An investigation of the business value of enterprise resource planning systems by firms in Kenya
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In the past years, many organisations in Kenya have invested a lot of capital in information systems that range from transaction processing systems to complex interorganisational systems. Enterprise Resource Planning (ERP) Systems are one of the systems that these organisations have invested in. These systems are marketed as the perfect solution to organisational problems of information management and .hence many organisations are making efforts to implement the same. ERP systems have emerged as the core of successful information management and the enterprise backbone of organisations. The benefits of ERP systems have been widely cited in literature and include increasing the speed of communication of information throughout the organisation, making it easier for businesses to coordinate their daily operations, giving organisations the flexibility to respond rapidly to customer requests while producing and stocking inventory only with what is required to fulfill existing or near-to-current orders and helping to eliminate many redundant processes and systems. The expected benefits of ERP systems also act as the motivations for organisations looking to implement these systems. Notwithstanding the benefits of ERP systems, they are very costly in terms of actual monies, person-hours, hardware cost and organisational changes required. With the implementation and adoption of ERP systems, organisations look to obtain business value: the benefits to the organisation must outweigh the costs incurred. In Kenya, the ERP systems phenomenon is slightly more than a decade old though in other parts of the world this has been around for much longer. Against this background, this research study sought to identify the motivations for adopting ERP systems, benefits and business value obtained from the use of the same. This study will assist organisations adopting ERP systems to have realistic expectations based on experiences of other organisations. The study involved thirty-three organisations in Kenya that were using ERP systems. Identification of the motivations and benefits was drawn from the perception of key persons within various organisations in the function areas of IT, finance, sales, purchasing and stores. Primary data for the study 'vas collected using questionnaires. Identification of business value was obtained by comparing the motivations and benefits. The study found that the highest identified motivation for the implementation of ERP systems was to improve the quality of data. Other key motivations were to improve strategic decision-making; to enhance of staff support activities in reporting; to improve productivity; and integrate operations. The greatest identified benefit was increase in the quality of data. Organisations also benefited from achieving effective management of their overall operation, better control of financial performance, better inventory/production management, facilitation of business learning and broadening of employee skills. The study further revealed that the business value of ERP systems included support for growth of sales; improved productivity; enhanced quality of data; easy access to customer data; enhanced response to customers; enhanced management of assets and improved strategic decision-making.
University of Nairobi, Kenya