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FACTORS AFFECTING THE IMPLEMENTATION OF ENTERPRISE RESOURCE
PLANNING IN STATE CORPORATIONS: A CASE STUDY OF NAIROBI CITY
WATER AND SEWERAGE COMPANY
Jacquiline Wanjiru Kimani
School of Human Resource Development, Entrepreneurship and Procurement
Department. Jomo Kenyatta University of Agriculture and Technology. P.O BOX 6200-
00200, Nairobi, Kenya.
ABSTRACT
The procurement role within organizations is playing a pivotal role in the success of
global firms. Procurement has been recognized as a subject of immense strategic
importance that has high impact on organizational performance. Enterprise Resource
Planning (ERP) system is one of the tools that can enhance performance in any
organization. The main objective of this study was to evaluate the challenges affecting
the implementation of ERP. The specific objectives were; to find out how top
management, training, systems security and IT infrastructure and effective project
management affect the implementation of ERP system in NCWSC. The study involved
the review of literature in order to gain an understanding of past undertakings on the
implementation of ERP systems. This was followed by a critical analysis and
identification of research gaps. Stratified random sampling was employed and 10% of the
target population was involved. This added up to fifty respondents in all the six
departments. Primary data was obtained through questionnaires. The gathered data were
analyzed through the use of SPSS version 17. The study concluded that top management,
training, systems security and IT infrastructure and effective project management affect
the implementation of ERP because of the need to continually improve business
processes. On recommendations the study suggested that organizations should embrace
technological changes that are rapidly changing on the environment that the organization
exists.
Keywords: Enterprise Resource Planning, Procurement, Purchasing, Performance and
Supply Chain Management
1.0 INTRODUCTION
1.1 Background of the Study
In today‟s fast paced environment world class performance cannot be sustained through
manual efforts alone. Technology has proved to be a key enabler of business
performance. This is because it offers major improvements in both efficiency and
effectiveness. In order to provide a more efficient government and better services to
citizens, public administrations and agencies have invested in Enterprise Resource
Planning (ERP) systems as their basic technological infrastructure (Raymond et al.,
2005).
Information and Communication Technology (ICT) has been termed the main driver of
Kenya‟s economic growth over the last decade. Since its initiation in 2000, the sector has
outperformed other sectors of economy, growing on average of 20 percent annually and
propelling the combined transport and communication sectors into economy second
largest. The sector has had a tremendous upwards scale performance (Njau, 2010). A lack
of timely and accurate information is a significant barrier to competitiveness for micro,
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small and medium-sized enterprises (MSMEs), which are now widely recognized as the
prime engine of growth in most of the developing countries (http://www.acdivoca.org)
Enterprise Resource Planning (ERP) system, which is recognized as a useful tool in the
view of enterprise process integration, has pursued automated transactions, efficiency of
operational decision making, productivity and development of customer service. ERP
system adoptions in the public-sector organizations is gaining acceptance. The features of
the recent trend in public enterprises are related in that the goal of public enterprises are
mainly based 'cost minimization' rather than 'profit maximization' (Yungmok et al., 2001)
In this study, Nairobi City Water and Sewerage Company has adopted ERP systems and
is now in the phase of stabilization, is the enterprise of concern on the factors affecting
the implementation of Enterprise Resource Planning system in state corporations.
Global procurement through the use of technology helps organizations build the
understanding to optimize their supply side performance. These therefore work together
to improve strategic sourcing, supplier appraisal, supplier performance and contract
management. The use of IT also streamlines the procurement processes and also enforces
policy compliance. This therefore leads us to the fact that the use of technology is
important both in private and public sector in the procurement function. One of the ways
in which information technology has been used to enhance performance is through the
use of Enterprise Resource Planning (ERP). This is because ERPs through the use of
Supplier Relationship Management application enables companies generate sustainable
savings by streamlining and centralizing their procure to pay processes (Ongwae, 2010).
Global enterprises that have established their facilities worldwide invest in ERP solutions
to streamline their back office processes and also integrate these processes to their head
office. Local suppliers will adopt IT automation such as ERP as part of the conformity to
global manufacturer‟s requirements when trading with them. Competition makes
enterprises to invest in technology such as ERP solutions to streamline their back end
processing such as accounting, procurement, and order management. Besides workflow
efficiency, the investment will lower the cost of producing the goods. Resource
management due to scarcity of raw materials and other resources make organizations
globally to improve their efficiency and therefore the need to invest in solutions that will
assist them in better planning and execution in producing the end product (Tong, 2008).
After 1990s development of advanced tools in information technology led to the
development of ERPs. Many organizations around the world have been implementing
ERP system to have uniform information system in their business and to reengineer their
business process. Many operating and manufacturing organizations have been able to
achieve high levels of performance in today‟s competitive environment by using various
IT tools that automate their routine organizational activities (Langenwalter, 2000). ERP is
designed to support medium and large business applications and processes. ERP systems
work as backbone of IS and promise to solve the problem of fragmented information by
providing seamless integration of all the information flowing through the company across
the different functional and business units, across organizational units and geographical
locations in the world.
Companies in Africa have historically been slower off the mark in using IT to automate
business processes, they are fast catching up and those still relying on manual systems are
no longer commonplace. The ERP requirements of companies in Africa are largely
consistent with those of businesses in the rest of the world (Marketos, 2010).
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Enterprise Resource Planning (ERP) systems have transformed the way organizations go
about the process of providing information systems. They promise to provide an off-the-
shelf solution to the information needs of organizations in Kenya (Otieno, 2008). In
Kenya, supermarket chains have adopted the use of ERP system to manage their product
planning, purchasing, inventory management, supplier integration, customer service,
finance, human resource management and order tracking. Basically, ERP has been used
to gaining competitive advantage and reduce costs by improving its overall efficiency in
managing inventory and sales (Shah, 2011).
Enterprise Resource Planning is a family of software packages used to integrate business
organizations with one another (Chase, 2001). ERP has had a positive impact on the
ability of businesses to improve working capital, implement a Total Quality Management
(TQM) culture, lower inventory levels, optimize raw materials and sell and deliver
products to the customers (Shtub, 1999). ERP has helped alleviate the arduous job of
supporting inflexible systems that in most cases result in cost increases, data redundancy
and inaccuracy and above all, various inefficiencies (O'Leary, 2000). Ideally, ERP is a
computer system that keeps managers informed about what is happening in real-time
throughout a corporation and its global connections (Jacobs et al., 2000).
The use of ERP increases visibility into the complete procurement process, a
comprehensive spend and procurement analysis, supplier performance analysis, supplier
payables analysis and employees expense analysis. Through a complete end to end
process an organization can reduce costs, enhance profitability, and increase customer
satisfaction and gain competitive advantage. ERP helps an organization gain a holistic
view of procurement therefore identifying opportunities for consolidation and cost
reduction (Thomas and Jajodia, 2004).
Enterprise Resource Planning is considered to be a type of Information System which is
most adequate for today‟s business organizations, due to the increasingly more complex
business world and more demanding market. By using an ERP system, the user gains
total control of all the processes in a company. The ERP system can be divided into
several modules, which have different functionalities which correspond to different
processes involved in business organizations. Different ERP systems have different
modules, depending on the type of business which the company drives (Beynon and
Davies, 2002).
ERP-systems have strength in that different modules can reach and interact with each
other, which give the system great flexibility and structure. Instead of having small
independent systems designed for controlling and supporting different departments of a
company, an ERP system can be used which function as all these systems in one. The
data stored in one independent system cannot be directly reached by another, whereas
using an ERP system, for example, data concerning an order can be viewed and which
only store data inside the different systems. This is because an ERP system has a
centralized database of the organization‟s data (Beynon and Davies, 2002).
1.1.1 Evolution of ERP
Enterprise Resource Planning (ERP) systems first surfaced in the 1990‟s and rapidly
became very popular because this new technology seemed to be the „magic bullet‟
entrepreneurs had hoped for (Markus et al., 1998). With the promise of integrating cross
functional organizational units and providing the ability to manage the whole
organization from one single IT architecture (Gable, 1998), it is no wonder the huge
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number of organizations that started implementing it. Many definitions for enterprise
systems have been advanced by researchers and there are some which are all
encompassing. Hossain et al, (2002) define the concept as “software systems for business
management, encompassing modules supporting functional areas such as planning,
manufacturing, sales, marketing, distribution, accounting, financial, human resource
management, project management, inventory management, service and maintenance,
transportation and e-business”. (Davenport, 1998) states that the system aims at
integrating all the information flowing through the company; financial, accounting,
human resource, supply chain and customer information (Hossain et al., 2002). The
concept of ERP was first conceived in the 1960‟s with the idea of centralized computing
systems which were designed to automate inventory control systems (Hossain et al.,
2002).
These systems were legacy systems and were built on programming languages such as
FORTRAN, ALGOL AND COBOL. This concept was further developed and in the
1970‟s, a Material Requirement Planning (MRP) system was released. This system had
the basic task of assisting the manufacturing process by planning necessary requirements
according to the master production schedule. A few years later, in the 1980‟s, another
version of the MRP was released, and was named Material Requirements Planning II
(MRPII). This later system had more functionality such as project management, finance,
human resources etc. These systems were very helpful in the production process, but had
their major setback in the fact that their functionality could not be extended into other
business units. In addition to this, the systems also required a high level of technical
expertise in terms of manpower and machines (http://www.erpwire.com/erp-articles/erp-
evolution.htm). In the early 1990‟s the MRPII had evolved finally giving birth to ERP.
This powerful new system was mainly based on the former MRP and MRPII and had the
power of enterprise wide inter functional coordination and integration. Some of the major
players (vendors) in the ERP world today include SAP, Oracle, Baan, PeopleSoft and
Microsoft Dynamics.
Davenport (1998) has argued that enterprise systems fail, not because of technical
reasons, but due to business problems. He further explains that companies fail to
reconcile the technological needs of the system with the business needs of the
organization. Every organization has its own unique business process, but enterprise
systems however combine a set of best practices and integrate them all in one package
with the hope of serving a wide variety of organizations. These systems therefore might
not always meet the exact needs of every firm and as such this necessitates re-engineering
of either processes or software in order to keep the two aligned. The task of alignment is
of strategic importance to implementation success. Swan et al (1999) argue that one of
the reasons for high failure rate in the implementation of ERP systems is the difference in
interest between customer organizations, which desire a unique business solution and
ERP vendors who are more concerned about a generic solution, which can be applied to a
broad market.
Yasar et al (2000) argue that unlike most other IT projects, enterprise system projects
involve a large scale change of the entire organization‟s way of doing business and the
way work is done. They further state that in order to successfully implement such
systems, it is important to treat it as change management and focus on an integrated
approach of Business Process Management. We can infer from this that treating such
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projects in any other way without fully realizing the change aspect on the organization
can easily lead to misalignment between organizational needs and system capabilities.
Hong and Kim (2002) support this by stressing that ERP implementation is process based
rather than function based. They further support their arguments by stating that ERP
implementation leads to disruptive organizational changes.
1.1.2 Overview of ERP – Systems
According to Wallace et al, (2001) enterprise systems links customers and suppliers into
a computer supply chain, employ proven success for decision making, coordinate sales,
marketing, operations, logistics, purchasing, finance, product development, and human
resources. Davenport (2000) declared that you can view the holistic view of business
from single information and IT architecture. It manages all the enterprise processes in a
coordinated method, and provides timely and reliable information in order to make right
decisions (Mabert, 2001).
Bradford (2008) pointed some advantages of using ERP like limited interfaces with
single application architecture, lower costs if integrated successfully, access of
information across a mix of applications, sole system to support organizational
procedures and tasks, removal of small and unnecessary systems, automation of tasks
with high impact and allow access to real time data support of multiple currencies and
languages for multinational, support for wide range of industries oil and gas, health care,
chemicals, banking and power industries and so on.
1.1.3 The profile of the Nairobi City Water and Sewerage Company
Nairobi City Water and Sewerage Company (NCWSC) is a water service provider
charged with the provision of water and sewerage services in Nairobi. Those services
were previously offered by the Water and Sewerage Department of the Nairobi City
Council. Nairobi City Water and Sewerage Company‟s formation arose from the
enactment of the Water Act 2002, which created new institutions to manage water
resources in the country. Under the new Act, water service providers will be licensed by
water service boards to retail water in their jurisdictions. Nairobi City Water and
Sewerage Company is one such water service provider, which has been appointed by the
Athi Water Service Board to provide water and sewerage services to the residents of
Nairobi and its environs.
The company is engaged purely in providing water and sewerage services to the residents
of Nairobi. The NCWSC is a subsidiary of the Nairobi City Council. The company
however, has operational autonomy to enable it to run efficiently and without
interference. The Company has an independent Board of twelve Directors constituting of
professional individuals drawn from private sector organizations, professional bodies, the
NGO sector and the City Council. To enhance the Nairobi City Water and Sewerage
Company‟s efficiency, the senior management team of the Company has been recruited
competitively from the job market. Both Directors and senior management staff are
bound by code of ethics that assures suppliers of due diligence in keeping with the
Company‟s goal of strengthening its corporate governance.
Since the Company is run on commercial principles, staff and management are integrated
into a competitive and productive environment that is customer-focused and results-
oriented. The Company is also ISO 9001 certified to ensure the consumers on the quality
management systems adopted within the Company. Currently, of the three million
residents of Nairobi, only 50 per cent have direct access to piped water. The rest obtain
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water from kiosks, vendors and illegal connections. Of the existing customers, about 40
per cent receive water on the 24-hour basis. The Nairobi City Water and Sewerage
Company is committed to ensuring that all stakeholders receive water regularly and
efficiently and that the water reaching the customers is of highest quality. The Company
aspires to be a role model among other water companies established across Africa.
Enterprise Resource planning was first implemented in Nairobi City Water and Sewerage
Company in the year 2006. The objective of the ERP implementation was to streamline
operations, reduce costs, improve efficiency, maximize profits, minimize waste, devote
talent to core business instead of overheads and also to realize better services to
customers and support better relationships with key partners through information sharing.
Customers were also targeted to access products and services better and also be billed
online through the use of technology in water management in Nairobi City Water and
Sewerage Company. The company is also investing on modern data loggers which are
GPS enabled to improve accuracy of locating the water meters. This will enhance levels
of data automation, accurate data capture and billing (Financial Post August, 2011).
1.2 Statement of the problem
Public organizations were not the initial target of many ERP vendors as they developed
products suitable for manufacturing companies. Nevertheless, ERP systems are
increasingly being implemented in the public sector (Thomas et al., 2004). Scheer et al.,
(2000) argue that at least half of all ERP implementation projects are judged to be
failures. In support of this assertion, research has shown that up to 90% of all ERP
implementation projects usually go over budget, or end up late and about half of them fail
to achieve the desired goals (Martin, 1998). So many theories and explanations have
emerged over the years which try to shed some light on why so many implementation
projects have failed. Many scholars and entrepreneurs would agree that the poor handling
of the critical success factors (CSF) which is associated with implementing enterprise
wide systems account for the high rate of failure. These CSF are widely documented in
ERP literature with some disparities.
Nairobi City Water and Sewerage Company is one such corporation that has adopted the
use of technology through the use of Enterprise Resource Planning in order to enhance
water management. However, the implementation has been slow and the organization
experiences loss of revenue through illegal connections and as such the organization can
only account for 60% of the water that it distributes yearly (Financial Post August, 2011).
Since public institutions are concerned with service provision to its citizens through
taxpayers money, this shows that funds are not utilized properly hence service delivery is
poor. Besides the system has also not been fully integrated with all the functions of the
organization therefore some functions operate as standalone systems. No study has been
done to establish the extent to which the various factors affect the implementation of ERP
system in state corporations. These poses a gap which this study sought to fill through a
case study of Nairobi City Water and Sewerage Company.
1.3 Objectives of the study
1.3.1 General Objective
The main objective of the study was to examine the factors affecting the implementation
of Enterprise Resource Planning in state corporations with a focus on Nairobi City Water
and Sewerage Company.
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1.3.2 Specific objectives
The study was guided by the following specific objectives;
i) To find out how top management support affects the implementation of ERP
in NCWSC.
ii) To establish the effect of training on the implementation of ERP in NCWSC.
iii) To analyze the effect of systems security and IT infrastructure on the
implementation of ERP system in NCWSC.
iv) To establish the effect of effective project management on implementation of
ERP in NCWSC
1.4 Research Questions
The study sought to respond to the following research questions.
i) How does top management support affect the implementation of ERP in
NCWSC?
ii) How does training affect the implementation of ERP in NCWSC?
iii) How does systems security and IT infrastructure affect the implementation of
ERP in NCWSC?
iv) How does effective project management affect the implementation of ERP in
NCWSC?
1.5 Significance of the study
The study was of great importance to the following stakeholders;
1.5.1 Management of the organization
The findings of this study were useful to the management of organizations in state
corporations. The study provided useful information that helped the management of state
corporations in implementing Enterprise Resource Planning systems and strategies
towards addressing the challenges that face the implementation of ERP systems in
organizations.
1.5.2 Employees
This study was of assistance to the employees because it was used as a reference during
the implementation of other projects in the organization
1.5.3 Researchers and other scholars
This study was also useful to future researchers who might be interested to research
further.
1.6 Scope of the study
The research study was carried out at Nairobi City Water and Sewerage Company
headquarters in Nairobi Industrial Area. They have other offices in Pangani, Eastleigh,
Westlands, Adams Arcade, Mombasa Road and Kayole. They also have various dam
sites in Ndakaini Dam, Sasumua, Ng‟ethu and Ruiru and also their treatment plants at
Kabete and Ruai. All the functions of the various departments are done centrally at their
headquarters and as such the study will cover six organizational departments located at
their head office. The study is expected to give insights on the factors affecting the
implementation of ERP.
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1.7 Limitations of the study
The study used questionnaires which was voluntary and relied on data as provided by the
respondents. The confidentiality policy in an organization affected the research and the
researcher produced an introduction letter from the college to the management in order to
avoid suspicion and also to enable the management to disclose much information
concerning the research study.
Some respondents were demotivated to provide data as they were unable to relate how
the research would assist them directly or indirectly. The researcher however assured
them that the findings of the research will be useful in the organization.
2.0 LITERATURE REVIEW
2.1 Introduction
Section two covers contributions from other scholars on Enterprise Resource Planning.
The section is thus structured into conceptual framework, theoretical, review and
empirical review.
2.2 Conceptual Framework
This section discusses the conceptual framework for the study. It shows the
conceptualizations between the independent and dependent variables. The independent
variables for purposes of this study are Top management support, Training and change
management, Security Systems and IT infrastructure and Effective project management
while the dependent variable is the ERP implementation. This conceptualization is based
on the arguments by Jerrar et al (2000).
Independent Variables Dependent Variable
Figure 2.1 Factors affecting implementation of ERP
2.3 Theoretical Review
2.3.1 ERP Implementation Factors
Cotteleer (2003) claimed that there have been many reports of unsuccessful ERP
implementations in famous organizations like Hershey to ship candy at Halloween, Nike
losing shoe orders, and Foxmeyer‟s failure to process orders. Umble (2003) reported that
a mismatch between ERP and organization‟s functions can have significant impacts on
organizational adoption, which can lead to implementation failure. If there is a mismatch
between business functions, data and output then the risks for ERP implementation will
be high (Soh, 2000). Different ERP implementation phases are associated with specific
ERP implementation problems (Markus, 2000). ERP require greatest attention to its
Top Management Support
Systems security and
IT Infrastructure
ERP Implementation
Training
Effective Project
Management
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dynamic and evolutionary nature and it requires a very flexible approach for
implementation to a new venture (Cliffe, 1997). Cost, time and lack of consultancy also
play an important role for ERP implementation failure (Bradford et al., 2008).
2.3.2 Top Management Support
Top management support has been consistently identified as the most important and
crucial success factor in ERP system implementation projects. Top management provides
the necessary resources and authority or power for project success. Top management
support in ERP implementation has two main facets that is providing leadership and
providing the necessary resources. To implement ERP system successfully, management
should monitor the implementation progress and provide clear direction of the project.
They must be willing to allow for a mindset change by accepting that a lot of learning has
to be done at all levels, including themselves (Bhatti, 2005).
For the good of the employees and the organization, managers must learn to facilitate the
introduction of changes into the workplace (Sheth, 1981). Al-Mashari et al (2000) assert
that effective implementation of ERP requires establishing core competencies, among
which is the use of change management strategies to promote the infusion of ERP in the
workplace. Communication can be used as a major strategy in changing the attitude of
the potential users. Top management can create more effective awareness for the ERP
system by communicating its benefits to the workers. In many cases, ERP
implementation failed because of lack of communication (Al-Mashari et al, 2000).
The most frequently discussed CSF, identified by most of the researchers is that a
successful ERP implementation requires top management support, because an
implementation involves significant change to existing business processes as well as a
significant amount of capital investment therefore gaining the required amount of support
from top management becomes paramount (Wong et al., 2007)
Top management support is needed throughout the implementation. The project must
receive approval from top management (Bingi et al., 1999) and align with strategic
business goals (Sumner, 1999). This can be achieved by tying management bonuses to
project success (Wee, 2000). Top management needs to publicly and explicitly identify
the project as a top priority (Wee, 2000). Senior management must be committed with its
own involvement and willingness to allocate valuable resources to the implementation
effort (Holland et al., 1999). This involves providing the needed people for the
implementation and giving appropriate amount of time to get the job done (Roberts et al.,
1992). Managers should legitimize new goals and objectives. A shared vision of the
organization and the role of the new system and structures should be communicated to
employees. New organizational structures, roles and responsibilities should be
established and approved. Policies should be set by top management to establish new
systems in the company. In times of conflict, managers should mediate between parties
(Roberts et al., 1992).
There is need for a project champion in an ERP implementation because the project lies
heavily on organizational support perseverance. The commitment of the project
champion is critical to drive consensus and to oversee the entire implementation project.
The project champion should be an advocate for the project and must continually manage
resistance and change. The project champion must be a high level official in the
organization to facilitate goal setting and legitimize change (Delgado et al., 2006).
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2.3.3 Training
Training is one of the most cited Critical Success Factors (CSFs) in Enterprise Resource
Planning (ERP) implementation projects (Bancroft et al., 1998). In order to realize
significant benefits from ERP systems a considerable amount of training is required
(Wortmann, 1998). There must be a training plan and it should take into consideration
both technical staff and end-users, with its scope depending on the type of
implementation approach selected. Some case studies of ERP implementations have
shown the importance of effective training at all levels (Kale, 2000).
Cohen (2010) points out that implementation and training are the crux of an ERP system
and businesses that were not supported in this sense developed a negative perception of
the system. Summers (2010) said that 90% of ERP implementation in public institutions
failed because companies did not choose the right business partner and thus lacked the
support, consultancy and training critical to the process. Koch (1996) mentioned that
“without proper training, about 30 to 40 percent of front-line workers will not be able to
handle the demands of the new system”. Hence, ERP systems are complex and demand
rigorous training. As Bingi et al. (1999) says “it is difficult for trainers or consultants to
pass on the knowledge to the employees in a short period of time.”
Coombs (2007) recommends that all employees should be trained on the new technology,
even if the technology is easy to use. Employees should be provided handouts to enhance
post-training results. Managers should also organize a group of employees who support
the new technology and can spread the word about the benefits of the new tool. Coombs
further mentions that administrators should also provide employee incentives. Incentives
will help employees realize that the change is not just one person‟s idea and that
administrators expect everyone to use the new technology.
Sufficient budget should be allocated on users in the training sessions and software
design process (James, 2004). Their objectives should be clear in order to understand the
system (Umble, 2003). According to Wee (2000) support organization is also critical to
meet user‟s needs after installation. The fact that enterprises demand for a customized
ERP system, it makes the whole system‟s structure change without a fixed schedule (Xue
et al., 2005). So, the enterprises face the problem of the systems‟ re-adjustment. The
employees need to understand the procedure logic that the whole ERP operates through
the continuous training.
Coulson et al, (2003) propose a training model that is based on the whole ERP concepts.
They emphasize the operators have to understand the entire “Blue Print” of the system
continuously so that it can make the quality of the entire ERP usage and efficiency reach
to the optimization. They provide with another training strategy and make the users‟
learning come to all kinds of knowledge levels. After adopting the training model, the
users still remind themselves the concepts of ERP. Therefore, the ERP system is
implemented into usage efficiently. So, it is necessary to help the enterprises proceed
with the training schedule by a decisive model of training.
2.3.4 Systems Security and IT Infrastructure
According to Bhatti (2005) adequate IT infrastructure, hardware and networking are
crucial for an ERP system‟s success. It is clear that ERP implementation involves a
complex transition from legacy information systems and business processes to an
integrated IT infra-structure and common business process throughout the organization.
The concept of task-technology fit (Goodhue and Thompson 1995) can be identified as
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one possible measure for assessing the suitability of a system for a user‟s job tasks. This
measure describes the correspondence between task requirements and functionality of the
technical solution. If the correspondence is perceived high, a user of such a technical
solution should be relatively satisfied with the solution (and vice versa). Information
systems involve different logic and ways of achieving certain goals. ERP systems are rich
in functionality for managing functionally different sorts of tasks and activities almost in
all kinds of businesses (Davenport 1998). According to Luo et al, (2004) organizations
may be overwhelmed by the required organizational changes to fit the system, and
dealing with ever changing ERP technology and its infrastructure. Further, any successful
ERP implementation requires a fit between the ERP system and the organizational
processes it supports.
As technology advances, aspects of systems security emerge and especially the security
and privacy of the organization‟s system. Information security contains a set of
principles, regulations methodologies, techniques and tools. Henderson et al (1999)
indicate the emerging importance of privacy and its implications to Information Systems
managers. According to Marianne et al (1996), security benefits have both direct and
indirect costs to the organization. Direct costs include purchasing, installing and
administering security measures. Security measures can also affect system performance,
employee morale, or retraining requirements.
System security includes: operating system, authorization, network equipment, access,
applications, access system functions, data access, virus prevention, intrusion monitoring,
tracking data changes, the security of data backup and archiving, security management
regulations of the host room and so on. Thus, in the implementation of ERP systems,
there is widespread phenomenon of no great importance to system security such as users
do not pay attention in keeping their password confidential, sharing of passwords, many
super-users authorization and so on. A direct consequence of the lack of safety awareness
in the security design of the system is that there are loopholes and short comings. In
recent years, there have been newspaper reports that banks or corporate computer
systems have been illegally invaded the news, this wake-up call to the enterprises
(Henderson et al., 1999)
Despite increasing investment in information security and its strategic role in today's
business success, effective implementation of information security strategy still remains
one of the top challenges facing global organizations (PricewaterhouseCoopers, 2008).
Businesses have been urged to make information security, a strategic issue for
organizations to compete and survive in this era of global economy and ever changing
enterprise risk (Amaio, 2009). Success in such demanding business environments
depends in large part on implementing an effective information security strategy to
protect information and information assets. Recent information security literature
recommends organizations employ an overall information security strategy that integrates
“people, processes, technology, and operations capabilities” to ensure effective defenses
across the organization (Allen, 2005). Additionally, today's global connectedness and
rapidly advancing information technologies have made technology driven security
solutions inadequate to meet information security challenges (Alberts, 2001). In order to
face the challenges and to take advantage of new opportunities brought forth by
information technology advances, Caralli (2004) suggests that organizations shift the
focus from a technology based information security strategy to an organizational based
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approach that considers a core set of organizational capabilities. Therefore, the
identification and understanding of organizational capabilities is essential to logically
recognize the relationship between information security strategy implementation success
and organization performance.
An organization can benefit from its ability to protect information and the environment in
which it exists. Among these benefits are, maintaining compliance with the law,
preserving brand strength, and company reputation, increasing customer trust, sustaining
business resiliency, and thereby achieving organizational objectives and improving
business performance (Ezingeard et al., 2005).
The challenges of a competitive marketplace with constantly changing business
requirements and the upward trend of cyber threats are realizing the need for a more
strategic view of information security (Kankanhalli et al., 2003). In addition, despite
technical advances that provide existing tools to protect information assets, technology
alone is not sufficient as information security threats and vulnerabilities have also
increased (Deloitte, 2008).
2.3.5 Effective Project Management
Project Management involves the use of skills and knowledge in coordinating the
scheduling and monitoring of defined activities to ensure that the stated objectives of
implementation projects are achieved. The formal project implementation plan defines
project activities, commits personnel to those activities, and promotes organizational
support by organizing the implementation process (Bhatti, 2005).
Project management plays an important role in planning the whole project direction and
to ensure that the undertaken ERP project can be implemented on time, on budget and
meet the requirements of the company (Wong et al., 2007). Good project management is
essential. An individual or group of people should be given responsibility to drive success
in project management (Rosario, 2000). First, scope should be established (Holland et al.,
1999) and controlled (Rosario, 2000). The scope must be clearly defined and be limited.
This includes the amount of the systems implemented, involvement of business units, and
amount of business process reengineering needed. Any proposed changes should be
evaluated against business benefits and, as far as possible, implemented at a later phase
(Sumner et al., 1999). Additionally, scope expansion requests need to be assessed in
terms of the additional time and cost of proposed changes (Sumner, 1999). Then the
project must be formally defined in terms of its milestones (Holland et al., 1999). The
critical paths of the project should be determined. Timeliness of project and the forcing of
timely decisions should be managed (Rosario, 2000). Deadlines should be met to help
stay within the schedule and budget and to maintain credibility (Wee, 2000). Project
management should be disciplined with coordinated training and active human resource
department involvement (Falkowski et al., 1998). Additionally, there should be planning
of well defined tasks and accurate estimation of required effort. The escalation of issues
and conflicts should be managed (Rosario, 2000). Delivering early measures of success is
important (Wee, 2000). Rapid, successive and contained deliverables are critical. A focus
on results and Constant tracking of schedules and budgets against targets are also
important (Wee, 2000).
The milestones and delivery date of the project must be realistic and clearly stated. Due
to the large number of parties involved in ERP implementation, it is critical to coordinate
project activities across all affected parties. Internal integration tools are necessary to
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facilitate collaboration with external stakeholders and to assure that user and process
requirements are being integrated into the system. The success of the project can be
gauged by completion dates, costs, quality and system performance (Delgado et al.,
2006).
2.4 Empirical Review
Maina (2007) indicates that the Challenges in the use of Enterprise Resource Planning in
Kenyan retail banks include; inadequate support from top management, inadequate
resources and employee resistance. Enterprise Resource Planning has the following
benefits to organizations as identified by Achillo (2008); Savings from reduction in the
cost of ordering non production goods, Reduction in cycle time, Increased customer
satisfaction, ensured streamlining of the procurement process and eliminated
administrative overheads, cross business entity analysis for better contracts and pricing
and other savings accrued from reorganization of procurement professionals. Some
researchers have studied about defining business process requirements for large-scale
public sector ERP implementations (Blick et al., 2003). However; researches which are
related with the public enterprise who adopted ERP system and its challenges in
implementation are still limited. Surveys conducted by Harvard Business School revealed
that despite the high investments in ERP systems, ERP implementations are still mired by
cost and schedule overruns, resistance to business process change, unavailability of
adequate skills, and overall under achievement relative to the expectation benefits
accruing from ERP (Austin, et al 2003).
In the past five years, a number of companies in Kenya have implemented Enterprise
Resource Planning systems in their organizations. Kenya Power and Lighting Company
(KPLC) implemented the SAP R/3 system in 1997, a number of other companies have
also implemented similar products. In 2006, three government corporations namely:
Kenya Ports Authority, Telkom Kenya Ltd., and Kenya Pipeline embarked on ERP
implementation. The major focus is on large ERP and inventory management systems.
The Kenyan Corporations implemented Enterprise Resource Planning systems in order to
improve management control (Otieno, 2008). Parastatals like Kenya Revenue Authority,
Kenya Ports Authority and Kenya Pipeline are using Enterprise Resource Planning to
provide online services to the public (Magutu et al., 2010).
The inherent appeal of ERP systems has not gone unnoticed globally (Xue et al., 2005).
Indeed, recent years have witnessed a dramatic increase in the adoption and diffusion of
ERP systems. However, the transfer of information systems like ERP systems, which are
typically developed in industrialized countries, to developing countries is often marred by
problems of mismatch with local cultural, economic and regulatory requirements (Molla
and Loukis, 2005).
Early studies conducted by Mabert et al. (2001) where they gave a breakdown of
implementation costs associated with ERP implementation states that the system-based
costs averaged 40% of the total cost, the remaining 60% of the cost went to training and
professional services. The ERP software cost averaged a mere 15% of the total cost of the
system implementation. This has particular implications in the sense that most ERP
decisions are driven mostly by software selection, thereby resulting in cost overruns for
companies that failed to see the true cost of ERP implementation.
Some studies contradict that sufficient financial benefits are achieved after ERP
implementation. This can be seen for example when Kennerley et al, (2001) concluded
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that return on sales in specific was found unaffected after implementing ERP systems.
The study by Wieder et al (2006) also stated that some research found that specific
financial benefits of ERP systems were not accumulated when comparing between ERP
users and non ERP users. Wei (2008) added that some researchers found long-term
positive effects of ERP on financial performance, while other researchers only suggest
that ERP can help keep performance as it is and does not improve it from the financial
aspect.
2.5 Critique
There is need for proper research on the extent to which each of the various factors affect
the implementation of ERP systems. Little has been done in relation to the management
and the operationalization of top management support, training, systems security and IT
infrastructure and effective project management metrics. Usually, the metrics proposed in
the ERP implementation methodologies are related with milestones and costs aspects.
Some organizations use an in-house training approach while others prefer to use training
consultants from outside (Esteves 2000). According to Esteves et al, (2002), training and
system security activities in a SAP implementation are in the ranking of the most critical
activities.
2.6 Summary and Gaps
From the foregoing literature challenges in the adoption of ERP in organizations have
been discussed. The impact of ERP on business performance has also been presented.
Maina (2007) did a study on the challenges in the use of ERP in retail banks in Kenya.
Among the challenges identified were inadequate training, inadequate resources and
resistance to change from employees and management. Although literature seemed to
agree with the argument that ERP improves performance, there were still some concerns
expressed by some scholars that there might be reverse causality between pre and post
implementation with a drop in some performance indicators (Hitt, 2002). Some
researchers tried to give reasons for this. For example, Fub et al, (2007) suggest that
services-sector business (like banks) adopting ERP usually anticipate and utilize ERP
systems for effectiveness more commonly than efficiency, therefore cost reductions and
productivity might not be as important for them as better quality business processes and
better information quality. For such ERP adopters making efficiency and productivity
measurements is inaccurate and can have negative causality.
Therefore, previous research has found contradicting findings regarding the effect of ERP
systems on business performance. Previous researchers have done researches on how
ERP affects business performance and some researchers have found that ERP systems
can affect overall business performance positively; others have only found ERP systems
to affect specific areas and not the overall business performance. This can then suggest
that ERP systems do not always affect business performance positively and some
contributing factors affect this relationship (Kang et al, 2008). The study therefore sought
to establish the causal factors that affect the performance of ERP and their
operationalization metrics.
3.0 RESEARCH METHODOLOGY
3.1 Introduction
According to Kothari (2003) research methodology involves details in approaches and
procedures used in carrying out studies. It includes the techniques, methods and
procedures adopted in the research. This section discusses the research design, target
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population, sample and sampling procedures, research instruments, validity and
reliability, data collection procedure and data analysis techniques.
3.2 Research Design
This study employed descriptive research design with an illustration of a case study.
According to Kothari (2003) a descriptive research design describes the state of affairs as
it exists in the present. A descriptive research design was appropriate as the study
involved fact finding to describe the factors affecting the implementation of ERP and
documenting the findings. A descriptive research design is also appropriate as it is
structured and is free from bias and represents data as it is (Kothari 2003).
3.3 Target Population
According to Cooper and Schindler (2003), a population is defined as the total collection
of elements about which we wish to make some inferences. Gall et al, (1983) also defines
a target population as the members of a real or hypothetical set of people, events or
objects to which the researcher wishes to generalize the results of the research. The target
populations for this study were the employees of NCWSC headquarters in Nairobi from
various departments since all their functions are centralized. The target population
comprises of 500 employees of the company.
Table 3.1 Target Population
Department Number
1 Commercial 92
2 Legal 12
3 Human Resource 32
4 Procurement 36
5 Finance 24
6 Technical 304
Total 500
3.4 Sample and sampling Technique
According to Kothari (1990) sampling is the process by which a relatively small number
of individuals, objects or events is selected in order to find out something about the entire
population from which it was selected. Stratified random sampling was used in this study.
Stratified random sampling technique is suitable as it gives each respondent in every
department a chance of being selected and also ensures that all departments are
represented. According to Kothari (2003) an optimum sample is the one that fulfills the
requirements of efficiency, representativeness, reliability and flexibility. This sample
should range between 10% and 30%. The study used a sample size of 10% of the target
population. This adds up to fifty respondents spread throughout all the six departments as
shown in table 3.2.
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Table 3.2 Sample and Sampling Techniques
Department Population Sample ratio Sample Percentage
Commercial 92 0.1 9.2 18.4
Legal 12 0.1 1.2 2.4
Human Resource 32 0.1 3.2 6.4
Procurement 36 0.1 3.6 7.2
Finance 24 0.1 2.4 4.8
Technical 304 0.1 30.4 60.8
Total 500 0.1 50 100
3.5 Data Collection
Primary data was collected using questionnaires. The questionnaires consisted of both
open ended and closed ended questions covering issues related to ERP implementation.
Open ended questions gave the respondents allowance to freely respond to the questions
without any limit and gave their alternatives. According to Mugenda and Mugenda
(1999), the open ended or unstructured questions permit greater depth of response from
the respondents while the closed or structured questions are usually easier to analyze.
Questionnaires were also chosen because they were easier for the researcher to collect a
lot of information over a short period of time.
A brief introduction was made to the respondents before administering the questionnaires
with the aim of explaining the questionnaires. Confidentiality was assured to the
respondents through the letters of transmittal that were attached to the questionnaires.
3.6 Validity and Reliability of Instruments
According to Mugenda and Mugenda, (2003), validity is the accuracy and
meaningfulness of inferences, based on the research results. One of the main reasons for
conducting the pilot study was to ascertain the validity of the questionnaire. A pilot study
was undertaken with six employees each from every department not represented in the
sample through a face to face interview in order to test the ease of administering the
questionnaire. This also helped in testing the effectiveness and consequently refining it
for it to be objective. In order to obtain reliability of the instrument, a test retest method
was used (Kerlinger, 1973).
3.7 Data Analysis Techniques
Data analysis was based on the research questions designed at the beginning of the
research. The quantitative data from the survey questionnaires were analyzed using the
Statistical Package for Social Sciences (SPSS) version 17. SPSS version 17 package was
used because it is a comprehensive system for analyzing data and can take data from
many types of files and use them to generate descriptive statistics, complex statistical
analyses, tabulated reports, distributions, trends and so on. The descriptive statistics
format was used to summarize and organize the data in order to generalize and infer
relationships. The study also used multiple linear regression analysis and Pearson Product
moment correlation (R) to present the relationship between dependent and independent
variables. The regression model was as follows:
Y= 0 + 11 + 22 + 33 + 44 +
Where 0 is the constant or intercept, 1 - 6 are the regression coefficients (change in Y,
given one unit change in). Y is the dependent variable (ERP implementation), 1 is top
management support, 2 is ERP training, 3 is system security and 4 is effective project
management while is the error term.
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4.0 DATA ANALYSIS AND INTERPRETATIONS
4.1 Introduction
This part presents analysis of the data on the factors affecting the implementation of
Enterprise Resource Planning in state corporations with a specific focus on Nairobi City
Water and Sewerage Company. This part presents the findings of the study and
discussions on the findings. The findings answer the research questions. Data collected
was collated and reports were produced in form of tables and figures.
4.2 Background Information
Table 4.1 illustrates the response rate of the respondents that participated in the survey.
The study targeted 50 respondents in collecting data on the factors affecting the
implementation of Enterprise Resource Planning in state corporations with a specific
focus on Nairobi City Water and Sewerage Company. 39 out of 50 target respondents
filled in and returned the questionnaire contributing to 78%. This complied with
Mugenda and Mugenda (2003) who suggested that for generalization a response rate of
50% is adequate for analysis and reporting, 60% is good and a response rate of 70% and
over is excellent.
This response rate can be attributed to the data collection procedure, where the researcher
personally administered questionnaires and waited for respondents to fill, and picked the
filled questionnaires. The 22% questionnaires that were not returned were due to reasons
like, the respondents were not available to fill them in at that time and with various
follow-ups there were no positive responses from them. The response rate demonstrates a
willingness of the respondents to participate in the survey.
Table 4.3 Response Rate
Response Frequency Percentage
Filled in questionnaires 39 78%
Un returned questionnaires 11 22%
4.2.1 Demographic Characterization of the Respondents
The study found it important to establish the general information of the respondents since
it structures the foundation beneath which the study can fairly entrance the relevant
information. The analysis centred on this information of the respondents so as to
categorize the different results according to their knowledge and responses.
4.2.2 Age Bracket
The study sought to find out the age bracket of the respondents, majority (61.5%) of the
respondents were in the age range of 30-40 years. Those in the age range of 21-30years
had percentage of 23.1% while 15.4% of the interviewed respondents were least falling at
the age bracket of 40-50yeras. None of the respondents had over 50 years. From the study
it can be concluded that majority of the respondents were in the middle age who are
capable of adopting strategic practices that the organization sets with the aim of
improving its general performance, though there was diffuse in all age categories.
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Table 4.4 Age Bracket of the Respondents
Frequency Percent
21-30 years 9 23.1
30-40 years 24 61.5
40-50 years 6 15.4
Total 39 100.0
4.2.3 Level of Education
The respondents were asked to indicate the level of qualifications attained. According to
figure 4.2, 53.8% had qualifications from the university, 38.5% had college qualifications
while 7.7% were post graduates. This points to the fact that issues of implementing
Enterprise Resource Planning are quite complex and staff in the strategic department
where business growth strategies are implemented and formulated must have the requisite
qualifications to perform.
Figure 4.2 Education Level of the Respondents
4.2.4 Position Held by the Respondents
The researcher was also inquisitive to investigate the positions that the respondents held
within the organization, from the findings, 76.9% of the respondents were from the non
management team while 23.1% were from the management team. This illustrates that
most of the work that is performed at NCWSC requires junior staffs with specific
qualifications in order to attain organizational objectives effectively.
Figure 4.3 Position Held by the Respondents
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4.2.5 Department
The study also requested the respondents to indicate the departments in which they serve.
Most (28.2%) were from the department of human resource, 23% were serving at
commercial departments. Those who were from the department of finance and
procurement were 15% in each case. 21.8% were from legal department while the rest
were at technical department.
Table 4.5 Department of the Respondents
Frequency Percent
Finance 6 15.4
Procurement 6 15.4
Hr 11 28.2
Legal 5 12.8
Technical 2 5.1
Commercial 9 23.1
Total 39 100
4.3 Whether Top Management Supports the Implementation of ERP
4.3.1 Clear Direction of ERP within the Organization
Figure 4.3 summarizes the findings on whether there was a clear direction of ERP
implementation within the organization. Majority (84.6%) of the respondents alleged that
there was a clear direction of ERP implementation within the organization while the rest
(15.4%) were of the opinion that there was no clear direction of ERP implementation in
the organization. This depicts that the management of NCWSC values the ERP system
and has provided leadership in its operations to ensure it delivers the service to the
internal and external customers smoothly.
Figure 4.4 Clear Direction of ERP within the Organization
4.3.2 Extent to which Top Management provides Expertise in ERP Implementation
The researcher also sought to find out the extent to which top management provides
expertise in implementation of ERP. From the findings the study found that most (48.7%)
of the interviewed respondents were in opinion that top management provide expertise in
implementation of ERP at a great extent, 33% were in opinion that top management
provides expertise of ERP implementation at a moderate extent. Those who were in
opinion that top management provides expertise in the implementation of ERP at very
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small extent and at very great extent were 7.7% in each case while 2.6% alleged that top
management provides expertise in implementation of ERP at a small extent. This implies
that the management team encouraged the implementation of ERP at a great extent by
providing expertise in order to implement the system in their organization.
Table 4.6 Provision of Expertise in ERP Implementation by the Management
Frequency Percent
Very small extent 3 7.7
Small extent 1 2.6
moderate extent 13 33.3
Great extent 19 48.7
Very great extent 3 7.7
Total 39 100.0
4.3.3 Factors of Top Management in influencing Implementation of ERP systems.
Table 4.5 depicts the results of the findings on the extent to which various factors
influenced the implementation of ERP in organizations. From the findings, most of the
respondents were in the opinion that improving business processes was the major factor
that influenced implementation of ERP at a great extent within the organization as
indicated by a mean score of 4.03. Other respondents were in the opinion that enhancing
customer service, reducing costs and having better management control were factors that
at a great extent influence implementation of ERP as indicated by mean score of 4.025,
3.95, 3.90 and 3.67 respectively. Few of the respondents were of the opinion that
integrating all functions of the organization influenced the implementation of ERP at
moderate extent as indicated by mean score of 3.46.
Table 4.7 Factors having influencing Implementation of ERP Systems
Ver
y s
mall
exte
nt
Sm
all
exte
nt
mod
erate
exte
nt
Gre
at
exte
nt
Ver
y g
rea
t
exte
nt
Mea
n
Std
.
Dev
iati
on
Integrate all functions of the
organization
3 3 15 9 9 3.46 1.17
Have better management
control
3 3 4 23 6 3.67 1.08
Enhance customer service 0 0 12 17 10 3.95 .759
Reduce costs 3 1 6 16 13 3.90 1.14
Improve business processes 0 0 6 26 7 4.03 .584
4.4 Whether Training Affects the Implementation of ERP
4.4.1 Training on Enterprise Resource Planning
Table 4.6 depicts results of the findings on whether the respondents have ever received
any form of training on ERP. From the findings, 84.6% alleged that they had not received
any training on ERP while 15.4% pointed out that they had received training on ERP in
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their organization. This illustrates that the organization did not offer training to all staffs
in the organization concerning major issues that affects the implementation process and
that they offered training to the few staffs in the related departments.
Table 4.8 Training of Employees on Enterprise Resource Planning
Frequency Percent
Yes 6 15.4
No 33 84.6
Total 39 100.0
4.4.2 Rating of Competencies in using Enterprise Resource Planning
Further the researcher requested the respondents to state how they rate their competences
on the use of ERP within their organization. Majority (56.4%) were in opinion that they
are competent in using ERP within their organization, 28.2% pointed out that usage of
ERP in the organization is fair while those who rated the usage of ERP in the
organization as very competent and incompetent were 7.7% in each case. This implies
that most of the employees are competent in using ERP in the organization.
Table 4.9 Rating of Competencies in using Enterprise Resource Planning
Frequency Percent
Very competent 3 7.7
Competent 22 56.4
Fairly 11 28.2
Incompetent 3 7.7
Total 39 100.0
4.4.3 Level of Agreement on Statements Relating to ERP System Implementation
The study sought to establish the level of agreement by respondents on ERP system
implementation. From the study findings, most of the respondents agreed that Lack of
training attributed to poor performance of the ERP as depicted by a mean score of 4.23.
other respondents were neutral with the statement that the organization does not have
competent personnel to effectively implement ERP as indicated by a mean of 3.33 while
few of the respondents neither disagreed nor agreed that their competencies on the use of
ERP have contributed to increased efficiency in this organization and that sufficient
budget has been allocated for purposes of ERP training as shown by a mean of 2.92 and
2.54 respectively.
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Table 4.10 Level of Agreement on Statements Relating to ERP System
implementation st
ron
gly
dis
agre
e
Dis
agre
e
Neu
tral
Agre
e
stro
ngly
agre
e
Mea
n
Std
.
Dev
iati
on
A sufficient budget has been
allocated for purposes of ERP
training.
15 4 7 10 3 2.54 1.43
My competencies on the use of the
ERP have contributed to increased
efficiency in this organization.
12 1 8 14 4 2.92 1.44
Lack of training attributed to poor
performance of the ERP.
3 0 3 12 21 4.23 1.14
The organization does not have
competent personnel to effectively
maintain the ERP system.
3 0 3 12 21 3.33 1.18
Good performance can be
attributed to adequate training on
ERP.
9 0 3 16 11 3.51 1.50
4.5 Effective Project Management and its effect on the implementation of ERP
4.5.1 Office with Ultimate Control and Operation of ERP
The researcher also requested the respondents to indicate the office that has ultimate
responsibility in ensuring implementation of ERP is effective within the organization,
from the findings in table 4.9, most (43.6%) of the interviewed respondents alluded that
IT department was the office that had ultimate control over implementation of ERP, 20.
5% of the respondent argued that procurement and user departments were the ultimate
departments that ensure control of ERP implementation within the organization while
15.4 % pointed out that managing director was responsible of controlling ERP
implementation.
Table 4.11 Office with Ultimate Control and Operation of ERP
Frequency Percent
Managing Director 6 15.4
IT Department 17 43.6
Procurement 8 20.5
User Department 8 20.5
Total 39 100.0
4.5.2 Existence of Project team in charge of ERP implementation
Figure 4.5 shows the aspect on whether the organization had a project team in charge if
ERP implementation, from the findings, 38.5% of the interviewed respondent alleged that
they had a project team accountable for the implementation of ERP, 33.3% purported that
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they do not have a project team while 28.2% alluded that they were not sure. This
depicts that most of the organization had teams that are set for ensuring effective
implementation of the strategies that the management formulate.
Figure 4.5 Existence of Project team in charge of ERP implementation
4.5.3 Delivery of ERP Implementation as per the stipulated time
Further the study asked respondents whether the existing project team was able to deliver
implementation of ERP within the stipulated time. From the findings, 48.7% alleged that
the team did not deliver the implementation of ERP as per set time while 30.8% were of
the opinion that the appointed team delivered as per the stipulated time and 20.5% were
not sure whether the team delivered the ERP implementation in the stipulated time.
Figure 4.6 Delivery of ERP Implementation as per the Stipulated time
4.5.4 Role played by Managing Director in running ERP project in the Organization
The researcher sought to establish the role played by the Managing Director in running
ERP in the organization. A total of 39 responses were obtained with 7.7% indicating that
the managing director was responsible for delegation, control of strategies in the
organization, facilitating ERP implementation through enhancing financial support,
overseeing processes & implementation of ERP and providing leadership as indicated by
mean score of 7.7% in each case.
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Table 4.12 Role of Managing Director in running ERP in the Organization
Frequency Percent
Delegation, control of strategies in the organization 3 7.7
Facilitate availability of resources 2 5.1
Facilitate the implementation through enhancing
financial support
3 7.7
Facilitation of ERP 3 7.7
He plays no role 3 7.7
MD does not play any role in the running of ERP 3 7.7
overseeing processes & implementation or ERP 3 7.7
supports the team financially & also materially 3 7.7
4.6 Systems security and IT infrastructure on Implementation of ERP
4.6.1 Problems with ERP Systems Security
Further the researcher sought to establish from the respondents whether they had
encountered problems in ERP system security. From the findings, 38.5% purported that
they had encountered problems with ERP system security while 30.8% argued that they
had not encountered any problem in ERP system security and the same percent (30.8%)
alleged that they did not know. This implied that proper control measures in systems
security need to be implemented and also reinforced to cover the organization against any
potential exposure.
Figure 4.7 Problems with ERP System Security
4.6.2 Sharing of Systems Passwords within the Organization
Table 4.13 presents the results of the findings on whether employees shared their systems
passwords in the organization. Majority of the respondents argued that they did not share
passwords with their colleagues (56.4%), 25.6% of the respondents alluded that they did
not know whether their work mates shared their passwords while 17% purported that
their colleagues shared their systems passwords. This implies that there is an eminent
danger if employees do not exercise due diligence in safeguarding their passwords and
this may expose the organization in as far as security issues are concerned.
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Table 4.13 Sharing of Systems Passwords within the Organization
Frequency Percent
Yes 7 17.9
No 22 56.4
Don‟t know 10 25.6
Total 39 100.0
4.6.3 Installation of Antivirus Programs in machines
Figure 4.8 present the findings on the query on whether machines in the organization had
been installed with antivirus programs. From the findings, (82.1%) alleged that their
machines are installed with antivirus programs, 15.4% were in opinion that their
machines are not installed with antivirus program while 2.6% were reluctant to the query.
This implies that most of the organizations do protect their machines from any effect of
virus that might affect their machines operation due to poor protection.
Figure 4.8 Installation of Antivirus Programs in machines
4.6.4 Frequency at which Antivirus Programs are updated
Further the study aimed at investigating how antivirus programs are updated. Majority
(61.5%) argued that antivirus programs are automatically updated through the internet,
25% alluded that antivirus updates were done once a month, 10.3% purported that
antivirus updates were not done while few (2.6%) argued that they update antivirus
programs once a year. This illustrates that most of the organizations kept their electronic
machines updated automatically through the internet.
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Table 4.14 Frequency at which Antivirus Programs are updated
Frequency Percent
Once a year 1 2.6
Once a month 10 25.6
Automatically through internet 24 61.5
Not updated 4 10.3
Total 39 100.0
4.6.5 Compatibility of ERP system and Information Technology Systems
Table 4.13 illustrates the findings on ERP system compatibility with other IT/IS systems.
66.7% of the interviewed respondents alluded that their ERP system is compatible with
other information technology systems, 23.1% were not aware on whether the other
systems were compatible with the ERP system. Those who alluded that it was not
compatible were 7.7% while 2.6% did not respond to the query. From the finding it‟s
clear that ERP systems within organizations are compatible.
Table 4.15 Compatibility of ERP System and Information Technology systems
Frequency Percent
Yes 26 66.7
No 3 7.7
Don‟t know 9 23.1
non response 1 2.6
Total 39 100.0
4.6.6 Respondents Agreement with statements relating to ERP system
The researcher also determined to establish the level of the respondents‟ agreement with
the statements regarding ERP system in relation to systems security. From the findings,
majority of the respondents strongly agreed that there were no loopholes in the ERP
system security in their organization as depicted by a mean score of 4.59, some of the
respondents were neutral that the adequacy of the security system of ERP in this
organization is sufficient and that there are issues of confidentiality to unauthorized
personnel as indicated by mean of 3.41 and 3.38 respectively. Few of the respondents
were of the opinion that the cost of system security exceeds the monetary benefits
accruing from the system and that there are no sufficient measures to retrieve lost data as
indicated by mean score of 2.31 and 2.21 respectively.
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Table 4.16 Respondents Agreement with the statements relating to ERP system
stro
ngly
dis
agre
e
Dis
agre
e
Neu
tral
Agre
e
stro
ngly
agre
e
Mea
n
Std
.
Dev
iati
o
n
The adequacy of the security system of
ERP in this organization is sufficient
3 5 10 15 6 3.41 1.14
There are no loopholes in the ERP
system security in this organization
5 17 10 3 2 4.59 9.31
There are issues of confidentiality to
unauthorized personnel
4 4 13 9 9 3.38 1.25
There are no sufficient measures to
retrieve lost data.
14 14 4 3 4 2.21 1.30
The cost of the system security exceeds
the monetary benefits accruing from the
system
13 9 9 8 0 2.31 1.15
4.7 Correlation Analysis
The study conducted Pearson Moment Correlation Coefficient to determine whether
relationship exists between variables (ERP implementation and top management support,
ERP training, system security and effective project management) and the nature of such
relationship if any.
Table 4.17: Correlation Matrix
Top
Management
Support
Training Systems
Security
Project
Management
Pearson Correlation .615 .568 .627 .535
Sig. (2-tailed) 0.05 0.002 0.047 0.032
The correlation matrix results shows that there was a good and negative linear association
between ERP implementation and top management support; R=0.615 (p=0.05). ERP
implementation had a moderate linear dependence on training given a correlation
coefficient of 0.568 at a p-value of 0.002. The same also applies to project management
with a Pearson correlation coefficient of 0.535 at p=0.002. There was a good linear and
positive relationship between systems security and ERP implementation; R= 0.627 at
p=0.047. These results show that ERP implementation is influenced positively by
management support, systems security, project management and ERP training.
4.7.2 Regression Analysis
A multiple linear regression model was applied to determine the relative effects of top
management support, ERP training, systems security and effective project management
on ERP implementation. The regression model was as follows:
Y= 0 + 11 + 22 + 33 + 44 +
Where 0 is the constant or intercept, 1 - 6 are the regression coefficients (change in Y,
given one unit change in). Y is the dependent variable (ERP implementation), 1 is top
management support, 2 is ERP training, 3 is system security and 4 is effective project
management while is the error term.
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Table 4.18: Model Goodness of Fit
R R Square Adjusted R
Square
Std. Error of
the Estimate
Durbin-
Watson
.796a 0.634 .550 3.370 2.013
a. Predictors: (Constant), Top Management Support, ERP Training, System Security and
Effective Project Management
b. Dependent Variable: ERP Implementation
The study used Table 4.18 to establish whether ERP implementation has a linear
dependence on the independent variables. The study established a correlation value of
0.796. This depicts a good linear dependence between the variables. An R-square value
of 0.634 was established and adjusted to 0.55. The coefficient of determination depicts
that top management support, ERP training, system security and effective project
management brings about 63.4% variations in overall success in ERP implementation;
36.6% of variations are brought about by factors not captured in the objectives and
further research is recommended. Durbin Watson value of 2.013 was established
illustrating lack of autocorrelation in the model residuals.
Table 4.19: Analysis of Variance (ANOVA)
Sum of Squares df Mean
Square
F Sig.
Regression 132.293 3 26.459 2.330 .046a
Residual 1374.069 35 11.356
Total 1506.362 38
Analysis of Variance was used to test the significance of the regression model as pertains
to the significance in the differences in means of the dependent and independent
variables. The ANOVA test produced an f-value of 2.330 which was significant at
p=0.046. This depicts that the regression model is significant at 95% confidence level.
That is, has 4.6% probability of misrepresentation.
Table 4.20: Regression Coefficients
Unstandardized
Coefficients
Standardizedd
Coefficients t
Sig. B Std. Error Beta
(Constant) .409 1.679 .942 .348
Top Management Support .748 1.336 .651 .560 .036
ERP Training 1.129 .407 1.067 2.773 .006
System Security .980 .738 .819 1.329 .016
Effective Project
Management
.418 .671 .902 -.027 .010
a. Predictors: (Constant), Top Management Support, ERP Training, System Security and
Effective Project Management
b. Dependent Variable: ERP Implementation
From Table 4.20, the established regression equation was:
Y= 0.409 + 0.7481 + 1.1292 + 0.9803 + 0.4184 p=0.046
From the above regression model, when the top management support, ERP training,
system security and effective project management have null value; success in ERP
implementation would be 0.409.
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Holding other factors constant, a unit increase in top management support would cause a
0.748 increase in ERP implementation success. A unit increase in ERP training would
lead to a 1.129 increase in ERP implementation success, system security yields 0.980 in
ERP implementation success while effective project management yields 0.090 increase in
ERP implementation success. This depicts that that top management support (p(t-
significance) = 0.036), ERP training (p=0.006), system security (p=0.016) and effective
project management (p=0.01) would increase ERP implementation success although ERP
training, followed by system security have the highest overall influence.
5.0 SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
5.1 Introduction
This section presents a summary of findings on the analysis of factors affecting the
implementation of Enterprise Resource Planning in state corporations with a specific
focus on Nairobi City Water and Sewerage Company, conclusions and recommendations.
The section is structured into summary of findings, conclusions, recommendations and
areas for further research.
5.2 Summary
5.2.1 Top Management Support
On whether top management supports the implementation of ERP, the study found that
there was clear direction of ERP within the organization and the top management
provides expertise on implementation of ERP at a great extent. Further the study found
that the need to improving business processes was the major factor that influenced
implementation of ERP at a great extent. The study established that top management
support did have great influence on ERP implementation success (p=0.05). This is in
tandem with the review of literature that for successful ERP implementation, top
management support is required because an implementation involves significant change
to existing business processes as well as a significant amount of capital investment
therefore gaining the required amount of support from top management becomes
paramount (Wong et al., 2007)
5.2.2 Training
On the study of whether training affects the implementation of ERP, the study found that
majority had not received any training on ERP though its usage was competent. On the
level of respondents‟ agreement with implementation of ERP systems under training, the
study found that the organization had competent personnel to effectively implement ERP
system and the use of the ERP has contributed to increased efficiency in this organization
and that sufficient budget has been allocated for purposes of ERP training. A positive
linear association was found between ERP implementation success and ERP training
(p=0.002). This finding also concurs with the review of literature that in order to realize
significant benefits from ERP systems a considerable amount of training is required
(Wortmann, 1998).
5.2.3 Effective Project Management
To the objective on effective project management and how it affects implementation of
ERP the study established that IT department was the office that had ultimate control
over implementation of ERP within the organization where the managing director‟s
office had least responsible of controlling ERP implementation. Further the study found
that the organization had a project team accountable for implementation of ERP though it
was not capable to deliver ERP implementation as per set time. On the role that the MD
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played in the running of ERP within the organization the study found that overseeing
processes & implementation of ERP and facilitating ERP implementation through
enhancing financial support were the major roles of the managing director. It was
established that project management prowess of the organization had positive linearity
with ERP implementation success (p=0.032). This finding concurs with the review of
literature that project management plays an important role in planning the whole project
direction and to ensure that the undertaken ERP project can be implemented on time, on
budget and meet the requirements of the company (Wong et al., 2007). It also concurs
that good project management is essential and an individual or group of people should be
given responsibility to drive success in project management (Rosario, 2000).
5.2.4 Systems Security and IT Infrastructure
On systems security and IT infrastructure on the implementation of ERP, the study found
that most of the employees had encountered problems of ERP system security. On
whether fellow colleagues of the respondents share systems passwords it was established
that there was no sharing of ERP system password. On whether machines used within the
organization had been installed antivirus program the study found that most machines had
been installed with antivirus program where updates were done automatically through the
internet. On whether ERP systems were compatible with other information technology
systems in the organization, the study established that the ERP system was compatible
with other information technology systems. Finally, most of the respondents strongly
agreed that there were no loopholes in the ERP system security in their organization
while few stated that the cost of the system security exceeds the monetary benefits
accruing from the system and that there was no sufficient measures to retrieve lost data.
From the correlation results, system security had a positive linear relationship with ERP
implementation success (p=0.047). This also confirms the literature review that the
challenges of a competitive marketplace with constantly changing business requirements
and the upward trend of cyber threats are realizing the need for a more strategic view of
information security (Kankanhalli et al., 2003).
5.3 Conclusion
The study aimed at finding out factors affecting the implementation of Enterprise
Resource Planning in state corporations. Based on the findings, the study concludes that
top management affects implementation of ERP at a great extent where management is
highly influenced by the need to improving business processes.
To the objective on how training affects implementation of ERP, the study concluded that
though majority had not received any training on ERP its usage was competent and has
contributed to increased efficiency in this organization.
To the objective on effective project management and how it affects the implementation
of ERP the study concluded that the organization had a project team accountable for
implementation of ERP where IT department was the office that had ultimate control
over implementation of ERP.
On the effect of systems security and IT infrastructure on the implementation of ERP the
study concluded that most machines had been installed with antivirus program where
updates were done automatically through internet and that their ERP system were
compatible. Further, the study established that there were no loopholes in the ERP system
security in their organization.
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5.4 Recommendations
5.4.1 Top Management Support
The study recommended that the top management should provide the necessary resources
in terms of leadership, financial support and provision of expertise in order for
implementation of ERP to be successful. Top management may also be involved in terms
of monitoring and evaluation from time to time in order to determine the success and
areas to improve on after the assessments in order for implementation to be successful.
5.4.2 Training
The study recommended that corporations should offer training to all staff members so as
to ensure competence is distributed within all operational departments of the organization
and for easier implementation of ERP. Further, the study recommended that competent
personnel should be employed to effectively implement ERP.
5.4.3 Effective Project Management
The study recommended that organizations should set a team that will be accountable for
implementation of strategic issues such as ERP and ensure it delivers its target within the
stipulated time. The study also advised that the management team accepts to be involved
in all strategic issues that concern the operations of projects in the organization so as to
give valid direction relating to the organization‟s objectives.
5.4.4 Systems Security and IT infrastructure
Further, the study recommended that organizations should embrace technological
changes that are rapidly changing on the environment that the organization exists.
Technology is a key enabler of an organization‟s transformation and this is because it
offers major improvements in both efficiency and effectiveness and an organization that
has embraced technology is able to be competitive.
5.5 Areas of further study
Based on the findings and conclusion of the study, the following areas have been
suggested for further study. A study of the implementation challenges in other state
corporations for additional insights as this study was done on one state corporation only.
Further research can also be done on the impact of Enterprise Resource Planning on
organisational performance. The study further suggests that research should be done on
the risk management of Enterprise Resource Planning systems since there is increased
internet crime which may lead to the exposure of an organisation if not well safeguarded
and control measures put in place.
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