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Tests the various parts of the applications work together within a system work. This test the behaviour of an end-to-end integrated system as defined by the scope of a development project. It is usually conducted by independent testers.
System testing may include tests based on risks, requirements, business processes, use cases or high level text descriptions, models or system behaviour, interactions with the operating system and system resources.
The test environment should be as close to the production environment as possible in order to minimise the risk of environment-specific failures not being found in testing.
V-model document: System Specification and System Testing.