The Relationship Between Enterprise Resource Planning And Financial Performance Of Commercial State Corporations In Kenya.

Abstract

Technology plays a key role in today’s business environment. Many companies greatly rely on computers and software to provide accurate information to effectively manage their business. One way that many corporations have adopted information technology on a large-scale is by installing enterprise resource planning (ERP) systems to accomplish their business transaction and data processing needs. The research discussed issues relating to ERP’s impact on financial performance of commercial state corporations in Kenya. The research employed a descriptive form of research design and used data collection form for data collection. Descriptive analysis was used to analyze the primary data of quantitative nature on the data collection form. Descriptive statistics such as frequencies and percentages augmented with measures of central tendency (mean) was employed. Additionally, return on assets ratio, asset turn over, current ratio and debt ratios were used to calculate pre and post-implementation profitability. Means for each recorded ratio was calculated to obtain the pre and post-implementation means. A paired t-test was performed on the calculated means at a 95% confidence level and at 19df to determine whether there was a significant difference between the means of the two periods for each ratio. The study found out that ERP System had a statistically significant influence on the measures of financial performance (i.e. Profitability, Turn-over/Asset utilization, Liquidity, and Solvency ratio) of commercial state corporations in Kenya. Therefore, the study concluded that ERP Systems had a positive statistically significant influence on the financial performance of commercial state corporations in Kenya. The researcher recommends the adoption of the ERP System in all commercial state corporations and subsequent improvement of the same so as to facilitate efficiency and guaranteed improved financial performance.