagram comprise the product, external entities, and data flows.

Understanding a context diagram

The context diagram identifies the flow of information between the system and external entities (actors) and helps the project team identify the interfaces that it needs to account for.

Businesses will find context diagrams to be useful when:

  • Work has begun on a new product that is expected to interact or impact existing systems.
  • An existing process is being automated, involving the building of a new system or the implementation of a commercial off-the-shelf (COTS) system.
  • An existing system needs to be replaced – which interfaces will be impacted by the upgrade?
  • Revisions need to be made to a system such that interfaces need to be added or removed.

The context diagram usually forms part of a requirements document and must be read and understood by all key project stakeholders. As a result, it should incorporate plain language wherever possible.

The structural elements of a context diagram

To illustrate key interactions, the diagram incorporates three symbols according to the elements they represent. These elements include:

  1. The product (circle) – or any system, process, or business entity responsible for processing and sending information to each entity. Importantly, the product in question must be within the control of the initiative to change. Systems, processes, people, or organizations that cannot be changed by the initiative should be represented as external entities.
  2. External entities (rectangles) – defined as the people, organizations, and systems that provide data to (or consume data from) the product. In a hotel reservation system (product), external entities include hotel guests, financial institutions, and external reservation systems.
  3. Data flow (directional arrows) – how does the product interact with external entities via data transfer? This encompasses user interfaces, file transfers, reporting, and APIs among other things. Each data flow is represented by an arrow annotated with text detailing the type of data that flows between the product and each entity. The label itself should be a noun giving a very general description of the data flow. For example, data flow between a bank and a hotel reservation system may include labels such as “payment validation request” and “payment validation”.

Benefits of context diagrams

Project teams that are unfamiliar with context diagrams should know that they can realize several benefits:

  • Error identification. Context diagrams provide a means for noting omissions or errors in a business plan or project. This helps the business mitigate risks and reduce costs before project implementation.
  • Scope definition. In some cases, the scope of a project may be hard to communicate to every stakeholder. The context diagram clearly illustrates the scope of a project in a way that is relatable and understandable.
  • Customer clarification. The project team can use the diagram to provide clarity on the user group that it considers to be its customers. This gives the organization impetus and purpose and allows project sponsors to make targeted investment decisions.

Key takeaways:

  • A context diagram graphically represents the flow of information between a product and its people, systems, or organizations.
  • A context diagram contains a product, process, system, or business entity at its center. The product is connected to external entities by directional arrows which describe the nature of data flow between the product and each entity.
  • A context diagram must be created in such a way that all project stakeholders can understand the conceptual relationships between key elements. Primarily this is achieved by assigning very general, noun-based descriptions to the data flow.

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Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"