In designing and developing a computer based automatic test equipment (ATE) system, the interaction between the major elements of the system is as important as the choice of elements themselves. This paper first looks at the five major elements of an engine ATE system and then discusses the interactions of these major elements together as a system.Computer simulation, the first element, is used to define the process and its limits. It is also used later to test and optimize plant level designs. A second major element of an engine ATE system is the definition of the individual processes and the decision on the control technique to employ. A third element is the choice of software language - should the system use a specialized test language that is optimized for the process, or should a more general purpose, widely understood language be used. A fourth parameter that becomes more important as the system grows is communication technique. The paper identifies the direction of communication in the engine ATE environment, both between system elements and between the system and the operator. Finally the paper discusses data reduction techniques used in several recent engine ATE projects. Application of standard statistical methods and a recent limit gaming technique are discussed.