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The Context Diagram shows the system under consideration as a single high-level process and then shows the relationship that the system has with other external entities (systems, organizational groups, external data stores, etc.).  

Another name for a Context Diagram is a Context-Level Data-Flow Diagram or a Level-0 Data Flow Diagram.  Since a Context Diagram is a specialized version of Data-Flow Diagram, understanding a bit about Data-Flow Diagrams can be helpful.

A Data-Flow Diagram (DFD) is a graphical visualization of the movement of data through an information system. DFDs are one of the three essential components of the structured-systems analysis and design method (SSADM). A DFD is process centric and depicts 4 main components.

• Processes (circle)
• External Entities (rectangle)
• Data Stores (two horizontal, parallel lines or sometimes and ellipse)
• Data Flows (curved or straight line with arrowhead indicating flow direction)

Each DFD may show a number of processes with data flowing into and out of each process.  If there is a need to show more detail within a particular process, the process is decomposed into a number of smaller processes in a lower level DFD. In this way, the Content Diagram or Context-Level DFD is labeled a “Level-0 DFD” while the next level of decomposition is labeled a “Level-1 DFD”, the next is labeled a “Level-2 DFD”, and so on.

Context Diagrams and Data-Flow Diagrams were created for systems analysis and design.  But like many analysis tools they have been leveraged for other purposes.  For example, they can also be leveraged to capture and communicate the interactions and flow of data between business processes. So, they don’t have to be restricted to systems analysis.

A sample Context Diagram is shown here.

A Context Diagram (and a DFD for that matter) provides no information about the timing, sequencing, or synchronization of processes such as which processes occur in sequence or in parallel.  Therefore it should not be confused with a flowchart or process flow which can show these things.

Some of the benefits of a Context Diagram are:

• Shows the scope and boundaries of a system at a glance including the other systems that interface with it
• No technical knowledge is assumed or required to understand the diagram
• Easy to draw and amend due to its limited notation
• Easy to expand by adding different levels of DFDs
• Can benefit a wide audience including stakeholders, business analyst, data analysts, developers