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INTERDISCIPLINARY JOURNAL OF CONTEMPORARY RESEARCH IN BUSINESS

23 COPY RIGHT © 2013 Institute of Interdisciplinary Business Research

DECEMBER 2013

VOL 5, NO 8

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


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).


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


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.


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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