Transcript 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.
The ERP life cycle used to implement systems
will not be the same in every organization.
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.
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.
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.
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.
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.
ERPLC Phases :
 Project
Definition
 Requirements Analysis
 External Design
 Internal Design
 Pre-implementation
 Implementation
 Post-implementation
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
We have

Control Objectives
studied

Key Controls
these points
in the

Segregation of Duties
previous
chapter

Audit Testing.

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.
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.
Benefits of Control Evaluation Guide ( CEG )
Development 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

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.


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.
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.
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.