how to delete old system update files after installation

System Data is a catch-all for all sorts of stuff; they are files that do not fit the specific categories the storage report reports on. Diverse files related to the OS & apps, caches, temp files, backups, plugins, old TM snapshots, update files and more. Most of it isn't identified and you can't just go deleting it.

System update files are normally removed by the system after the update is completed.

I suggest using an app like Daisy Disk or Omni Disk Sweeper to see what's actually taking up space on your drive and where it is located. You will be better informed about what you might be able to remove, or at least copy to an external drive.