In business terms, a system is a collection of elements within the business that work together to perform a specific function. Elements of a system include employees, software, outside vendors, individual business departments and a myriad of other elements of the business that work in tandem. A closed system is defined as a system that has no interaction with any elements outside the system itself. For most businesses, a completely isolated system is rarely practical, but in some cases, a closed system does make sense in the context of the business and the system's function within that business. In other cases, the term "closed system" is used to refer to a business system that is not completely closed but that has very little interaction with outside elements.
There are several reasons why closed systems exist in businesses. For example, if a particular system is highly proprietary, containing sensitive information about the company itself or its employees, it might be established as a closed system in order to prevent that information from being corrupted or stolen through interaction with outside systems. Another similar system might be set up to protect it from viruses or electronic intrusion. Often systems are set up to disallow the addition of unauthorized software, making them partially closed in order to protect the system's data.
Another reason why a business might choose to create a closed system is for long-term analysis reasons. One department within the company might wish to analyze specific data, separating that data from any influence of interaction with the outside environment. In this case, such a system would be the best way to provide information for this kind of analysis. A partially closed system also can provide information about how the company responds to very specific environmental changes. This kind of data can be used to determine how the company should respond to these changes.
Aside from very specific uses, a closed system approach generally is much less popular and much less useful to a business than the open-system approach. An open system allows a company to interact with other companies, with customers and with suppliers. The system might have too many limitations for a large company to perform all of its necessary functions and is also subject to entropy as data within the system becomes irrelevant over time. Generally, businesses operate using a variety of systems with various degrees of open and closed approaches, allowing the various systems to provide targeted data and a variety of functionality.