Satellite data has become an important component of NCEP data assimilation systems. The satellite data currently being used at NCEP include sounders, imagers, altimeters and scatterometers from polar and geostationary platforms. With the development of variational data assimilation techniques, it is now possible to extract more information from the indirect satellite observations. The key to effectively using satellite data is the availability of fast and accurate forward models, quality control and bias correction procedures and a sufficiently mature analysis/assimilation system. The importance of each of these components will be discussed using examples from the NCEP data assimilation system. In addition, the relative importance of each of the components of the satellite observation system currently observed for the NCEP data assimilation systems will be presented.