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UNIVERSITY OF ZIMBABWE

GRADUATE SCHOOL OF MANAGEMENT

MASTER IN BUSINESS ADMINISTRATION

NAME: NICHOLAS SHERENI

REGISTRATION NUMBER: R9917053

Course Code: MBA 570

Dissertation Topic : An evaluation of gaps within the NSSA ICT system

which exposes the organization to potential risk of fraud.

Dissertation submitted in partial fulfilment of the requirements of the Master of Business Administration degree (MBA), Gra duate School of Management University of Zimbabwe.

Supervisor: Dr. H Chikova

February 2014

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ACKNOWLEDGEMENTS

The completion of this project was made possible through the help of friends and

colleagues. My sincere gratitude to my supervisor Dr. Chikova for his guidance and

appropriate comments. Many thanks also go to staff and management of NSSA for

participating in the study. All their comments were of great value.

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DEDICATION

This dissertation is dedicated to my wife and kids……..

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Declaration

I ............................................................ do hereby declare that this dissertation is the result of my own investigation and research except to the extent indicated in the acknowledgements, references and my comments included in the body of the report and that it has not been submitted in part or in full for any other degree to any other university.

Student Signature:.............................................. Date:..................................

Supervisor Name: Dr. H. Chikova

Signature :................................................. Date:..........................................

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ABSTRACT This study sought to evaluate the gaps within the National Social Security Authority (NSSA) Information Communication Technology (ICT) System, which expose the organisation to potential risk of fraud and therefore recommend an ERP system the organization should adopt. The research reviewed literature on Enterprise Resource Planning (ERP) implementation and business performance, ERP implementation critical success factors, stages in ERP implementation and strategies of ERP implementation. ERP implementation implies integrating all operations of the business into one system which is not the case at NSSA where there are small disjoint systems aimed at achieving specific objectives for specific departments such as human resources, accounting/finance and payment of pension benefits. The research study was a case study that was carried out on NSSA in Harare and Masvingo. The sampling frame was restricted to the management and employees at NSSA head office in Harare and Masvingo regional office. The questionnaire was used as the main data collection tool in this study because of its ability to collect standardised responses from respondents. The study concluded that the adoption of an ERP would lead to operational efficiency and effectiveness at NSSA since information technology has a history of cutting cost and raising outputs by automating basic repetitive operations. The study also concluded that there is ready infrastructure for the adoption of ERP at NSSA and according to the study findings the organisation seems to be prepared for the successful implementation of their chosen ERP. This is supported by the fact that the critical success drivers recommended by various implementation methodologies such as ready infrastructure are already in place. Furthermore, training needs are adequately budgeted for, implying that the organisation is prepared for employee training on ERP systems so that they would be in a position to use the system without difficulties and thus enhances the chances of success with ERP implementation, that will steer the organisation towards improved efficiencies and enhanced productivity. Successful adoption of ERP at NSSA would positively contribute to the productivity of the organisation and subsequently in the long run may improve its viability. The study recommends that NSSA would be able to accrue benefits from ERP operations, or even increase them if only they ensure that there is better co-ordination between strategic alignment and the management of their ERP implementation. The study also recommends that everyone from the boardroom to storeroom needs to understand his role and responsibilities for implementation. Implementation leaders should encourage dialogue to get people focused on business objectives and early identification and correction of problems. Who will be accountable for results and when, must be an integral part of this understanding.

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Table of contents ACKNOWLEDGEMENTS .................................................................................................................... ii

DEDICATION ....................................................................................................................................... iii

ABSTRACT ........................................................................................................................................... v

LIST OF FIGURES ............................................................................................................................ viii

LIST OF TABLES ................................................................................................................................ ix

Chapter 1 ............................................................................................................................................... 1

Introduction ........................................................................................................................................ 1

1.0 Introduction ................................................................................................................................. 1

1.1 Background of NSSA ..................................................................................................................... 1

1.1.1: NSSA Network Topology ...................................................................................................... 2

1.1.2 Environmental Analysis .......................................................................................................... 3

Macro Environmental Analysis ........................................................................................................ 4

Political Environment .................................................................................................................... 4

Economic Environment ................................................................................................................. 4

Social Environment ....................................................................................................................... 5

Technological Environment .......................................................................................................... 5

Legal Environment ........................................................................................................................ 5

1.2 Statement of the problem .......................................................................................................... 6

1.3 Research Objectives: ................................................................................................................. 6

1.3 Research Objectives: ................................................................................................................. 7

1.4 Research Questions ................................................................................................................... 7

1.5 Research proposition ................................................................................................................. 7

1.6 Significance of the study ............................................................................................................ 7

1.7 Scope of the study ...................................................................................................................... 8

1.8 Assumptions of the study ........................................................................................................... 8

1.9 Research outline ......................................................................................................................... 8

Chapter 2 ............................................................................................................................................. 10

Literature Review ............................................................................................................................ 10

2.0 Introduction ............................................................................................................................... 10

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2.1 Overview ................................................................................................................................... 10

2.2 ERP Implementation Critical Success Factors (CSF) ........................................................... 10

2.3 Stages in ERP implementation ............................................................................................... 14

2.4 ERP implementations and business performance ................................................................ 18

2.5 Strategies of effectively implementing ERP ........................................................................... 22

2.5.3 Intermediate benefits of ERP systems ................................................................................ 25

2.6 Chapter summary ..................................................................................................................... 31

Chapter 3 ............................................................................................................................................. 32

Methodology .................................................................................................................................... 32

3.2 Research Strategy .................................................................................................................... 33

3.3 Target Population ..................................................................................................................... 34

3.4 Sampling ................................................................................................................................... 34

3.5 Data collection .......................................................................................................................... 34

3.6 Types of data ............................................................................................................................ 35

3.7 Data processing, analysis and presentation .......................................................................... 36

3.8 Chapter conclusion ................................................................................................................... 36

CHAPTER 4 ........................................................................................................................................ 37

DATA PRESENTATION AND ANALYSIS .................................................................................... 37

4.1 Introduction ............................................................................................................................... 37

4.2 Response Rate ......................................................................................................................... 37

4.3 Sample Demographics ............................................................................................................. 38

4.4 Knowledge of ERPs ................................................................................................................. 41

4.5 Operational Efficiency and Effectiveness ............................................................................... 43

4.6 Benefits of ERP to NSSA ......................................................................................................... 49

Chapter 5 ............................................................................................................................................. 51

Recommendations and conclusions ............................................................................................. 51

5.1 Introduction ......................................................................................................................... 51

5.2 Conclusions............................................................................................................................... 51

5.3 Recommendations of the Study .............................................................................................. 53

5.4 Area of further study ................................................................................................................. 54

References ...................................................................................................................................... 55

Appendices ...................................................................................................................................... 62

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LIST OF FIGURES

Figure Pages

1.1 NSSA Topology 3

2.2 Framework for ERP implementation 14

4.1 Positions of respondents at NSSA 38

4.2 Length of employment at NSSA 39

4.3 Level of education of respondents 40

4.4 Knowledge of ERPs 41

4.5 If adoption of ERPs leads to operational efficiency and effectiveness 42

4.6 Whether NSSA has ready infrastructure for adoption of ERP 43

4.7 Training needs and budget adequacy 44

4.8 Employees and ERP adoption at NSSA 45

4.9 Management support for ERP adoption at NSSA 46

4.10 Availability of a clear adoption and clear business plan 47

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LIST OF TABLES

Table Pages

2.1 A CSF model with strategic and tactical factors 10

2.2 Advantages and disadvantages of Big Bang 22

2.3 Advantages and disadvantages of phased rollout 24

2.4 ERP scorecard 26

4.1 Response rate 38

4.2 Definition of ERP 41

4.3 Benefits of ERP 48

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List of Acronyms

Aids Acquired immune deficiency Syndrome

BCP Business Process Change

BPR Business Process Reengineering

CPS Client Processing System

CSF Critical Success Factors

CMS Client Management System

ERP Enterprise Resource Planning

HIV Human immune-deficiency virus

ICT Information Communication Technology

IT Information Technology

NSSA National Social Security Authority

NPS National Pension Scheme

SPSS Statistical Package for Social Sciences

WCIF Workers Compensation Insurance Fund

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Chapter 1

Introduction

1.0 Introduction

In today’s world business entities and corporations in private, public or quasi-

government have since moved from standalone systems of operations and business

coordination to integrated systems (Davenport, T. H. 1998). Enterprise Resource

Planning (ERP) integrates internal and external management information across an

entire organisation, embracing all the functions of an organisation (Al-Mashari 2003).

ERP systems automate business activities through the use of an integrated software

application with the main purpose of facilitating the flow of information between

business functions internally and externally. Organisations with small independent

systems normally face difficulties in auditing and integrating audit findings in

independent systems there by pausing the companies to the risk of fraud. Integrated

systems makes it easy to keep audit trail of transactions occurring within the company.

These systems can operate on various hardware and network configurations employing

a database as storage for information. This chapter is the introductory chapter of the

study and the background of the research, objectives and research questions,

justification of the study are contained herein.

1.1 Background of NSSA

The National Social Security Authority (NSSA) is a statutory corporate body constituted

and established in terms of the NSSA Act Chapter 17: 04 of 1989. The Act empowers

the Minister of Labor and Social Services to establish social security schemes for the

provision of benefits to or in respect of all employees or such classes of employees as

may be specified in a notice of Government. Its role includes the administration of every

social security scheme and fund established in terms of the NSSA Act, advising the

Minister on all matters concerning the operations of the schemes and on matters

relating to social security in general. Currently NSSA administers two social security

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schemes: the Pension and Other Benefits Scheme and the Accident Prevention and

Worker’s Compensation Insurance Fund.

Social security, interchangeably known as social protection, encompasses all

interventions from public and private bodies intended to relieve households and

individuals of the burden of a defined set of risks such as sickness, maternity,

employment injury, unemployment, invalidity, old age, death, provision of health and

child support (Cichon et al., 2004). Schemes created under the NSSA Act are

contributory and employment-based, and are designed to benefit employees and their

dependents. Currently NSSA members are drawn from employees in the formal sector,

including civil servants. Social security schemes are contributory schemes and are

different from social assistance programs, which are primarily funded from general

government revenue.

1.1.1: NSSA Network Topology NSSA despite having a sound and robust ICT infrastructure and state of the art

equipment, the organisation still depends on various disjoint small systems to support

its business operations. NSSA ICT systems has business applications such as Client

Processing System (CPS) which caters for its benefits NPS, WCIF System for the

workers compensation scheme, Client Management System (CMS) for

employee/employer registrations, Accounting Sun System to replace the revenues

Collections System.

Lack of integration between the CMS system and the CPS system has exposed the

organisation to serious system challenges(audit report 2009). NSSA has been failing to

reconcile its debtors and payments figures year after year due to lack of system

integration between its Collections System and the Client Management system (CMS).

This has been an audit observation for years which needs urgent attention hence

proposal to implement yet another independent accounting system Sun System to

provisionally capture employer’s contributions against their employees, the Sun System

is aimed at replacing the Collections System which is currently capturing organisational

revenues collections.

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NSSA core business applications were developed in the late 90s and due to

technological advancement in the IT industry, these applications are no longer being

supported. These old applications are not compatible with the newer operating systems

like windows 7 which are now in use and software developers like microsoft no longer

support older operating systems on which these applications run. This has exposed the

organisation to loss of data through computer viruses as operating system updates are

no longer available.

Figure 1.1: NSSA typology

1.1.2 Environmental Analysis To fully understand the nature of NSSA, an analysis of macro and micro environmental

factors shall be employed. The PESTEL analytic tool shall be employed to explore the

organisation’s external environment while the SWOT analysis shall be used to examine

the internal environmental factors impacting on the company.

HEAD OFFICE

CENTRALISED

SERVER

HARARE REGION MUTARE REGION

MASVINGO

REGION

BULAWAYO REGION

CHINHOYI REGION

GWERU REGION

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Macro Environmental Analysis

In order to fully appreciate the characteristics of the external environment in which

NSSA operates, this section shall adopt the PESTEL analysis tool.

Political Environment

The period from 2000 to 2012 witnessed major shifts on the Zimbabwean political

landscape which resulted in the fall of Zimbabwe’s economic competitiveness on the

global arena(Financial gazette 2009). During the same period the country engaged in a

land redistribution programme that saw the previously disadvantaged citizens being

allocated land to become small-holder farmers. The political unrest that was obtaining in

the country disturbed the development and foreign direct investments in Zimbabwe

resulting in fewer and fewer money going towards NSSA mainly because the country

was left with fewer and fewer people in the formal employment sector who contributed

towards NSSA CZI business report (2010). The company found it difficult to operate

since most of the citizens in Zimbabwe lost employment and joined the informal sector

which is a sector which is not bound by any statute to contribute to NSSA and this

reduced the company’s revenue base. The political situation gradually improved with

the formation of an inclusive government but still not much foreign investment came in

to support the ailing companies since the international community was still skeptical of

the fragility of the inclusivity, citing insincerity and lack of transparency on the part of the

government.

Economic Environment

The economic meltdown experienced during the period under review resulted in

financial institutions failing to extend credit lines to the corporate world. The introduction

of the multi currency regime by Minister Chinamasa a few months before the inclusive

government saw the economic environment slightly improving. However, the operational

environment remained tight with the majority of potential customers remaining

unemployed and thereby not contributing to NSSA. Due to the liquidity constraints, the

organisation has been disbursing pay-outs that are low and considered not consistent

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with the current living conditions. The low pay-outs by NSSA are a result of the age of

the scheme and the level of the ceiling on insurable earnings.

Social Environment

Owing to the challenges obtaining in the political and economic sectors of the economy,

the social environment ordinarily negatively responded. Labour was generally

disgruntled with the company’s failure to meet demands by the employees. This

resulted in the company losing skilled labour and other critical staff to other countries

regionally and internationally. According to NSSA in 2009, the company lost over 39%

of its critical technical staff and 48% of its remaining staff was aged. This resulted in the

company making do with semi and unskilled labour to fill the vacuum. Equipment could

no longer be efficiently serviced hence break downs were now more prominent than

before.

HIV and AIDS related illnesses remained a challenge for the remaining work force that

could not leave the company for greener pastures elsewhere. This meant that

productive time had also been reduced.

Technological Environment

During the period under review, there was an inadequate inflow of foreign direct

investment as well as a lack of balance of payment support. This negatively impacted

on NSSA which is government owned which lagged behind in terms of the latest

technological trends due to capital inadequacy to replace the aged equipment with

automated process communication systems. To date the organisation is still using

various independent ICT systems as compared to integrated Information Systems which

consolidate the whole organisation’s business units from accounting to human

resources.

Legal Environment

During the period under review, the legal environment was characterised by

uncertainties. In many cases the monetary framework would be changed on ad hoc

basis resulting in inadequate business planning for the company. Overnight changes of

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taxes and duties legislation without adequate notice for companies to adjust was a

common feature. The price control regulation is one typical example of how the legal

environment militated against company business practices. Some laws for example the

Indigenisation and Empowerment Act were also introduced.

1.2 Statement of the problem

NSSA has some standalone systems which are being used in the Benefits and Finance

Department. These include benefits NPS systems like Claims Processing System

(CPS), WCIF system, newly launched accounting Sun System, P16 System, Client

Management System (CMS), the human and pay roll systems. NSSA’s main problem is

maintaining consistency across its operations. These current systems at NSSA are not

able to communicate with each other as they are not connected and information is in

silos. Inventories are maintained on manual systems and captured centrally at the end

of the month. Lack of system integration has exposed the company to potential fraud

from its clients who at times can claim whilst their employer did not insure them for the

period they are claiming a benefit. At times the systems can have challenges to

separate penalties and accumulated debt amount over long periods of non contribution

by employers. At times system audit trail cannot be found exposing the organisation to

risk of fraud from its employees. Lack of integration between the NSSA collections

system and employee registration system also brought a complication of perennial

failure to reconcile the organisation’s debtors and payments figures. NSSA has in the

past suffered losses due to fraud by a staff member that used social engineering

techniques to steal other users’ passwords and use them to process fraudulent claims

against the fund (Audit report 2013).

1.3 Research Objectives:

The main objective of the study is to evaluate gaps within the NSSA ICT System, which

exposes the organisation to potential risk of fraud.

The study’s specific objectives are to:

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1.3 Research Objectives:

The study seeks to:

i. Identify the factors that hinder the successful implementation of ERP at NSSA.

ii. Identify how can the NSSA systems be integrated into a single ERP.

iii. Establish how the concept of ERP can contribute to productivity and the

organisation’s profitability.

iv. Establish the core capabilities required to sustain ERP value over longer time

periods at NSSA.

v. Identify and recommend suitable implementation methodology that will assist

NSSA to succeed with ERP deployment.

1.4 Research Questions

The study seeks to answer the following research questions:

i. What are the factors that can hinder the successful implementation of ERP at

NSSA?

ii. How will the introduction of an ERP contribute to the productivity and viability of

NSSA?

iii. What are the core capabilities required to sustain ERP value over a long period

at NSSA?

iv. How can the ERP at NSSA be deployed?

1.5 Research proposition

Adoption of a sound ERP system at NSSA would lead to increased efficiency reduced

financial losses due to fraud and competitiveness.

1.6 Significance of the study

The study will assist in the development of a body of knowledge which can then be used

for policy formulation by NSSA and consequently, for the development of the economy

through the adoption of an ERP system that will aid in improving efficiency and reduce

losses as a result of fraud. It is then necessary to put safety nets in the form of usage of

information systems in place to restore shareholder confidence in the operations of

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NSSA. The findings will also be helpful to other parastatals as it provides them with the

actual causes of ERP malfunctioning in the parastatals and hence the failures can be

avoided or prevented. The study findings will also be used as reference material in

future research in this area. It will also be helpful to the academia, organisations and

consultants in this field as it will add on to the available literature.

1.7 Scope of the study

The scope of the research will be limited to the effectiveness of ICT systems in

parastatal organisations in Zimbabwe with a focus on NSSA between the period 2008

and 2013. The research will be carried out in Harare since NSSA has its head office in

the capital. The same study will also be carried out at NSSA Masvingo particularly

because this is where the researcher works and thus will be easy to administer the

questionnaires to the respondents. The target population will consist of NSSA staff and

management at the head office in Harare and in Masvingo.

1.8 Assumptions of the study The following assumptions were made:

a) The respondents were assumed to have at least some basic understanding of

ERP systems and their benefits to the organisation.

b) It was also assumed that all respondents to the questionnaire had sufficient

background information on ERPs and were up-to-date with recent

developments in the IT and strategy formulation and implementation in NSSA

in particular.

c) It was also assumed that the current state of affairs at NSSA would remain

constant during the period of the study as any changes in the organisation

may affect the views of the respondents and therefore the findings of the

study.

1.9 Research outline This study shall be presented in five chapters. Chapter 1 is the introduction to the

research, Chapter 2 (Literature Review) reviews the literature related to ICT systems in

organisations and the benefits of ERPs to organisational efficiency. The reviewed

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literature will be used in the critical analysis of the study findings. Chapter 3

(Methodology) presents the methodology on how the study is conducted. Chapter 4

(Results and Discussion) presents the findings from the research and the discussions of

the findings. Chapter 5 is the conclusion of the study and it outlines the conclusions of

the study as well as the study recommendations deriving them from the research

findings. Furthermore, the chapter presents the suggested area of further research.

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Chapter 2

Literature Review

2.0 Introduction This section presents literature on Enterprise Resource Planning (ERP) and the

emergence of ERP. Critical success factors and key ERP implementation elements are

also presented in this chapter. This chapter forms the crux on which the study findings

will be discussed.

2.1 Overview According to the assertions of Arnold (2006), Enterprise Resource Planning (ERP)

software programmes are indeed at the cutting edge of information systems technology.

They integrate fragmented business operations, often replacing multiplicity of legacy

systems in the process. As such they seek to achieve total client satisfaction with their

innovation. Nicolaou (2004) also affirms that major advantages of ERP systems over

application software suites lie in their consequent integration of accounting transaction

processes with workflow, design, and engineering management. It is widely reported

that enterprise-wide applications promise seamless integration of all information flowing

through a company’s accounting and financial information, human resources

information, supply chain information, and customer information organisation. They

automate and structure and organise business processes by providing reference

models and process templates. According to Ross, Vitale, and Willcocks (2003) cited by

Sumner (2005), business justification for ERP is about tangible and intangible benefits,

which include inventory reduction, operating cost reduction, overdue accounts

collection, process improvement and reduction in cycle times.

2.2 ERP Implementation Critical Success Factors (CS F) In project management contexts, the degree of project success can be evaluated in

terms of time - set for completion, cost - versus the set budget, quality - as regards

methodology employed, and scope as it refers to how well the system matched with the

company’s needs. However, Holland and Light (1999) have considered what they call

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success factors for implementing ERP and have categorised them as strategic and

tactical. Table 2 is the model of ERP implementation critical success factors (CSF).

Table 2.1 A CSF model with strategic and tactical f actors

Strategic Tactical

Legacy systems. Client consultations.

Business vision. Personnel.

ERP strategy. Business Process Change (BPC)

software configuration.

Top management support. Client acceptance.

Project schedule and plans. Monitoring and feedback.

Communication.

Trouble shooting.

Source: Holland and Light (1999)

On another front, literature presented by various authors and researchers identify eight

main factors that are perceived critical for successful ERP implementation. These are

presented below:

2.2.1 Top Management Support

Top management support has been identified and is frequently cited in ERP literature

as the most important success factor in ERP system implementation projects Zhang et

al (2002).The expectation is that the project must receive approval and support from top

management before it is implemented. Further, top management must be willing to

become involved and allocate the required resources to the implementation process.

According Zhang et al.(2002) ERP implementation requires senior management

According to Zhang, Lee, Zhang and Banerjee (2002) top management backing in order

to for them to provide leadership and required resources. Furthermore the senior

management’s other role in ERP implementation is making the workers understand the

capabilities and limitations and creating practical purposes for ERP systems (Umble,

Haft, and Umble, 2003)

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Al-Mashari, Al-Mudimigh, and Zairi (2003) argued that top management support does

not end with initiation and facilitation, but instead must extend to the full implementation

of an ERP system. Furthermore, top management support should provide direction to

the implementation teams and monitor the progress of the project Zhang et al.(2002)

2.2.2 Business Plan and Vision

The goodness of project management is evaluated against a project plan that in

essence should have clear objectives, execution strategy, scope of deliverables, and

time schedules of project activities. Having a distinct company plan and vision is a

requirement for guiding the ERP through out its life cycle (Loh & Koh, 2004). The main

components in the management of a project needs to start with an understanding of the

what needs to be achieved and the conceivable means of achieving them (Schwalbe,

2000).

According to Nah (2003) the biggest challenge faced by ERP project leaders does not

come in the implementation stage, but having too much expectations by project team

members and senior staff plus major stakeholders. Thus, it is imperative to fix the goals

of the project prior to seeking for executive buy in. This is the reason why most ERP

implementations have failed to take off as planned (Somers & Nelson 2004).

2.2.3 Re-engineering Business Process

As a starting point for any ERP implementation, management should first of all settle on

whether the organisation should change its business processes flow to fit the software,

or whether it is preferred to change the software to suit the business flow. This will set

the tone as regards the extent of remodelling or re-engineering required for the project

to succeed. Hammer and Champy (2001) defined business process re-engineering

(BPR) as “the fundamental rethinking and radical redesign of business processes to

achieve dramatic improvements in critical, contemporary measures of performance,

such as cost, quality, service and speed”.

2.2.4 Project Management and Project Champion

The implementation process of an ERP system is multifaceted comprising of rigorous

activities, therefore companies should set up project teams consisting of people who

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leads, manage and control the implementation process of a project (Zhang et al., 2002).

Project management activities span from the first stage of the ERP life cycle to closing

it. Project planning and control is a function of the project’s characteristics such as

project size, experiences with the technology, and project structure (Somers & Nelson,

2004).

According to Remus (2006) the most important factor during the implementation of an

ERP is project champion. Those leading the project championing stage should be

change agents and should have an understanding of technology in the business and

organisational setting. Besides that, they also have the role of endeavouring to control

resistance to change and to inculcate positive thoughts about the new system (Loh &

Koh, 2004). This individual also needs to be a high-level executive who will champion

the ERP project to the entire organisation. ERP implementations usually require

employees to put in long hours and work overtime. The long hours and stress may lead

to decrease in morale among employees, and the project champion is called upon to

cheer up and boost the morale of these employees during implementation until the

realisation stage of the project.

2.2.5 Teamwork and Composition

Projects of the nature and magnitude of ERP require a balanced combination of

implementation teams, ensuring the availability of both business and technical know

how. The personnel should comprise of people with the best skills in the organisationon

Loh & Koh, (2004). Al-Mashari et al, (2006) contend that the accomplishment of ERP

projects has a correlation with the knowledge, technical abilities and practical

experience of the project manager as well as his team. The team members besides

being technologically sound, should also have a deep understanding of the organisation

and the requirements needed (Remus, 2006).

2.2.6 ERP System Selection

According to Wei and Wang (2004), it is time consuming as well as difficult to select a

suitable ERP system. They also add that there are various ERP systems on the market

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and that there is no on single ERP that provides all the functionalities needed for a

business. Some of the ERPs have similar functions but the challenge is that they have

different designs Shehab et al.( 2004). Consequently, a company should select and

procur an ERP that is able to meet the organisation’s requirements. There is a criteria

identified which need to be taken into consideration when choosing an ERP. An

example, is a study by Everdingen et al. (2000) who emphasised that the ERP system

chosen has to thoroughly fit with most of the current business procedures. Furthermore,

he notes that the ERP system has to be flexible, user-friendly and easy to implement.

Another similar research study by Sprott (2000) reported that applicability, integration,

adaptability and upgradeability are essential factors that have to be considered in ERP

adoption.

2.2.7 User Involvement

User involvement is essential because it improves perceived control through

participating in the whole project plan. According to Zhang et al.(2002) there are two

areas for user involvement when the company decides to implement an ERP system:

user involvement in the stage of definition of the organisation’s ERP system needs, and

user participation in the implementation of ERP systems.

2.2.8 Training and education

There is need for the training of users of ERP since the operation of the systems are not

that easy even with excellent IT skills Woo (2007). Ignorance and lack of proper training

However, lack of training could possibly lead to project failure. While Nah et al, (2003)

argued that sufficient training can assist increase success for ERP systems, also lack of

it may well lead to failure.

2.3 Stages in ERP implementation According to Al- Mashari and Zairi (2000) enhancement methods like using ERP

systems involve change thus it is important to involve internal customers so as to avoid

resistance to change. This involvement of internal customers assists top management

in dealing with workers resistance to ERP implementation (Aladwani, 1998). He further

suggested an all encompassing outline which has three stages (Figure 2.3):

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Figure 2.2: Framework for ERP implementation

Source: Aldwani (1998)

2.3.1 Knowledge formulation phase

Identification and evaluation of attitudes of users and influential groups of users should

be considered in the initial stages of project implementation. The process involves

providing answers to the following:

� Identification of individuals or groups resisting

� Identifying their needs

� Identifying their values and beliefs

� Identifying their interests

Aladwani (1998) also asserts that having answers to the above is necessary and may

provide a platform for the organisation to determine how the actual sources of

employees’ resistance to ERP introduction. These facts established from the employees

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provide the actual indicators of the causes of resistance to change (Hultman,1979). This

could well be applied to the context of implementing an ERP system. Some of the users

may begin to resent the ERP mainly because they feel threatened by the new system

thereby they start fearing for their jobs or how they will fit into the new set up and the

fear of power authority dilution.

2.3.2 Strategy implementation phase

According to Aladwani (1998), it is the role of managers to use information about users

in order to do away with resistance to the ERP system as well as and to influence other

users to adopt. Communication is an effective strategy that can be harnessed to inform

potential users of the benefits of ERP. Gray and Larson (2000) put forward that the

knowledge of a system mainly about what it offers or what it can do for the organisation

can stimulate anticipation for an ERP. However, the management should be wary of

unrealistic worker’ expectations which will end up developing or extending into

resistance problem (Paquin, 2002). Moreover, Turbit (2003) argues that the

achievement of future ERP initiatives in an organisation relies on management gaining

trust from the workers. The other way of communicating to the workers about the ERP

is giving them full information and describing to them how the system operates.

Customers do not show how much they want a new product until they are given all the

information about how it works and the advantages of that product over the

conventional ones (Lazarus, 1988). Likewise, lack of knowledge on the ERP system by

users can result in them resisting the system. Teaching of the various groups about the

ERP system and how it functions can raise awareness of the system creating

awareness (Stratman & Roth, 1999). From the beginning, managers need to explain

how the system works to the users (Web, 1998). As an example, management should

make it clear to the users what to expect from the system and what they in turn should

do or know or the skills they should acquire in order for the system to operate efficiently.

The next step is to influence cognitive aspects of the users. Wiegers (1999) emphasises

that this strategy has a useful implication for ERP. Management should assure the

workers that the adoption of the ERP system will not render them jobless and this will

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make the adoption process positive. The strategy for minimising costs needs to be

developed in such a way that individuals and groups of workers view the benefits

associated with the adoption as compared to the costs that would be incurred without

adoption. As an example, management can emphasise on how the system would

enhance their job capabilities and make them more productive (Davenport, 1998).

Likewise, powerful groups within the company are also looking at the cost aspect of the

implementation effort. Another strategy that could help affect the adoption attitude of

potential users is differentiation. Aaker (1992) highlights the quality option as one

important basis for product differentiation. In the ERP context, the users’ perceived high

quality of the ERP system would surely have a positive impact on their attitudes towards

that system. Some ERP systems have an unwieldy user interface, which can cause

problems (Computerworld, 1998). Generally, system users do not scientifically measure

quality attributes of the system, rather each user constructs his or her own convenient

perception about the system depending on his or her real (or socially constructed)

experience.

Hands-on training is another important driver of ERP implementation success

(Stratman and Roth, 1999). Kalling (2003) adds that training presents a chance to assist

users in adjusting to the new system and also construct positive attitudes toward the

system. Further more, the training on the use and of the ERP is a good opportunity for

the potential users to gain hands on experience thereby gaining appreciation of the

system and its benefits.

Finally, management should get support and endorsement of well known opinion

leaders since these are able to influence many people to adopt and like the new system

(Wall and Seifert, 2001). Applying this strategy on the context of ERP would solicit

backing of the executives and powerful people. Furthermore after, convincing group

leaders to successfully take part in the ERP system implementation and make them feel

important and indispensable because they are making key decisions. Because of their

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commitment, leaders of the groups will try to convince their colleagues that the ERP

system is to their benefit.

Introduction of a new system should be carefully timed for example not introducing an

ERP system at a time when most of the workers are feeling threatened by it. First

coming up with solutions before the ERP introduction assists in setting the stage for

success. Lastly, top management buy in is critical for the successful implementation of

an ERP system (Stratman and Roth, 1999). Change requires a strategic vision to be

sustained and assured of its long-term success. Davenport and Brooks (2004) were of

the view that the implementation of an ERP would only be successful with senior

management support hence their buy-in is important. Ehie and Madsen (2005) notes

that successful introduction and implementation of an ERP system in an organisation

can only be achieved if senior management have seriously committed themselves to

backing of the project that will ensure the attainment of the conditions for the successful

introduction of the change ushered in by by the ERP in the organisation.

2.3.3 The status evaluation phase

Progress of implementation activities should be measured regularly to achieve effective

and efficient control, through monitoring and feedback from users. This is the last stage

of the suggested framework which should be done regularly. Besides having a

performance measurement system to ensure that the desired business outcomes were

achieved, Al-Mashari and Zairi.(2000) believe it is as important to have a performance

system to monitor the progress of ERP change management efforts. In order to be

useful, the feedback should be timely, accurate, and systematic. Based on status

evaluation phase outcome, top management takes appropriate action (Thacker, 2000).

The feedback coming from the evaluation phase may be positive, which means that

recorded performance of counter resistance efforts should be maintained (at least).

Alternatively, the performance feedback may be negative (Aladwani, 1998).

2.4 ERP implementations and business performance The focus of this section is on the business value of Enterprise Resource Planning

systems (ERP), which is a more specialised literature on IT business value. In the

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literature on ERP business value, the contribution of ERP implementations to an

organisation’s profitability is reflected in positive, negative or non-existent relationships

(Nicolaou & Bhattachrya, 2006). As the research develops, it becomes clear that the

business value of ERP should be analysed taking into consideration the different stages

of ERP implementation. Among one of the first studies, Poston and Grabski (2001) use

a sample of 50 companies that implemented SAP, Oracle, PeopleSoft or Baan from

1993 to 1997, and observe a significant decrease in the cost of goods sold as a

percentage of revenue in the third year after implementation, whereas during the first

two post-implementation years, there is no significant decrease in the financial ratio.

There are no significant changes in the ratio of selling, general, and administrative costs

to revenues or residual income. This implies ERP implementation overally results in

value addition despite requiring high initial cost of implementaion.

However, the number of employees as a percentage of revenue significantly decreased

all three years after ERP implementation. These results confirm that ERP

implementations are complex, and even when the system goes live there may be

additional implementation costs with fine-tuning the installations, consulting and staff to

maintain the ERP system. All these are expected to increase the proportion of costs to

revenue in the first post-implementation years. Then, another explanation for these

findings may reside in Brynjolfsson’s (1993) lag explanation of IT productivity paradox. It

may be that after implementation, the performance gains created by the ERP system

are shadowed by the inefficiencies caused by employees when learning the new

technology.

The mixed results obtained by Poston and Grabski (2001) stress the need for larger

data samples and more developed business performance measurements and models.

Using the data sample of one thousand one hundred and seventeen (1,117) companies

implementing ERP, Hitt, Wu and Zhou (2002) analyse if SAP implementations impact

the business performance by looking at the performance development before, during

and after implementation. Productivity, stock market valuation and profitability are the

three business performance measures used in their study. They find that the companies

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implementing ERP have higher financial performance than non-implementers in terms

of sales, profit margins, return on assets (ROA), inventory turnover, asset utilisation and

accounts receivable turnover. This shows that companies implementing ERP are better

at generating income per unit of input and manage the inventories and customer

payments more efficiently Nicolou,AI (2004).

Hunton et al. (2003) believe that most of the performance gains occur during the

implementation period, but in the immediate period after implementation, the

productivity and the profitability decrease. This may indicate that many ERP modules

are already implemented, operational and efficient before management considers the

project to be completed. However, performance reverts to pre-implementation levels,

which may be due to the fact that the gains in performance are scattered by the long-

term maintenance costs (Markus & Tanis, 2000). This explanation is supported by the

fact that performance ratios (e.g. accounts receivable turnover), which are not affected

by costs, continue to rise. Alternative theoretical explanations for the temporary decline

in performance are the inadequate training of the end-users to help them understand

the new business processes (Nicolaou, 2004).

The third measure of business performance in Hitt, Wu, and Zhou (2002) is Tobin’s q.

The financial markets seem to reward the ERP implementers with higher market

valuations, both during and after implementation, which reinforces the assumption of

both short term and long-term benefits of ERP implementations. In addition, the analysis

of the impact of the implementation scale on business performance finds an optimal

level of functional integration in ERP systems. The financial benefits decrease beyond

this optimal level. This suggests that full-scale ERP implementations engender

diseconomies of scale. Hitt et al. (2002) show that on average, ERP implementations

are productive investments, which provide benefits at different stages in an ERP project.

They also show that the benefits of ERP may be influenced by the synergies between

different modules of the entire system, which entails that part of the business value of

ERP systems resides in the scale of implementation.

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Hitt et al. (2002) imply that ERP implementations have the potential to lead to both

short-term and long-term benefits. Based on a sample of 63 firms implementing ERP

matched to 63 peer firms that did not implement ERP, Hunton et al. (2003) show that in

the third year after implementation, the return on assets (ROA), return on investment

(ROI) and assets turn over (ATO) are significantly better for the companies

implementing ERP compared to non-implementers. The findings in Hunton et al. (2003)

are consistent with Poston and Grabski’s (2001) statement that the realized benefits of

ERP become visible when the post-implementation frame is extended to a time horizon

of four or five (4 or 5) years. Yet, in Hitt et al. (2002) the improvements in ROA and

ATO are significant during the implementation stage. Additional findings in Hunton et al.

(2003) reveal that the profitability of non-implementers declines in time, whereas the

profitability of implementers remains at an approximately constant level during the first

three years after implementation. The findings suggest that ERP implementations help

companies stay on the competitive edge in the first years of post implementation.

This confirms that investments in ERP represent that cost of doing business. For

clarification of the long-term ERP benefits, the profitability of ERP implementers and

non-implementers should be compared during longer post implementation time.

Nicolaou (2004) extended the analysis frame of ERP impact on business performance

to four years and tested for differential profitability across matched pairs of ERP and

non-ERP implementers. The differential profitability measures the long-term

performance of companies implementing ERP relative to non-implementers. The

companies implementing ERP turned out to have a higher ROI two years after the

system goes live in comparison with ROI level before implementation. ROA was

significantly higher in the fourth post-implementation year. However, both ROI and ROA

were lower in the first year of go-live. These findings are in line with the Hitt et al. (2002)

results where the profitability of the companies implementing ERP sinks in the first year

after implementation. Yet, some of the findings contradict Hunton et al. (2003), which

show a constant level of financial performance in the three post-implementation years

for the companies implementing ERP.

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In conclusion, the studies of the direct relationship between ERP systems and business

performance agree on the fact that ERP implementations enable companies to improve

their productivity and profitability. There are mixed results related to the time frame

when the improvements in business performance become visible (e.g., be it during the

implementation project, or in the 2nd or 3rd year of go live stage) (Hitt et al., 2002;

Hunton et al., 2003; Nicolaou, 2004). These studies are confronted with the problem of

determining the ERP business value due to the existence of time lags caused by the

learning and adjustment that employees need to get acquainted with the new ERP

system. This is why future research of the long-term productivity effects would increase

the understanding of the time lags between costs incurred and benefits received.

2.5 Strategies of effectively implementing ERP There are three top implementation strategies which organizations can use which are

the Big bang, Phased rollout and Parallel adoption (Muhammad, 2010). Organisations

are not restricted to pursue a single strategy but they can use a combination of the

strategies (Muhammad, 2010). There is no single strategy which is regarded as the

most successful strategy, only the existing circumstances lead to the right

implementation strategy (Bradeley, 2008). The organisations will use the pilot projects,

alpha testing, refinements and iterations before recommending the strategies to the

entire organisation.

2.5.1 The Big Bang

The implementation is carried out at once and the whole company switches to the new

system on a target date (Muhammad, 2010). The old systems will be shelved from that

date. All the modules of the organisation will be implemented at the same time

(Muhammad, 2010). However, some planning activities have to be carried out prior to

the implementation of the strategy (Muhammad, 2010). The legacy systems will then

be switched off and the new system then goes live (Muhammad, 2010). There is no

going back once this stage is reached, even if you encounter some problems. The only

remedy available is to test your data before the change over (Muhammad, 2010).

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2.5.1.1 The Big Bang Theory – Risks and Benefit

According to Muhammad (2010) there is a high-level of risk which you face when

following this strategy because many things can be affected by the abrupt changeovers.

He also adds that the implementation is quick and less costly than a long phased

implementation as shown below.

Table 2.2 Advantages and Disadvantages of Big Bang Advantages

Disadvantages

Implementation time is shorter

Difficulties are most pronounced

Implementation difficulties and pains are condensed

Details may be overlooked in the rush to change

Costs are much lower than a long, drawn out implementation

Employees have less time to learn the new system

Employees only need to be trained on the new system, not for the change over period

Full end-to-end system testing is tough to carry out prior to implementation

Implementation happens on a single date and everyone knows the date

Fall back scenarios are more difficult than originally thought. A failure in one part on the system could (will) affect others There is a catch-up period

Source: Muhammad (2010)

2.5.2 Phased Rollout

The change takes place in phases and always requires an extended time frame for the

system to be fully implemented (Bradeley, 2000). The organisation usually will

implement core modules first then other modules later depending on the funding of the

project, unit by unit and geographically (Bradeley, 2008). The strategy is also called the

steady state theory (Muhammad, 2010). The organisation will schedule the changes

over a long period of time (Bradeley, 2008). The legacy system will be abandoned and

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the new system adopted in a series of planned step (Muhammad, 2010). It can be

phased roll-out by module, phased rollout by business unit and phased rollout

geography (Muhammad, 2010).

2.5.2.1 Phased Rollout by Module

It is the widely used strategy (Bradeley, 2008). Using this strategy the ERP Modules are

implemented in stages, starting with core modules and then add others in phases

(Muhammad, 2010).

2.5.2.2 Phased Rollout by Business Unit

Implementation is carried out in a single business unit or a number of departments at

once. The project team will travel from department to department or business units

during the time of the implementation (Bradeley, 2008). The team which is a group of

super users will become more equipped with each implementation phase.

2.5.2.3 Phased Rollout by Geography

This is known as a pilot approach (Muhammad, 2010). This strategy is normally used in

organisations where regional offices are distributed in different areas. (Bradeley, 2008).

Table 2.3 Advantages and Disadvantages of Phased Ro llout

Advantages

Disadvantages

More time for users to adopt to the new ERP

Duration of the project is much longer than Big Bang

Technical staff can focus on one part of the system or a select group of users at one time

A fall back to the old becomes more difficult with each phase

Project members may develop unique implementation skills that they can be positioned for in later rollouts

Temporary bridges must be created between legacy and the new ERP

Source: Muhammad (2010)

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2.5.2.4 Parallel Adoption

The strategy is also referred to as the parallel conversion or parallel running and parallel

cut over (Muhammad 2010). It is the less risky strategy and it involves the use of both

systems at the same time that is the legacy system and the ERP (Bradeley, 2008). The

strategy allows users to test the new system while operations are continuing with the old

system (Bradeley, 2008).When the new system passes the test thus when the legacy

system will be abandoned (Muhammad 2010).

2.5.2.4.1 Parallel Adoption: Risks 1) The strategy is too costly (Muhammad 2010).

2) Very inefficient because employees are entering data into both systems

(Muhammad 2010).

3) While we are not able predict the extra costs that could come from a backfired

Big Bang implementation, parallel adoption has become unpopular because of

perceived high costs (Muhammad 2010).

2.5.3 Intermediate benefits of ERP systems

The findings presented in the previous section do not show why ERP systems enable

companies to improve their efficiency and profitability ratios. ERP systems provide the

business infrastructure and implementing an ERP system is not an issue of changing

software, but an issue of transforming business processes. Hence the examination of

how ERP systems affect the organisation at intermediate process levels brings insight

into the matter. To this end, Chand et al. (2005) suggest a balanced-scorecard based

framework to assess the organisational benefits of ERP systems. The benefits of ERP

are evaluated not only in financial terms (e.g., higher revenues and lower costs), but

also in terms of process level performance (e.g., improved cycle times), customer value

(e.g., improved customer service), and organisational learning value (e.g. better

understanding of business, creativity).

In addition, the benefits of ERP are analysed dependent on the three effects that ERP

systems have at firm level: automate informate or transformate effects (Kim, 2004).

Thus, a twelve cells framework results. Each cell contains a set of financial and non-

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financial success measures of ERP systems. Law and Ngai (2007) present an argument

that the combination of non-financial measures (e.g. customer satisfaction, internal

processes, ability to innovate and learn) offers a deeper analysis of the sources of

benefits of ERP systems and the future impact on the bottom line.

In Chand et al. (2005) view, companies usually start ERP implementation with the

intention to automate the business processes. At this level, operational benefits of ERP

are identified based on specific goals within each of the four balanced scorecard

perspectives: to improve process efficiency, meet current needs of customers more

efficiently, reduce costs and increase productivity. Hunton et al. (2003) put forward that

when the ERP system is in operational use, companies realise that it can be used to

provide information to all the parties across the value-chain. At this informate level,

tactical benefits of ERP may be evaluated contingent on the specific goals of each of

the four dimensions of the balanced scorecard: to improve tactical decision-making,

identify and fulfill customer needs proactively, increase revenues, and workers

becoming more effective decision makers (Hitt et al., 2002). In order to keep up with the

highly competitive markets, companies need to reengineer and transform themselves.

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Table 2.4 ERP Scorecard

ERP Benefits Process Customer Finance Innovation Automate (Operational benefits)

Goal : Improve process efficiency Success Measures : Error reductions, faster processing, consistent data, increase in throughput

Goal : Meet current needs of customers more efficiently Success Measures: Improved response time, reduced customer complaints, reduced errors

Goal : Reduce costs Success Measures: reduced inventory carrying costs, lower labour costs

Goal: Increase productivity Success Measures: Power user involvement in user training for operational tasks.

Transformate (Strategic benefits)

Goal: Improve tactical decision making Success Measures: Improved work scheduling, improved work assignment, improved access to information, improved quality management, improved control

Goal: Identify and meet customer needs proactively Success Measures: Better customer expectations setting, improved customer satisfaction, improved scheduling and delivery

Goal: Increase revenue Success Measures: better forecasting

Goal: Make workers more effective decision makers Success Measures: Training for decision making skills, worker empowerment for taking action

Cmpetitiveness(Strategic benefits)

Goal: Adapt to radical environment changes Success Measures: Technology changes, competition changes

Goal: Meet new customer needs or new needs of customers Success Measures: Increased customer base, partnership with customers

Goal: Improve market value Success Measures: Growth capitalisation, New markets

Goal: Absorb radical changes Success Measures: Change management processes, breath and broader horizon

Source: Chand et al. (2005)

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At this transformative level, strategic benefits of ERP may be assessed depending on

the goals within each of the balanced scorecard dimensions: to adapt to radical

environment changes, meet new customer needs or new needs of customers, and

improve market value (Baki & Cakar, 2005). An important conclusion is that the goals

for implementing the enterprise systems must be considered in the assessment of the

impact of ERP systems on business performance. The operational, tactical and

strategic benefits of ERP impact the bottom line performance in different ways. Chand

et al.(2005) framework captures these different ways of impact using the balanced-

scorecard lens. However, this framework does not highlight the links between the

benefits of ERP that would show how ERP systems create value within organisations.

Therefore, using a framework by Chand’s et al. (2005) as a lens for the identification of

the benefits of ERP systems, this study puts forward a set of interrelationships between

motivations for implementing ERP systems, the ERP project management and the

different types of benefits of ERP generated at the process level, customer level,

financial level and learning and growth level (Velcu, 2007a).

2.5.4 Factors with leveraging effects on the busine ss performance of ERPs

The mixed results regarding the direct link between ERP systems and business

performance should be interpreted with consideration to the fact that all these results

report average performance measures across a spread range of companies

implementing ERP (Melao & Pidd, 2003). The studies of this direct link do not consider

the various experiences companies have with their ERP projects and the organisational

and contextual factors that may affect both the cost of implementation and the benefits

obtained (Nicolaou, 2004). A distinct research strand discusses differences in the

characteristics of the ERP systems selection process, implementation methods,

implementation effort, and critical success factors of implementation (Motwani,

Subramanian & Gopalakrishna, 2005). However, there is a dearth of papers that

empirically analyse the influence of the characteristics of ERP projects on business

performance. This type of investigation would add to the understanding of additional

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factors that influence the ability of companies to use ERP systems to obtain productivity

gains and turn them into profit.

Hunton et al. (2003) examine the combined effect of two organisational factors – firm

size and financial health - on the business performance of companies implementing

ERP. Large implementers are found to have higher ROI than large small firms. The

large and unhealthy companies may have more room for potential efficiency and profit

gains. The results also show that small and healthy companies implementing ERP show

better performance in terms of ROA, ROI and return on sales (ROS) than small and

unhealthy ERP implementers. The small and healthy firms have the possibility to obtain

the resources necessary for the full completion of the implementation, whereas small

and unhealthy firms may have limited resources that force them into partial

implementations. In conclusion, this study shows that the organisational conditions at

the outset of the ERP implementation project should be controlled for when studying the

relationship between ERP investments and profitability.

Nicolaou (2004) examines the influence of ERP implementation characteristics on the

firm’s ability to use ERP to improve the business performance two years after continued

use of ERP. The selection of an ERP package from a larger vendor, who has a

technology led objective, and the implementation of specific modules enable higher

financial returns from ERP implementations relative to the firms that follow a different

implementation strategy. Thus, the consideration of implementation factors can help

explain a company’s ability to improve its operational performance in the long run. The

study does not exhaust the list of implementation factors and the possible relationships

among the investigated factors.

ERP systems have their own life cycle in organisations. As most of the companies have

an ERP system in place, the focus moves from the implementation project issues to the

utilisation and development of the implemented system (Rikhardsson &

Kraemmergaard, 2006). Accordingly, researchers of ERP business value turn the

attention towards the effects of the continuous improvements to ERP systems on the

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benefits realised from ERP use. Nicolaou and Bhattacharya (2006) empirically examine

the impact of ERP revisions (e.g. enhancements, upgrades, abandons and switches)

on business performance. Enhancements to the system are the modular additions to

the system or upgrades. The system abandons are the switches to another ERP vendor

or complete abandon of the ERP project. Additionally, the study examines the effect of

the timing of system revisions on the differential performance of the companies

implementing ERP. The sample companies are divided into two groups:

• Companies implementing ERP that make early changes to the system, in the first year

after the completion of the implementation project;

• Companies implementing ERP that make later changes to the system, at an interval of

two years or more after the completion of the implementation project. In general, the

changes to the ERP system made in the post-implementation period are found to

significantly improve the financial performance of the companies. Furthermore, in the

fourth post-implementation year, the companies that embark on an early enhancement

have higher differential performance results than their non-ERP matching companies.

Late enhancements and early and late abandons are shown to deteriorate the

differential performance of ERP implementers.

ERP implementations may increase the firm’s ability to generate long term superior

business performance contingent on factors such as: the organizational conditions at

the outset of the ERP implementation project (Hunton et al., 2003), the characteristics of

ERP projects (Nicolaou, 2004), the continuous management of the ERP post-

implementation process (Rikhardsson & Kraemmergaard, 2006), and the changes to

the system in the post-implementation stage (Nicolaou & Bhattachrya, 2006). However,

the extant research on ERP business value did not examine the leveraging effect of the

success of ERP projects on business performance.

ERP systems become an organizational actor in the implementing companies. Hence,

future research on the business value of ERP systems should include in the analysis

the complementary effects on the bottom line of organizational changes facilitated by

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ERP implementations at different stages (e.g. the ability of the ERP system to integrate

the organizational activities across the entire value chain and the use of the ERP

system in combination with latest internet technologies) (Davenport & Brooks, 2004).

The potential of ERP systems to enable companies to reach competitive advantage

may reside in the unique combination of the different dimensions of the management of

ERP implementations throughout their lifecycle.

2.6 Chapter summary This chapter has presented literature on ERP, critical success and failure factors, ERP

implementation and business performance. The change management strategies for

ERP implementation were also presented in this chapter. The next chapter will present

the study methodologies and their justifications.

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Chapter 3

Methodology

3.0 Introduction This chapter presents the research design and methodology that was used to

investigate and complete this study. The chapter also justifies the chosen

methodologies.

3.1 Research Philosophy White (2000) states that research can be carried out by either using the qualitative or

quantitative approach. However, research can be carried out by using a combination of

the two approaches, thus triangulation. Whatever method is used in research, the

process of enquiry in science is the same, (Hammersley, 1992). However Silverman

(2000) argues that these two approaches often involve different evaluation methods, at

the same time qualitative research tend to be more superior as it is value free.

3.1.1 Positivism philosophy

This refers to a design where standardised measurement procedures are used to

assign numbers to observation. Statistical figures are used to summarise the results.

Creswell (1994) defined quantitative data as data coming from statistical measurement

expressed in numerical forms. Findings can be generalised with much objectivity.

Campbell and Stanley (1993) are of the assertion that quantitative research is

commonly used to investigate research questions. There is a potentially infinite array of

possible quantitative research designs, and in the human sciences particularly, it can be

difficult to do pure, experimental research. Thus a great many adaptations of

experimental designs, called quasi-experimental and non-experimental designs have

been developed. It is important to consider a range of possible quantitative research

designs and their strengths and weaknesses, before adopting any particular design.

Denzin and Lincoln (2005) define quantitative research as a methodology that makes

useful descriptions of observed phenomena and explains the possible relationships

between descriptive surveys, longitudinal developments, correlational and ex-post

factors research designs. White (2000) views quantitative research as an iterative

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process through which evidence is evaluated, and theories and hypothesis are refined

and tested. Denzin and Lincoln, (2005) argues that in quantitative research,

measurement is usually regarded as the only means by which observations are

numerically expressed in order to investigate casual relations or associations.

3.1.2 Phenomenology philosophy

Roberts et .al (2003), Saunders (2003) and White (2003) cited in Mahofa (2006) define

phenomenology approach as that ideology that uses qualitative data to arrive at natural

facts. Thus this approach is based on the way people experience social phenomenon in

the world they live. It is characterised by focus on meanings that the research subjects

attach to social phenomenon, an attempt by the researchers to understand what is

happening and why it is happening using qualitative data. This is mainly concerned with

opinions and subjective judgements. Information under this research design would be

obtained from documentary analysis. For example practical work, observations,

personal judgments and other procedures. Qualitative methods use open-ended

interviews to explore opinions, behaviours and attitudes of individuals or groups of

individuals (White, 2000). The data collected using such methods is usually in the form

of descriptions. The advantage of this approach is that it provides a deeper

understanding of social phenomena than would be obtained from purely quantitative

data (Silverman, 2000).

In this study, the researcher used both positivism and phenomenological approaches in

order to take advantage of the strengths of both philosophies to come up with more

accurate and reliable data. The researcher administered questionnaires to staff and

management of NSSA.

3.2 Research Strategy

In this study, the researcher used the case study as his research strategy. A case study

was more appropriate because it provided detailed analysis of NSSA. The case study

provided for probing deeply and simultaneously undertaking intensive analysis of the

organisation. This involved the researcher asking a variety of research questions that

were geared towards developing a full understanding of the case or subject matter.

Furthermore, the case study provided the ability for the researcher to obtain “direct

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experience of the ways in which actors interacted in a setting” and this view largely

influenced the use of the case study. A case study was found to be more desirable

because, it is a useful research strategy for “pioneering new ground” which can bring to

light important variables, processes and interactions.

The researcher obtained an in-depth knowledge through the case study research

(Silverman, 2000) of the impact and effectiveness of the ICT system at NSSA through

both quantitative and qualitative means.

3.3 Target Population According to Gratton and Jones (2010:110) population refers to everyone who shares

those characteristics defined by the researcher as relevant to the investigation. The

research targeted all management and staff and at NSSA Head office in Harare and

NSSA Masvingo Regional Office.

3.4 Sampling

3.4.1 Stratified random sampling

The population was divided into segments or strata. Each stratum had relatively

homogeneous elements. A specific number of NSSA employees were chosen randomly

in proportion to the specific stratas. Stratification only makes sense when the population

can be classified into strata that are homogeneous in the state being investigated. In

this study the researcher classified the respondents into groups namely management

and staff. Respondents were randomly selected from these groups.

3.5 Data collection In this study, the researcher used a questionnaire and interview. Two methods were

used in order to reduce weaknesses of one method though the major data collection

tool used in the research was the questionnaire. The questionnaire was used due to its

applicability to the case study research design (Labovitz and Hagedorn, 1976)..

3.5.1 Interviews

Mhlanga (2007) posits that interviewing is a method used to gain an understanding of

the underlying reasons and motivations for people’s attitudes, preferences or behaviour.

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There are three types of interviews and these are structured, semi-structured and

unstructured (Corbetta, 2003).

3.5.1.1 Structured Interviews

The questions and the order in which they are asked is determined in advance.

According to Corbetta (2003, p.269) structured interviews are “….interviews in which all

respondents are asked the same questions with the same wording and in the same

sequence.” The structured interviews have an advantage of capturing control of the

topics and the format of the interview due to its nature of a common format thereby

making it simple to code and make comparisons of the data. However the main

disadvantage of a structured interview is that it follows the interview guide hence does

not provide room for probing of more information.

3.5.1.2 Semi-Structured Interviews

It is a method of data collection in which the interviewer does not determine in advance

the questions and their order. Therefore, the interviewer needs to needs to have self

confidence in order to deal with the situation and new ideas arising on the topic.

This study employed the structured interview during data collection. This method was

chosen in the study so as to avoid variation in questions that were conducted with

interviewees. This would ensure consistency in the questioning, order or in the wording

of the questions asked. According to Corbetta (2003), the main goal of a structured

questionnaire is ensuring that interviewees’ responses to questions would be

aggregated.

3.6 Types of data

3.6.1 Primary data

Zikmund (1997) states that primary data are gathered and assembled for the particular

research project available. This is supported by Parasuraman (1991), who agrees that

primary data is collected specifically for a project. Primary data is expensive to collect,

but it is important, as it is possible to formulate structured and unstructured questions

that focus on the study topic. This study relied mainly on the data collected through

questionnaires as its primary source of information. This constitutes the most important

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form of data collection given the qualitative nature of the research topic, (Merriam,

1998). The information is crucial to the research project as it specifically addresses

issues of interest to the study area.

3.6.2 Secondary data

Secondary data is mostly historical data. It is data that will have been collected and

assembled for some other project, (Zikmund, 1997). Secondary data are data gathered

and recorded by someone else prior to (and for purpose other than) the current project.

It is not primarily intended for the study under review. Secondary data is cheaper to

collect as opposed to primary data. It is usually gathered from various sources such as

websites, various textbooks, journals and company documents like business plans,

divisional plans, and annual reports and so on.

3.7 Data processing, analysis and presentation

Once the fieldwork has been completed, the data must be converted into a format that

will answer the decision maker’s questions, (Zikmund, 1997). Data processing usually

consists of questionnaire coding, data entry and data cleaning. Initially, the

questionnaires were given unique codes for all responses. Data entry was done using

Microsoft Excel. SPSS was used to remove varying responses using frequency tables.

The data was also analysed using SPSS version 16. In data analysis and interpretation,

frequencies, percentages and mean were used. The information is presented using

tables, graphs, charts and testing of hypotheses to enable easy comparison and clear

projection of the situation. These findings are laid out in chapter four, together with their

detailed discussion.

3.8 Chapter conclusion This chapter presented the methodology of the study. The research adopted the case

study approach and employed the questionnaire and interview during data collection.

The advantage of using the interviews was that they complimented the questionnaires

and they allowed for further probing (Zikmund, 2000). The next chapter presents the

study findings, presentations and analysis.

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CHAPTER 4

DATA PRESENTATION AND ANALYSIS

4.1 Introduction This chapter presents the data and analysis of the research findings. Discussions of the

findings are also presented in this chapter in relation to the literature reviewed in

Chapter 2.

4.2 Response Rate According to the American Association for Public Opinion (AAPOR) (2008), response

rate refers to the total number of people successfully interviewed or who successfully

responded to questionnaires divided by the actual number of responses attained from

the study or survey. Response rate is an important indicator of survey quality. There are

several reasons why the response rate in most instances is not 100% and these

includes that others cannot be contacted because of their or the researcher’s work

commitments, or others refuse to answer the questionnaire or others do not return them

on time. In this study the researcher administered 50 questionnaires to NSSA

management and staff in Harare and Masvingo. Of the 50 questionnaires which were

distributed forty (40) were completed and sent back for analysis. This therefore

represents a study response rate of 80%. Therefore, the response rate was considered

to be high to ensure or warrant validity of the study findings. This is in line with

Saunders et al (1997) who cited a research by Dillman (1978) and gives a benchmark

for response rate of questionnaires at between 50 percent and 92 percent. The

response rate in this study was high because the researcher self administered the

questionnaires and this proved to be more favourable than postal questionnaires or

emailed ones since the researcher was present to respond to unclear questions to the

respondents (Saunders, Lewis and Thornhill, 2004).

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Table 4.1 Response Rate

Questionnaire sent Questionnaires

Received

%

Staff 30 25 62.5%

Management 20 15 75%

Total 50 40 80%

4.3 Sample Demographics The titles of the survey respondents included managers, senior managers, supervisors,

and clerks. Moreover, the majority of respondents have been employed within the

organisation for more than 5 years as shown in Figure 4.1 below. Therefore, it was felt

that their understanding and experience are proper to respond to this survey and that

their answers are representative of and reflect the general feelings about the NSSA IT

system in place.

4.3.1 Position at NSSA The positions of the respondents in this study are shown in Figure 4.1.

Figure 4.1: Positions at NSSA of respondents

Middle Management

13%

Lower

management

40%

Staff

47%

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According to the study findings presented in Figure 4.1, the majority 47% of the

respondents in this study were members of staff, 40% were lower management while

only 13% were middle managers at NSSA. These findings show that there was a fair

representation of respondents from across the organis

users and their managers. This i

the IT systems and thus have adequate knowledge and experience on the systems

currently running at NSSA. A reasonably big number (40%) were from a decision

making level at Regional level and hence were i

position of the organisation regarding the adoption of ERP. Their responses were from

an informed position and therefore added value to the study findings.

4.3.2 Length of service at NSSA

The section sought to establ

had spent NSSA and the findings are presented below.

Figure 4.2: Length of employment at NSSA

The study findings show that 39% of the respondents have between 6 and 10 years,

30% had above 10 years, 19% had between 1 and 5 years while only 12% had less

than a year working for NSSA.

respondents had been with the organisation for a fairly long time and thus were in a

0%

5%

10%

15%

20%

25%

30%

35%

40%

Less than 1 year

12%

According to the study findings presented in Figure 4.1, the majority 47% of the

study were members of staff, 40% were lower management while

only 13% were middle managers at NSSA. These findings show that there was a fair

pondents from across the organisation in the study by system

users and their managers. This is so because most the respondents are daily users of

the IT systems and thus have adequate knowledge and experience on the systems

currently running at NSSA. A reasonably big number (40%) were from a decision

making level at Regional level and hence were in a position to give informatio

ation regarding the adoption of ERP. Their responses were from

an informed position and therefore added value to the study findings.

Length of service at NSSA

The section sought to establish an understanding of the length of time the respondents

had spent NSSA and the findings are presented below.

Figure 4.2: Length of employment at NSSA

The study findings show that 39% of the respondents have between 6 and 10 years,

30% had above 10 years, 19% had between 1 and 5 years while only 12% had less

than a year working for NSSA. In view of the study findings, it implies that majority of the

ondents had been with the organisation for a fairly long time and thus were in a

1-5 years 6-10 years Above 10 years

19%

39%

30%

Page 39

According to the study findings presented in Figure 4.1, the majority 47% of the

study were members of staff, 40% were lower management while

only 13% were middle managers at NSSA. These findings show that there was a fair

ation in the study by system

s so because most the respondents are daily users of

the IT systems and thus have adequate knowledge and experience on the systems

currently running at NSSA. A reasonably big number (40%) were from a decision

n a position to give information on the

ation regarding the adoption of ERP. Their responses were from

an informed position and therefore added value to the study findings.

ish an understanding of the length of time the respondents

The study findings show that 39% of the respondents have between 6 and 10 years,

30% had above 10 years, 19% had between 1 and 5 years while only 12% had less

In view of the study findings, it implies that majority of the

ondents had been with the organisation for a fairly long time and thus were in a

Above 10 years

30%

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position to understand the IT systems within the organisation. Their responses and

views in this study were perceived to be of significant importance since they have an

understanding of the IT system at NSSA.

4.3.3 Level of education

The level of education of the respondents is shown in F

Figure 4.3: Level of education of respondents

The study findings reveal that (29%) of the respondents were degree holders, 25%

college diplomas, 19% had A’ Level

Level. This shows that most of the respondents attained a modest level of education

and accordingly were in a position to understand the research issues under study.

O' Level A' Level

10%

19%

position to understand the IT systems within the organisation. Their responses and

views in this study were perceived to be of significant importance since they have an

tanding of the IT system at NSSA.

of the respondents is shown in Figure 4.3.

Figure 4.3: Level of education of respondents

The study findings reveal that (29%) of the respondents were degree holders, 25%

s, 19% had A’ Level , 17% were post graduates while only 10% had O’

This shows that most of the respondents attained a modest level of education

and accordingly were in a position to understand the research issues under study.

A' Level Diploma Degree Post graduate

19%

25%29%

Page 40

position to understand the IT systems within the organisation. Their responses and

views in this study were perceived to be of significant importance since they have an

The study findings reveal that (29%) of the respondents were degree holders, 25% had

, 17% were post graduates while only 10% had O’

This shows that most of the respondents attained a modest level of education

and accordingly were in a position to understand the research issues under study.

Post graduate

17%

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4.4 Knowledge of ERPs This section sought to establish whether the respondents were aware of the term ERP

and the responses are presented below.

Figure 4.4: Knowledge of ERPs

The study findings show that 67% of the respondents in this study were aware of the

term ERP, 19% had not heard about it while 14% were not sure. The findings may imply

that the study was carried out with the knowledgeable respondents who knew and

understood the area under study hence adds validity of the research findings and

conclusions.

4.4.1 Defining ERPs

Respondents were given a definition of ERPs and were asked whether or not they

agreed with it and the findings from the study are presented below.

Table 4.2: Definition of ERP

67%

19%14%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Yes No Not sure

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Definition of ERP

Number of

respondents

Yes No Not

Sure

An ERP system is a centralised database system with all

business processes that can be viewed, updated, and

monitored through a single system in order for information

to be shared across all functional departments.

75%

10% 15%

From the table above, 75% respondents concurred with the definition that an ERP

system is is a central database with all business processes that can be viewed,

updated, and monitored through a single system in order for information to be shared

across all functional departments, only 10% respondents did not agree while the

remaining 15% were not sure about the given definition. The findings may imply that the

respondents had a clear idea of what an ERP is mainly because they were in line with

Arnold (2006) who posits that Enterprise Resource Planning (ERP) software programs

are indeed at the cutting edge of information systems technology. They integrate

fragmented business operations, often replacing multiplicity of legacy systems in the

process. As such they seek to achieve total client satisfaction with their innovation.

Nicolaou (2004) also affirms that major advantages of ERP systems over application

software suites lie in their consequent integration of accounting transaction processes

with workflow, design, and engineering management. It is widely reported that

enterprise-wide applications promise seamless integration of all information flowing

through a company’s accounting and financial information, human resources

information, supply chain information, and customer information organisation. They

automate and structure and organise business processes by providing reference

models and process templates.

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4.5 Operational Efficiency and Effectiveness The respondents were asked whether or not they agreed that an ERP would enhance

NSSA’s operational efficiency and effectiveness and the findings are presented below.

Figure 4.5:Whether the adoption on an ERP would lea d to operational efficiency

and effectiveness at NSSA

The study findings show that 57% of the study respondents strongly agreed that the

adoption of an ERP would lead to operational efficiency and effectiveness at NSSA,

39% agreed while only 4% disagreed. The findings may imply that the respondents

were aware of the advantages that ERP can bring to the organisation. The results are in

line with Shanks et al. (2003:78) who described that information technology has a

history of cutting cost and raising outputs by automating basic repetitive operations. In

addition according to Shanks et al. (2003:79) “…expect enterprise systems to offer

benefits in terms of cost reduction, cycle time reduction, productivity improvement,

quality improvement and improved customer services”.

In light of the above it can be argued that ERP systems optimise companies’ day to day

business, whereby optimisation could be seen as the process of reducing the space of

potential problems and enhancement of the business by utilising the integration

between business units. In the process it then improves the efficiency and effectiveness

of business operations within an organisation.

Strongly agree

57%

Agree

39%

Disagree

4%

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4.5.1 Infrastructure readiness at NSSA for the adop tion of an ERP

This section sought to find out from the respondents whether they viewed NSSA as

being ready for the adoption of an ERP and the findings are presented below.

Figure 4.6 : Whether NSSA has ready infrastructure for ERP adoption

According to the study findings, the majority of the respondents in this study 45%

strongly agreed that NSSA has ready infrastructure for the adoption of an ERP system,

33% agreed, 15% were neutral while only 7% disagreed. The study findings implies

that there is ready infrastucture at NSSA for the adoption of an ERP. The availability of

a ready infrastructure for ERP ensures system realibility and also that the sytem will

work effeciently and effectively leading to the attainment/meeting of organisational

objectives. This is in line with Weicher et al (2004) on the case of a Chinese

organisation, who assert that to ensure maximum Return on Investment (ROI), China

Telecom required an infrastructure platform with exceptional reliability, performance,

availability, and scalability to power ERP. This may imply that for any organisation to

successfully adopt ERP it ought to have a ready infrastructure that would be able to

power the ERP system selected for implementation.

45%

33%

15%

7%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Strongly Agree Agree Neutral Disagree

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4.5.2 Training needs and ERP adoption at NSSA

This section sought to establish if user training needs were adeq

successful implementation of ERP at NSSA. The findings of the study are presented

below.

Figure 4.7 Training needs and budget adequacy

The study findings reveal that most (42%) of the respondents strongly agreed that

training needs are adequately budgeted for, 35% agreed, 15% remained neutral on the

issue while only 8% disagreed. From the study findings it appears as if training needs

for the adoption of ERP are adequately budgeted for at NSSA. The reason for there

being 77% of respondents strongly agreeing or agreeing to the existence of training

budget, might probably be attributed to ability of project leaders to communicate such

information to the rest of the interested parties at NSSA. The results may be conclusi

that training needs are adequately budgeted for at NSSA. The adequacy of budget for

training however, ensures that employees get proper training and are better positioned

for adoption of ERP and it would increase the chances of its successful adoption at

NSSA. Due to the complexity of ERP systems adequate training is needed for the

employees to fully appreciate the operations of the system and hence the need for an

adequate budget for the training needs for the adoption of ERP. On the other hand,

Janstal (2003) argues that training needs are typically under budgeted in ERP projects.

0% 5%

Strongly agree

Agree

Disagree

Neutral

8%

15%

Training needs and ERP adoption at NSSA

This section sought to establish if user training needs were adequately budgeted for, for

successful implementation of ERP at NSSA. The findings of the study are presented

Figure 4.7 Training needs and budget adequacy

The study findings reveal that most (42%) of the respondents strongly agreed that

needs are adequately budgeted for, 35% agreed, 15% remained neutral on the

issue while only 8% disagreed. From the study findings it appears as if training needs

for the adoption of ERP are adequately budgeted for at NSSA. The reason for there

f respondents strongly agreeing or agreeing to the existence of training

budget, might probably be attributed to ability of project leaders to communicate such

information to the rest of the interested parties at NSSA. The results may be conclusi

adequately budgeted for at NSSA. The adequacy of budget for

training however, ensures that employees get proper training and are better positioned

for adoption of ERP and it would increase the chances of its successful adoption at

e to the complexity of ERP systems adequate training is needed for the

employees to fully appreciate the operations of the system and hence the need for an

adequate budget for the training needs for the adoption of ERP. On the other hand,

gues that training needs are typically under budgeted in ERP projects.

10% 15% 20% 25% 30% 35%

42%

35%

15%

Page 45

uately budgeted for, for

successful implementation of ERP at NSSA. The findings of the study are presented

The study findings reveal that most (42%) of the respondents strongly agreed that

needs are adequately budgeted for, 35% agreed, 15% remained neutral on the

issue while only 8% disagreed. From the study findings it appears as if training needs

for the adoption of ERP are adequately budgeted for at NSSA. The reason for there

f respondents strongly agreeing or agreeing to the existence of training

budget, might probably be attributed to ability of project leaders to communicate such

information to the rest of the interested parties at NSSA. The results may be conclusive

adequately budgeted for at NSSA. The adequacy of budget for

training however, ensures that employees get proper training and are better positioned

for adoption of ERP and it would increase the chances of its successful adoption at

e to the complexity of ERP systems adequate training is needed for the

employees to fully appreciate the operations of the system and hence the need for an

adequate budget for the training needs for the adoption of ERP. On the other hand,

gues that training needs are typically under budgeted in ERP projects.

35% 40% 45%

R9917053 Page 46

Furthermore, these training budgets do not usually include the hidden costs of lost

productivity as employees cope with complex new systems.

4.5.3 Employees and ERP adoption

This section seeks to establish if the employees were viewed as important

elements/involved in decisions pertaining to the adoption of ERP. The findings are

presented below.

Figure 4.8: Employees and ERP adoption at NSSA

According to the study findings, most (51%) of the respondents agreed that employees

were viewed as important elements/involved in decisions pertaining to the adoption of

ERP, 26% strongly agreed, 10% were neutral, 9% disagreed whilst only 4% strongly

disagreed. It is however interesting to note that only one of the respondents strongly

disagreed that employees were viewed as important elements in decisions pertaining

ERP adoption. This entails that employees may have been taken as important elements

in the decisions pertaining the adoption of ERP at as NSSA as the numbers of the

respondents to agree on that notion were convincing. Taking employees as important

elements in such decisions has positive effect on the ultimate goal of ERP adoption as

employees would be ready to accept the change. The employees would feel as being

part and parcel of the project and hence would view it as their own and would certainly

work towards its successful implementation. User involvement increases user

51%

26%

10% 9%4%

0%

10%

20%

30%

40%

50%

60%

Agree Strongly agree neutral disagree strongly disagree

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satisfaction and acceptance by developing realistic expectations about system

capabilities (Esteves et al., 2003).

From a different perspective, taking employees as important elements/involving them in

such decisions as ERP adoption would enable management to evaluate attitudes of

individual users and influential groups. This is to identify groups that resist change,

understand their needs, beliefs and values. It offers a good starting point for determining

source of employee resistance to change. According to Hultman (1979), employee-

raised facts, beliefs, and values are good indicators of what may cause their resistance

to change. This could well be applied to the context of implementing an ERP system.

4.5.4 Executive buy in and support of ERP implement ation

This section presents the research findings on whether the idea of ERP adoption at

NSSA received top management support and the findings are shown below.

Figure 4.9: Management support for ERP adoption at NSSA

The study findings indicate that 59% of the study respondents agreed that the idea of

ERP adoption at NSSA received top management support, 32% strongly agreed, 7%

remained neutral while only 2% disagreed. Collectively (91%) of the respondents

agreed that the idea of ERP adoption received top management support and hence the

study findings may be conclusive. Top management at NSSA may have totally backed

59%

2%

32%

7%

0% 10% 20% 30% 40% 50% 60% 70%

Agree

Disagree

Strongly agree

Neutral

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the idea of ERP adoption that may have been visible to all employees within the

organisation. The thought that top management has given their support on the idea of

ERP adoption would give an impression that it may as well give its support throughout

the implementation of the project. However, this may not be automatic in reality as top

management support may not be visible during the implementation phases of t

project.ERP adoption at NSSA may be receiving top management support as the

findings revealed that there is ready infrastructure for the adoption of ERP, and that

employees were taken as important elements in the adoption of ERP. All these point to

the fact that top management is somehow supportive of the adoption of ERP at NSSA.

4.5.5 Business Plan and Vision for ERP Life Cycle at NSSA

This section sought to establish if there is clear business plan and vision in place to

guide the project throughout its implemen

study findings.

Figure 4.10: Availability of a clear business plan and vision at NSSA

According to the study findings in Figure 4.10 most of the respondents (44%) agreed

that there is clear business plan

ERP life cycle, 34% remained neutral, 10% strongly agreed, 7% disagreed whilst 5%

strongly disagreed. These findings may imply that there is indeed a clear business plan

and vision to guide the projec

that there is a set direction in which the project has to follow in order to achieve its

intended objectives or goals and also that supportive measures may be in place to see

through the whole project.

the idea of ERP adoption that may have been visible to all employees within the

t that top management has given their support on the idea of

ERP adoption would give an impression that it may as well give its support throughout

the implementation of the project. However, this may not be automatic in reality as top

y not be visible during the implementation phases of t

ERP adoption at NSSA may be receiving top management support as the

findings revealed that there is ready infrastructure for the adoption of ERP, and that

employees were taken as important elements in the adoption of ERP. All these point to

op management is somehow supportive of the adoption of ERP at NSSA.

Business Plan and Vision for ERP Life Cycle at NSSA

This section sought to establish if there is clear business plan and vision in place to

guide the project throughout its implementation life cycle. Figure 4.10 presented the

Figure 4.10: Availability of a clear business plan and vision at NSSA

According to the study findings in Figure 4.10 most of the respondents (44%) agreed

that there is clear business plan and vision in place to guide the project throughout the

ERP life cycle, 34% remained neutral, 10% strongly agreed, 7% disagreed whilst 5%

strongly disagreed. These findings may imply that there is indeed a clear business plan

and vision to guide the project throughout its life cycle. This also indicates that it is likely

that there is a set direction in which the project has to follow in order to achieve its

intended objectives or goals and also that supportive measures may be in place to see

ole project.This also confirms the readiness of NSSA towards the

10%

44%

34% 7%

5%

Page 48

the idea of ERP adoption that may have been visible to all employees within the

t that top management has given their support on the idea of

ERP adoption would give an impression that it may as well give its support throughout

the implementation of the project. However, this may not be automatic in reality as top

y not be visible during the implementation phases of the

ERP adoption at NSSA may be receiving top management support as the

findings revealed that there is ready infrastructure for the adoption of ERP, and that

employees were taken as important elements in the adoption of ERP. All these point to

op management is somehow supportive of the adoption of ERP at NSSA.

This section sought to establish if there is clear business plan and vision in place to

tation life cycle. Figure 4.10 presented the

Figure 4.10: Availability of a clear business plan and vision at NSSA

According to the study findings in Figure 4.10 most of the respondents (44%) agreed

and vision in place to guide the project throughout the

ERP life cycle, 34% remained neutral, 10% strongly agreed, 7% disagreed whilst 5%

strongly disagreed. These findings may imply that there is indeed a clear business plan

t throughout its life cycle. This also indicates that it is likely

that there is a set direction in which the project has to follow in order to achieve its

intended objectives or goals and also that supportive measures may be in place to see

This also confirms the readiness of NSSA towards the

SA

A

N

D

SD

R9917053 Page 49

adoption of ERP in that there is a plan and vision that has to be followed. On the other

hand, this gives a challenge to the management in trying to sell this business plan and

vision to the employees to get their support. Employees’ support is essential in trying to

move towards the achievement of the business plan and vision. Successful adoption of

the ERP at NSSA depends mainly upon the business plan and vision that needs to be

followed throughout the project life cycle.

4.6 Benefits of ERP to NSSA This section sought to gain an understanding of the respondents of the benefits that

NSSA can gain from the adoption of ERP and the findings are illustrated below.

Table 4.3 Benefits of ERP

Benefits % of respondents

Improved process efficiency 97

Meeting customer needs efficiently 51

Reduced costs and increased productivity 61

Improve tactical decision making 87

Increase revenue 31

Improve worker decision making capability 80

According to the study findings in Table 4.3 the benefits of ERP adoption for NSSA are

improved process efficiency (97%), improved tactical decision making (87%), improve

worker decision making capability and 31% said it increase revenue. In light of the

findings the power of the standard ERP solution lies in its automation of core business

activities and the usage of e-business to enhance and make use of technology

developments currently available. The power is further emphasised by the integration

that is achieved in the business units that further contribute to the efficiency to which

organizational functions are attained. The outcome of this allows these entities to

function as a complete orbit. In general, the benefits ERP systems offer not only

increased decision making-speed, improved control of operations and costs, and cost

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reductions, but more importantly improved enterprise-wide information dissemination

(Davenport 2000:8).

In line with the findings where the respondents suggested that ERP improve tactical

decision making and improve worker decision making capability Davenport (2000:12)

states that ‘better’ decision making may be interpreted to mean either generating the

information that is currently available but doing it faster and with less human

intervention or producing different types of information. From a different perspective,

after an ERP system has been implemented the benefits and other general benefits are

not realised immediately. Business is slower than normal immediately after the legacy

system has been deactivated and the “go live’ phase has taken place. Several aspects

may be the cause of this, for example data issues, training issues, change management

issues and the overall transition from the legacy system to the ERP system.

ERP implementations are also known to be unusually difficult to implement, even when

compared to other large-scale systems development projects. Part of this difficulty is

due to the pervasiveness of the changes associated with ERP, the need for

simultaneous process redesign of multiple functional areas within the firm, and the need

to adapt processes to the capabilities of the software” as stated by Hitt et al. (2003).

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Chapter 5

Recommendations and conclusions

5.1 Introduction

The conclusions and recommendations of this study are presented in this chapter based

on the findings in Chapter.

5.2 Conclusions The study conclusions are presented as follows:

i. The NSSA respondents were aware of the term ERP and they defined it as a

centralised database system with all business processes that can be viewed,

updated, and monitored through a single system in order for information to be

shared across all functional departments.

ii. The adoption of an ERP would lead to operational efficiency and effectiveness at

NSSA since information technology has a history of cutting cost and raising

outputs by automating basic repetitive operations. In addition according to

Shanks et al. (2003:79) “…expect enterprise systems to offer benefits in terms of

cost reduction, cycle time reduction, productivity improvement, quality

improvement and improved customer services”.

iii. There is ready infrastructure for the adoption of ERP at NSSA and according to

the study findings the organisation seems to be highly prepared for the

successful implementation of their chosen ERP. This is supported by the fact that

the critical success drivers recommended by various implementation

methodologies such as ready infrastructure are already in place. Furthermore,

training needs are adequately budgeted for, implying that the organisation is

prepared for employee training on ERP systems so that they would be in a

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position to use the system without difficulties and thus enhances the chances of

success with ERP implementation, that will steer the organisation towards

improved efficiencies and enhanced productivity. Successful adoption of ERP at

NSSA would positively contribute to the productivity of the organization and

subsequently in the long run may improve its viability. This is due to the fact that

properly planned and meticulously executed ERP implementation can deliver

benefits to the organization in terms of cost reduction, cycle time reduction,

productivity improvement and improved customer service. Further ERP power of

integration enhances synergies between business units and departments that

also contribute to the efficiency of the whole organization. The outcome of

successful ERP implementation will allow NSSA to function as a complete

integrated unit. In general ERP systems offer not only increased decision

making-speed, improved control of operations and costs, and cost reductions,

but more importantly improved enterprise-wide information dissemination as well.

iv. ERP value requires a set of capabilities which are distinct from the capabilities

required to create ERP value. For sustaining ERP value, organizational

innovation capability and strategic flexibility are two key capabilities that are

essential. On this front, management of NSSA would need endurance to achieve,

because the organization operates in a highly regulated sector that is

characterized by a lot of government intervention.

Innovation capability therefore calls for the ability of NSSA to advance or

continuously improve the ERP system that would be in place in line with changes

in the business environment, processes and demands. Innovation capability

ensures that the ERP system would remain closely fit to the organizational

business procedures and in the process create business value going forward.

Strategic flexibility dictates that the organization’s strategic intents are supple

enough to allow the organization to adapt to the ever changing requirements of

the ERP system in tandem with technological trends.

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On the other hand other capabilities like the ability of the management to create

effective awareness for the ERP system by communicating its benefits to the

employees are a pre-requisite. Creating effective awareness for the employees

ensures that they fully understand the reasons behind the adoption of ERP and

its benefits to the organisation. This would work to get the employees

commitment towards the succesful implementation of the project and also

reduces employee resistance to change. In an attempt to change the attitudes of

potential users of ERP, management must first try to affect the cognitive

component of users’ attitudes (Aladwani, 1998). A major strategy for achieving

this goal is communication. Gray and Larson (2000) also note that knowledge

about what the system can deliver to the organization and its workers can build

anticipation for the system.

5.3 Recommendations of the Study The study presented the following recommendations:

i. NSSA need a well thought-out, comprehensive process to help plan, guide and

control the entire implementation effort. This is because starting an

implementation with an undocumented, insufficient or untailored implementation

methodology is an open invitation to disaster or, best case, a long, drawn out

implementation. A comprehensive methodology to plan, guide and control the

effort has the potential for dramatic savings, not to mention the most important

benefit that is avoiding big mistakes.

ii. Everyone from the boardroom to storeroom needs to understand his role and

responsibilities for implementation. Implementation leaders should encourage

dialogue to get people focused on business objectives and early identification

and correction of problems. Who will be accountable for results, and when, must

be an integral part of this understanding.

iii. Before the intricate details of software selection begin it is prudent for the

management to know how the current strategy, processes and supporting

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systems compare to what they could be with the new system. Successfully

implementing ERP requires strategy, people and process focused. There is need

for NSSA to evaluate its business strategy and ERP plan before it commits to

software acquisition and installation. Doing it right the first time is the only cost

effective way to go.

iv. The sooner the ERP system goes live and with less attendant costs, the quicker

the benefits to be achieved will start to accrue. The project really needs to be

delivered within a reasonable time to cut down on cost overruns.

v. NSSA would be able to accrue benefits from ERP operations, or even increase

them if only they ensure that there is better co-ordination between strategic

alignment and the management of their ERP implementation. This notion is

supported by Law and Ngai (2007), who show that strategic intent to use ERP is

correlated with business process improvement, success of ERP use and

business performance.

5.4 Area of further study ERP security is an area that needs further research, business applications like ERP

systems store business data such that any vulnerability in these applications can result

in monetary loss to an organization. ERP systems have a very complex structure which

is a threat to security (complexity kills security). However there is a myth that ERP

security is a vendor’s problem which might not be true because vendors are not

responsible about vulnerabilities in their products. Business application security is the

problem of a client. There is need to do further research to establish ways to secure

ERP systems to safeguard organizational data from malicious modifications.

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Appendices

Appendix I

1/197 Smurts Road

Prospect

Waterfalls

20 December 2013

Dear Colleagues

My name is Nicholas Shereni and l am a final year MBA student at the University of

Zimbabwe (GSM). As a requirement of my studies, l am conducting a research entitled ,

An evaluation of gaps within the NSSA ICT system which exposes the organisation to

potential risk of fraud. May you please spare your time to complete the attached

questionnaire by the 10th of January 2014. Your input will be treated with utmost

confidentiality and is only for academic purposes. Please note that there is no wrong or

right answer. If you have any questions or if you are seeking any clarifications,feel free

to contact me on the following details: 0772 219 747, 039 265882-4 or email

nshereni@yahoo.co.uk.

Thank you in advance.

Regards

Shereni Nicholas

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Appendix 2: Questionnaire for NSSA staff and manage ment

1. What is your position at NSSA? Please choose the appropriate. a) Lower management b) Middle management b) Staff

2. For how long have you been with the organisation?

a) Less than 1 year [ ] b) 1-5 years [ ] c) 6-10 years [ ] d) Above 10 years [ ] 3. What is the highest level of education that you have attained? Please tick the appropriate. a) O’ level [ ] b) A’ level [ ] c) College Diploma [ ] d) Undergraduate [ ] e) Post Graduate [ ] 4. Have you ever heard of the term Enterprise Resource Planning (ERP)? Please tick the applicable. a. Yes b. No c. Not sure 5. ERP system is a central system database with all business processes that can be viewed, updated, and monitored through it in order for information to be shared across all functional departments. Do you agree with this statement? Please tick the appropriate. a. Yes b. No c. Not sure On a scale of 1-5 please tick where appropriate on the following statements

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8. ERP can enhance NSSA’s operational effectiveness and efficiency. 1 Strongly

agree 2 Agree 3 Neutral 4 Disagree 5 Strongly

disagree

9. There is ready infrastructure for the adoption of ERP systems at NSSA. 1 Strongly

agree 2 Agree 3 Neutral 4 Disagree 5 Strongly

disagree

10. Training needs are adequately budgeted for, for the adoption of ERP at NSSA. 1 Strongly

agree 2 Agree 3 Neutral 4 Disagree 5 Strongly

disagree

11. Employees are viewed as important elements/involved in decisions pertaining the adoption of ERP at NSSA. 1 Strongly

agree 2 Agree 3 Neutral 4 Disagree 5 Strongly

disagree

12. The idea of ERP adoption at NSSA has received top management support. 1 Strongly

agree 2 Agree 3 Neutral 4 Disagree 5 Strongly

disagree

13. There is clear business plan and vision in place to guide the project throughout the NSSA life cycle. 1 Strongly

agree 2 Agree 3 Neutral 4 Disagree 5 Strongly

disagree

14. People tasked with leading in implementation of ERP at NSSA fully understand the organisation’s business practices. 1 Strongly

agree 2 Agree 3 Neutral 4 Disagree 5 Strongly

disagree

15. ERP system selected at the organisation closely fits with the most of the current business procedures. 1 Strongly

agree 2 Agree 3 Neutral 4 Disagree 5 Strongly

disagree

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16. Top management is creating more effective awareness for the ERP system by communicating its benefits to the employees. 1 Strongly

agree 2 Agree 3 Neutral 4 Disagree 5 Strongly

disagree

17. There is a performance system to monitor the progress of ERP change management at NSSA. 1 Strongly

agree 2 Agree 3 Neutral 4 Disagree 5 Strongly

disagree

18. NSSA has capabilities to ensure sustainability of ERP value

1 Strongly agree

2 Agree 3 Neutral 4 Disagree 5 Strongly disagree

19. Which of the following do you think are the benefits of an ERP for NSSA? (Please tick all the appropriate). a) Improved process efficiency [ ] b) Meeting customer needs efficiently [ ] c) Reduced costs and increased productivity [ ] d) Improve tactical decision making [ ] e) Increase revenue [ ] f) Improve worker decision making capability [ ] 20. What do you think are suitable implementation methodology that will assist NSSA to succeed with ERP deployment? _______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

End of Questionnaire Thank you for your effort