A Framework of Open Source Solution as Tool for Cost Reduction Among Smes in Nairobi: Case of Ainushamsi Energy

Abstract

This study focuses on the open source business solution adoption as a tool of cost cutting by SMEs in Kenya due to increasing costs and shrinking IT budgets. The adoption will be aim to help these organization to ensure survival and compete effectively by bringing down cost of running technology software; right from acquisition, licensing, maintenance and updates. SMEs in the 21st century face a number of operational challenges mostly because of comparatively high associated costs as a result they turn to cost cutting measures. Their economies of scale do not necessarily favor high spending - which tends to limit profits as well as further business expansion. cost of running proprietary industry specific software on average falls between 15 - 28% of gross costs high for SMEs (Ainu Shamsi Energy Limited, 2016). It could be argued that one of the reasons for the sharp fall in annual returns on investments as in the study by Norfund, is the cost of running proprietary software (Saran, 2016). Open-source software is available with a license and the owner of copyright provides the rights to make change as well as distribute the software to anyone and for any intention. Open-source software is developed in a collaborative community manner (M. St. Laurent, 2004). In this study, three contexts were studied, that influence effective use of open source system as a tool of cost cutting within an SME environment. The context includes Organizational context, Technological context and Environmental context. The case study SME was Ainu Shamsi Energy Company Limited. The arithmetic mean was used to analyze the user opinions on the select context. The research methodology used in this study was purposive sampling. This is a form of nonprobability sampling where the decisions regarding the persons to be used in the sample are taken by the researcher, based on variety of criteria that include professional knowledge of adoption of open source in regard to cost cutting. A total of 50 questionnaires were self-administered to the respondents accompanied. The semi structured questionnaires were constructed using the Likert scale type of statements. For the purpose of this study, 37 respondents were achieved which is 74% of the target population. The data was analyzed using a statistical software and the findings were presented in frequencies and percentages which were used for hypotheses testing. The result indicated that 94% of the 37 respondents can influence decision making in IT, hence can influence the adoption of OSS as a tool of cost cutting. The study found out that 13 hypothesized relationships in the conceptual framework were completely supported by the data collected and analyzed. The results of this study provide positive contribution to open source adoption by SMEs as a tool of cost cutting. The study recommended further research on adoption of open source as a cost cutting tool in large and public institution. The study finally will recommend the open source adoption as a tool of cost cutting based on the studied advantages.