Scaling the size of parallel systems while maintaining the system performance is an important
problem. A default scaling approach by using larger networks to interconnect more processors works
only up to a limited extent and the derived configurations using this approach are not cost-effective.
Recent advents in VLSI and packaging technologies now offer multiple processors on a single multichip
module. This offers potential to design larger systems by replacing each processor in a base
system by a processor-cluster. Similarly, advents in the interconnection network technology now
provide the ability to use wider and faster network channels. In this paper we analyze the scaling of
systems by taking into account current interconnection and processor-integration technolgies. The
impact of software overhead to send and receive messages in parallel system on its scalability is also
demonstrated. Our results indicate that systems with high message overhead costs can be scaled
in a cost-effective manner by employing larger clusters as computing nodes. This can be achieved
without changing the network until the messaging costs are balanced. A system with balanced
messaging costs can be further scaled in a more cost-effective manner by using larger clusters and
wider network channels.