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ERP Life Cycle

ERP Life Cycle. Introduction:. This chapter provides an overview of the generally accepted phases of ERP life cycle ( ERPLC ). Each phase of this life cycle is defined, including the roles of each principal participant, key activities and deliverables.

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ERP Life Cycle

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  1. ERP Life Cycle

  2. Introduction: • This chapter provides an overview of the generally accepted phases of ERP life cycle ( ERPLC ). Each phase of this life cycle is defined, including the roles of each principal participant, key activities and deliverables. • The ERP life cycle used to implement systems will not be the same in every organization.

  3. ERPLC Methodology: The following are generally accepted as the best practices of a good ERPLC methodology: 1. Predefined documents/deliverables. • All of the products or deliverables to be developed during the implementation of an ERP system need to be defined. • In the better design methodologies, these products and documents are standardized. • The sequence in which the products are created is also determined.

  4. 2.ERP life cycle phases or checkpoints. • The ERP life cycle should be divided into segments defined by activities, outcomes, or deliverables. • The purpose of having distinct phases or checkpoints is to facilitate decisions about: • completion of the project • changes in direction • cancellation of the project • authorization for use of more resources on the project at these points in time. • This is done to assure that management can continually evaluate project status and make appropriate decisions.

  5. 3. Completion of products/documents are tied to ERP life cycle phase checkpoints. • Specified work is to be completed at each checkpoint. • When a project is reviewed at a checkpoint, it is apparent which products/documents are to be delivered at that point in time. This also helps ensure that the project is on schedule. • The status of work can be determined by examining these checkpoints.

  6. 4. Product document reviews. • Status reviews of projects are performed by evaluating the deliverables produced by the project team. • These products/documents should be produced in a standardized format.

  7. 5. Training is tied to products/documents. • One needs to understand the ERPLC and its deliverables in order to effectively review the process and outcome. • Users and systems maintenance personnel need to understand not only the final system (i.e., its software, hardware, configuration, and controls), but also the requirements definition and analysis process that went into implementing the ERP.

  8. : ERPLC Phases • Project Definition • Requirements Analysis • External Design • Internal Design • Pre-implementation • Implementation • Post-implementation

  9. ERPLC Control Evaluation Guide: • Before mapping the ERPLC Phases to the ERPLC Evaluation Control Guide, the structure of the Control Evaluation Guide should be defined. • This structure consists of: • Business Risks • Control Objectives • Key Controls • Segregation of Duties • Audit Testing. We have studied these points in the previous chapter

  10. Audit Testing: • Audit testing is the verification of key control processes to • determine whether they are effective in containing risk. • providing assurance that the control objective is met.

  11. The objectives of the ERPLC control evaluation are: • To document risks and control objectives for the total business. • To relate business risk and control objectives to key controls for the particular ERP system/procedure. • To document key controls for the particular ERP application. • To relate key controls to audit tests.

  12. ( CEG )Benefits of Control Evaluation GuideDevelopment for ERP applications: Benefits include: • Shared and complete understanding of the high-level business risks and control objectives that pertain to the auditable entity. • coordinated identification of key controls

  13. Stabilization of terms and definitions. • Uniform communication among various participants. • Shared responsibility in the CEG development process among various participants. • Feedback mechanism for ERP System auditing. • Overall, coordinated identification of control weaknesses during ERP system review that is communicated to the project team for attention.

  14. Now that there is a structure for the Control Evaluation Guide, ERP life cycle can be reviewed. • Without structure, the deliverables to be produced and their timeframe cannot be determined. Structure also ensures that necessary requirements are identified and controls installed.

  15. Exhibit 3.1 provides the overview of the ERPLC and is designed to be used in the following manner: As a tool for understanding: It defines the major phases in the ERP life cycle in terms of key activities to be performed and products delivered.

  16. This exhibit can be used to orient the auditor to the ERPLC process by explaining the : • Phases/activities of the ERPLC process. • Participants ( i.e., functional responsibilities for implementation rather than job titles or full-time positions ) in the ERPLC process. • Responsibilities assigned to individual participants. • Products/deliverables to be produced.

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