Understanding how information flows in an organisation is very important in System Analysis.

1. Identify the information that flows between Customers, Staff, Management 
2. Identify how the information generated. (Forms, Phone Calls, e Payments)
3. Identify data contained in each business activity
4, Define the  information that is requires computerization

This diagram shows how information flows between Business Functions within the business and between Business Functions and External Entities, such as suppliers, customers, government, etc.

The stages in Information Flow Modeling

• Identify the Business Functions for which the flow of information needs to be modeled.
  
  
• Identify and show the information required by the Function and where it comes from – the source will be another Business Function or an External Entity.
  
  
• Identify and show the information created by the Functions that is required by other Business Functions or External Entities.
  
  
• Feedback the Information Flow Models to the business to ensure that they are correct.