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First of all you need to understand what a process is before you start. Then decide if you're going to do a physical diagram (Names of People and/or Departments), or a logical dfd (verbs like Call Customer, Validate Order, etc...). Steps:

  1. The way to start it is to place every process on a large diagram and show the data that moves from one process to another. They don't have to be databases or even electronic data.
  2. Then after you've drawn that, decide what parts of your process will be automated by a system. That helps define the scope of your system.
  3. Take the portion of your process that will be automated it, and summarize the processes into no more than 7 processes. The rule of thumb is that if you can describe it in one page, you don't need to diagram any lower.
  4. Draw the sub-diagrams for those processes that were summarized as sort of drill downs of the larger diagram. Keep in mind that the same rule of 7 applies.
  5. After you've identified all of the flows, then create your context diagram as one process with all of the flows coming from the sources outside of the process (e.g., Customer, Vendor, etc...).

Hints:

  • Validate every process by asking yourself the question about each output coming out of the process, "Do I have all of the ingredients coming out of the process that are required to generate the output?"
  • If you have a process that has one flow in and one flow out, is really necessary to perform that process? Does it really produce value?
  • Keep the diagrams simple and easy for the business to understand. Every diagram should be quickly understood by anyone looking at it.
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Q: What are the do's and dont's of dataflow diagram?
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