Develop a context diagram. A context diagram is a good way of depicting system boundaries. In the diagram's center is a circle ; inside of it is displayed the system of concern. The outside entities, with which the system interacts directly, are in boxes on either side, connected by data flows depicting the data passed between them. (See Figure 3-5 and its attendant discussion.) DFDs are prepared, in successively more detail, to depict data flows in the system.