Effect of Enterprise Resource Planning (ERP) system implementation on

Organizational performance (the case of Shemu Plc. Dire Dawa)

A Thesis Paper Submitted to the School of post Graduate Studies of Dire

Dawa University in Partial Fulfillment of the Requirements for the Master of
Business Administration (MBA) Degree.

COLLEGE OF BUSINESS AND ECONOMICS

DPARTEMENT OF MANAGEMENT
BY
MUNA DAWUD KEMAL
ID: GSE/0136/11

Advisor: Dr. Abraham .E

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 APPROVAL SHEET

SCHOOL OF GRADUATE STUDIES

DIRE DAWA UNIVERSITY

As Thesis Research Advisors, we hereby certify that we have read and evaluated this Thesis
prepared, under our guidance, by Muna Dawud Kemal entitled “Effect of Enterprise
Resource Planning (ERP) system implementation on Organizational performance (the case
of Shemu Plc. Dire Dawa), Ethiopia” We recommend that it be submitted as fulfilling the
thesis requirement.

Dr. Abraham .E
Major Advisor Signature Date
(MSC) ______ ___________
Co-Advisor Signature Date
As member of the Board of Examiners of the M.Sc. Thesis Open Defense Examination, We
certify that we have read, evaluated the Thesis prepared by Muna Dawud Kemal examined
the candidate. We recommended that the Thesis be accepted as fulfilling the Thesis
requirement for the Degree of Master of Business Administrative (MBA).

Chairperson Signature Date

Internal Examiner Signature Date

External Examiner Signature Date

Final approval and acceptance of the Thesis is contingent upon the submission of its final
copy to the Council of Graduate Studies (CGS) through the candidate School Graduate
Committee (SGC).

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 Declaration
My signature below, I declare and affirm that this Thesis is my own work. I have followed all
ethical and technical principles of scholarship in the preparation, data collection, data analysis
and compilation of the Thesis. Any scholarly matter that is included in the Thesis has been
given recognition through citation.
This Thesis is submitted in partial fulfillment of the requirements for a Master of Business
Administrative at the Dire Dawa University. The Thesis is deposed in the Dire Dawa Library
and is made available to borrowers under the rules of the Library. I solemnly declare that this
Thesis has not been submitted to any other institution anywhere for the award of any academic
degree, diploma or certificate.
Brief quotations from this Thesis may be made without special permission provided that
accurate and complete acknowledgment of the source is made. Requests for permission for
extended quotations from or reproduction of this Thesis in whole or in part may be granted by
the Head of the School or Department when in his or her judgment the proposed use of the
material is in the interests of scholarship. In all other instances, however, permission must be
obtained from the author of the Thesis.
Name: Muna Dawud Kemal Signature: _____

Date: June, 2021

School/Department: School of Economics and Management

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 ACKNOWLEDGEMENTS
Above all, I thank the Almighty God for giving me health, patience and strength for the
completion of the study.

I am profoundly grateful and indebted to Dr. Abraham Ewnetu my major advisor, who put his
greatest effort in exploring workable research problems and leading me the way out to carry out
the overall analytical operation from his vast experience. Also I am highly grateful to
Mekuanint Tesega (MSC) My Co- Advisor for his invaluable personal support and advisory
role in building up the theoretical frameworks and in scrutinizing this thesis research.

In addition, I would like to express my sincere appreciation and gratitude to Shemu PLC
management and employees for their greatest cooperation and responding to my questionnaires
and anybody who has a hand on my success without mentioning and each who facilitating my
finance and minimize my responsibilities while I do this study.

The study would have not been possible without the lovely backing and help I received from my
family and my husband Abduselam Beyan by giving me time, relax and moral of appreciation
to accomplish successfully. To them I say thank you.

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ABBREVIATION AND ACRONYMS
ERP: Enterprise Resource planning

IS: Information systems

Plc: Private limited company

SPSS: Statistical Package for Social Sciences

DBMS: database management system

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 Table of Contents
ACKNOWLEDGEMENTS ......................................................................................................................... iv
ABBREVIATION AND ACRONYMS ....................................................................................................... v
LIST OF TABLE ......................................................................................................................................... ix
ABSTRACT.................................................................................................................................................. x
CHAPTER: ONE: INTRODUCTION .......................................................................................................... 1
1.1. Background of the study ................................................................................................................... 1
1.2 Background of Shemu Plc............................................................................................................. 3
1.3 Statement of the problem .................................................................................................................. 4
1.4 Research Questions ........................................................................................................................... 5
1.5 Objectives of the study...................................................................................................................... 5
1.5.1 General Objective ..................................................................................................................... 5
1.5.2 Specific Objectives ................................................................................................................... 6
1.6 Significance of the study ................................................................................................................... 6
1.7 Scope of the study ............................................................................................................................. 6
1.8 Limitation of the study ...................................................................................................................... 6
CHAPTER TWO: LITERATURE REVIEW ............................................................................................... 9
2.1. Theoretical Review ................................................................................................................................ 9
2.1.1 ERP .................................................................................................................................................. 9
2.1.2Theoretical Perspective of ERP systems ......................................................................................... 12
2.1.2.1 Technology Acceptance Model (TAM) .................................................................................. 13
2.1.2.2 The DeLone and McLean model............................................................................................. 13
2.1.2.3 Cognitive fit theory ................................................................................................................. 14
2.1.3 Factors affecting ERP implementation .......................................................................................... 15
2.1.4 Performance ................................................................................................................................... 17
2.1.5 Enterprise Resource Planning and Organizational Performance ................................................... 18
2.2. Empirical Review................................................................................................................................. 20
2.3 Conceptual Framework ......................................................................................................................... 24
CHAPTER THREE .................................................................................................................................... 30
RESEARCH DESIGN AND METHODOLOGY ...................................................................................... 30
3.1. Research design ................................................................................................................................... 30
3.2. Sources of Data .................................................................................................................................... 30

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 3.2.1. Primary Data ................................................................................................................................. 30
3.2.2. Secondary Data ............................................................................................................................. 30
3.3. Study Population .................................................................................................................................. 31
3.4. Sample Size and Sampling Techniques ............................................................................................... 31
3.5. Data Collection Instruments................................................................................................................. 32
3.5.1. Questionnaire ................................................................................................................................ 32
3.5.2. Interview ....................................................................................................................................... 32
3.6 Research Procedures ............................................................................................................................. 33
3.7. Method of Data Analysis ..................................................................................................................... 33
CHAPTER FOUR....................................................................................................................................... 34
4. RESULTS AND DISCUSSION ............................................................................................................. 34
4.1. Introduction ...................................................................................................................................... 34
4.2 Response Rate ................................................................................................................................... 34
4.3 Reliability Test .................................................................................................................................. 34
4.3 Demographic characteristics of the Respondents ............................................................................. 35
4.4 Descriptive Analysis ......................................................................................................................... 36
4.4.1 In what extent the current implemented ERP system of Business Plan and Vision is contribute
to the performance in Shemu Plc ........................................................................................................ 36
4.4.2 In what extent the current implemented ERP system of top management Support and
Commitment is contribute to the performance in Shemu Plc ............................................................. 38
4.4.3 In what extent the current implemented ERP system of performance is affected by Training .. 41
4.4.4 In what extent the current implemented ERP system of performance is affect by
communication.................................................................................................................................... 42
4.4.5 In what extent the current implemented ERP system of performance is affect by Financial
Managements for Capacity Building done on the System .................................................................. 43
4.4.6 In what extent the current implemented ERP system have on organizational performance ...... 45
4.5 Inferential Analysis ........................................................................................................................... 46
4.5.1 Correlation Analysis .................................................................................................................. 46
4.5.2 Regression Analysis ................................................................................................................... 47
4.5.2.2 Multiple Linear Regressions ................................................................................................... 50
4.6. Discussion of Results ....................................................................................................................... 54
CHAPTER FIVE ........................................................................................................................................ 55
5. SUMMARY, CONCLUSION AND RECOMMENDATION ............................................................... 55

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 5.1. Summary .......................................................................................................................................... 55
5.2. Conclusion ....................................................................................................................................... 56
5.3. Recommendation ............................................................................................................................. 57
5.4. Suggestions for further Research ..................................................................................................... 58
REFERENCES ........................................................................................................................................... 59

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 LIST OF TABLE
Table 4.1: - Reliability Test --------------------------------------------------------------------------34
Table 4.2 Demographic and socioeconomic characteristics of samples-------------------------35

Table 4.3 Descriptive Analyses of Business Plan and Vision-------------------------------------37

Table 4.4 Descriptive Analysis of top management Support and Commitment-----------------39

Table 4.5 Descriptive Analysis of Training-----------------------------------------------------------41

Table 4.6 Descriptive Analysis of Communication---------------------------------------------------42

Table 4.7 Descriptive Analyses of Financial Managements for Capacity Building Done on the
System--------------------------------------------------------------------------------------------------------44
Table 4.8 Descriptive Analysis of Performance--------------------------------------------------------45
Table 4.9 Correlations--------------------------------------------------------------------------------------46

Table 4.10 Model Summaries------------------------------------------------------------------------------47

Table 4.11 ANOVA-----------------------------------------------------------------------------------------49
Table 4.12 Coefficients-------------------------------------------------------------------------------------50

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 ABSTRACT
The introduction of an information system such as Enterprise Resource Planning (ERP) system in an
organization brings with it changes on how users work. The objectives of this study was to determine
the extent of ERP implementation, establish the factors affecting the successful implementation of an
ERP system, and to identify the impact of ERP application on organizational performance of Shemu
Plc. A total of 158 employees were selected through purposeful and probability proportionate
technique methods to collect primary data using questionnaire and semi-structured interview. The
data collected was analyzed by using both descriptive such as statistics for the demographic
characteristics of the respondents, and multiple regression analysis was used in the study to
determine the relationship between enterprise resource planning implementation and organizational
performance. The study results were presented by the use of tables and percentage. From the study
analysis top Management Support and commitment has a positive and significant standardized
coefficient value (β=0.137, p<0.1). The positive relationship means if, training increases by 1,
organization performance in the Shemu Plc will increase by 0.233. Communication was found to have
a non-statistically significant relationship with performance. Top Management Support and
commitment has a positive and significant standardized coefficient value (β=0.137, p<0.1). The
positive relationship means if, Top management support increases by 1, organization performance in
the Shemu Plc will increase by 0.137. And Performance and Financial Managements for Capacity
Building Done on the System has a positive and significant standardized coefficient value (β=0.354,
p<0.1). In conclusion, it is clear that communication, training, top level management support, and
management skills affect ERP implementation in the Shemu Plc, therefore the study recommends that
the Shemu Plc management should ensure there are mechanisms which enhance the commitment of
the top management in the organizations operations, also the level of communication should be
upgraded to ensure efficiency and effectiveness. The management should ensure that the employees
are well trained and have the required skills to accomplish their tasks in a professional way, the level
of management skills should be of high standards to ensure that there is harmony between the
management and the employees and that the management is well versed with high skills and it should
be for the benefit in achieving organizational goals and objectives.
Key terms: Enterprise resource planning system, information systems, organizational
performance, Shemu private limited company.

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 CHAPTER: ONE: INTRODUCTION
1.1. Background of the study
Enterprise Resource Planning (ERP) systems are enterprise-wide information systems that
integrate and control the complete range of processes and functions, in order to provide a holistic
view of the business from a single information and information technology (IT) architecture
(Klaus, Rosemann, & Gable, 2000), enabling organizations to manage efficient and effective use
of their resources by using a complete, integrated, packaged software solution and a common
central database for the organization’s information-processing needs (Al-Fawaz, Eldabi, &
Naseer, 2010). By adopting an ERP system, organizations are looking for a better use of their
own resources in order to raise their own efficiency, which can be jeopardized by high costs
associated with ERP implementation, staff training, as well as maintaining and aligning the
system with the needs of the organization (Jáčová, Brabec, & Horák, 2013)

Information systems are combinations of hardware, software, and telecommunications networks

that people build and use to collect, create, and distribute useful data, typically in organizational
settings (Bourgeois, 2014). Many organizations work with large amounts of data. Data are basic
values or facts and are organized in a database. Many people think of data as synonymous with
information; however, information actually consists of data that has been organized to help
answers questions and to solve problems. There are some general types of information systems.
For example, a database management system (DBMS) is a combination of software and data that
makes it possible to organize and analyze data. In contrast, there are a number of specialized
information systems that have been specifically designed to support a particular process within
an organization or to carry out very specific analysis tasks. For example, enterprise resource
planning (ERP) is an information system used to integrate the management of all internal and
external information across an entire organization. Another example is a geographic information
system (GIS), which is used to manage and analyze all types of geographical data.

Starting in the late 1980s and the beginning of the 1990s new software systems known in the
industry as enterprise resource planning (ERP) systems have surfaced in the market targeting
mainly large complex business organizations. Enterprise resource planning systems or enterprise
systems are software systems for business management, encompassing modules supporting
functional areas such as planning, manufacturing, sales, marketing, distribution, accounting,

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financial, human resource management, project management, inventory management, service
and maintenance, transportation and e-business (Hussein et al., 2002). Enterprise resource
planning (ERP) is defined as the ability to deliver an integrated suite of business applications.
ERP tools share a common process and data model, covering broad and deep operational end-to-
end processes, such as those found in finance, HR, distribution, manufacturing, service and the
supply chain.

According to Otieno (2008), Enterprise Resource Planning (ERP) systems integrate internal and
external management information across an entire organization, embracing finance/accounting,
manufacturing, sales and service and customer relationship management. ERP systems automate
this activity with an integrated software application. The purpose of ERP in an organization is to
facilitate the flow of information between all business functions inside the boundaries of the
organization and manage the connections to outside stakeholders. This software, used by many
enterprises, has a critical role in ensuring increased efficiency.

While implementing an ERP system, the ultimate goal will be to have a smooth transition that
doesn’t compromise or disrupt business continuity. It is certain that ERP deliver great rewards
and opportunities, but the risks embedded are equally great as Davenport (1998) noted that ERP
implementations can be complex, costly and highly problematic. While some firms achieved
impressive benefits from ERP systems, others have experienced difficulty in gaining benefits
they expected. Thus suggested by Markus and Tanis (1999) for both researchers the question was
will invest on ERP systems pay off? Several firm level econometric studies (Anderson et al.,
2003) suggest that most likely answer is yes on average. However the impacts vary from one
firm to another.

A report by Price Water House Coopers (2012) on business innovation, it established that ERP is
influential in business core areas, for instance in operations, systems automate repetitive
processes, retire redundant business practices, reduce processing time, keep an audit trail and
visibility, improve quality and standards, transparency and traceability, boost employee
productivity, data delivery conversion and analysis. PWC (2012) report adds that one of the
biggest benefits of ERP systems is standardization of processes and systems. In managerial,
systems store and integrate data from different sources at a central point to create meaningful
information and data analysis which leads to enhanced decision making, management of

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resources, planning, and overall employee performance. As a strategic tool, ERP systems
improve service delivery; build innovation, lower cost of business, link business to customers
hence supporting growth of business in order to remain competitive. To the organization, ERP
offers flexibility to support process reengineering, user involvement, empowerment, vision, and
coordination (PWC, 2012).

Talluri Sai Kirana and A Vasudeva Reddy (2019) studied on Critical Success Factors of ERP
Implementation in SHEMU PLCS by review of literature on the impact of ERP implementation
in SHEMU PLCs and their result shows that Success factors of ERP implementations include
organizational commitment, full support from top level management, BPR with minimum
customization, effective communication procedures, suitable ERP package selection and
adequate training and change management. ERP failure factors include employee resistance, lack
of inadequate commitment from top level management, inadequate training and education,
inadequate requirements definition, inadequate resources, incompatibility between organization
business processes and ERP software, unrealistic expectations on ROI, poor selection of ERP
packages, heavy customizations and change management inefficiency. Successful
implementations have affected Shemu PLCs to grow economically and in terms of
productivity as well.

Several firms in Ethiopia started using ERPs in the recent years and its effect research was done
on public organization and not on private organization. So Shemu Plc is one of private
organization thus way the researcher aim to identify the effects that are caused on organizational
performance by the implementation of ERPs.

1.2 Background of Shemu Plc

The company, Shemu private limited company was established in December 14, 1999 E.C in
Dire Dawa with starting capital of one million birr which is raised to 75 million nowadays. At its
startup number of workers was 57 in a single bar soap production plant. The company is engaged
mainly in manufacturing, distributing, and selling bar soap, dry and liquid detergent, soap
noodles, palm ole in, vegetable shortening and Shemu PLC. The company which has its own
corporate level office in Addis Ababa is undertaking its manufacturing activities in two
manufacturing units at Dire Dawa Main factory and kotebe Research and development center.

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With this arrangement of its organizational units, the company is endeavoring to reach out the
overall national market. Currently the total number of workers in the company is more than 430
in nine different plants. As of the financial data from 2017 the company’s annual revenue
estimated to 450million birr and total accumulated tax paid by the company is estimated to 135
million birr per annum.

In this research, endeavors and efforts made in order to study the effect of ERPs on
organizational performance in case of Shemu Plc.

1.3 Statement of the problem

In today’s turbulent and complex business environment REP systems deemed to play an essential
role in increasing competiveness of organizations. It is often presumed that a good ERP system
make an enterprise seamless by removing all the communication barriers. Thus, the overall
purpose of the ERP systems is to generate related information, help managers, staffs to oversee
business performance and take future direction by allowing companies to revise negative
situations quickly by minimizing financial losses, improving operation, facilitate
communications within the company and marketing activities and other indicators of
organizational performance.

There are varieties of literatures written on the impact of ERP system on organizational
performance usually on organizations located in America, Europe & Asia. ERP systems,
regardless of their release since 1980s, have been undertaken for a few numbers of researches in
Africa till the recent years. Looking at literatures from the past shows little emphasis given to the
effects that are caused by ERP systems on organization performance in Africa particularly
Ethiopia. There is considerable evidence that information system technologies activity
undertaken by large organizations (Bani-Hani, 2013). Researchers have investigated many issues
related to critical success factors of ERPs ranging from pre implementation requirements to
successfully implement ERP projects with minimum costs, implementation steps and related
problems, conditions of success and reasons of failure (Botta-Genoulaz and Millet 2005; Basoglu
et al., 2007; Le and Han, 2016). Several studies have conducted within the streams of user
aspects as a crucial factor when studying information system technologies, particularly in terms
of ERP systems. These studies, however, have a gap to critically assess the effects of ERP
systems on manufacturing companies in countries like Ethiopia, in terms of different measures of

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organizational performance. As a result, there is gap in existing literature, which determines the
aim of this project is to examine the financial, marketing, operational and other gains or loss
resulting from an ERP system.

The study conducted by Enderas Addisse (2017) on the title of assess the benefits and challenges
of implementing Enterprise Recourses planning (ERP) in ethio-telecom with ERP
implementation issues in gov’t project result show that there is a lack of top management
commitment; lack of appropriate training for all system users and as well as lack of allowing user
to participate on the implementation process and recommended top management is expected to
provide in the area of committing to the ERP project. In addition the company has to consider the
way to give adequate training and development for both end user as well as super user.

However, this research project will be important evidence to business owners, operating
managers, IT professionals, ERP vendors and consultants who have interest in the knowledge
built. Additionally, the findings of this research will clarify to understand and respond
appropriately while adopting and implementing the ERP systems in Manufacturing
Organizations. It is often presumed that a good ERP system make an enterprise seamless by
removing all the communication barriers. Thus, the overall purpose of the ERP systems is to
generate related information, help managers, staffs to oversee business performance and take
future direction by allowing companies to revise negative situations quickly by minimizing
financial losses, improving operation, facilitate communications within the company and
marketing activities and other indicators of organizational performance.

1.4 Research Questions

1. What is the extent of ERP implementation in Shemu Plc?

2. What are the factors that affect successful implementation of ERP system in Shemu
Plc?
3. What are the effects of ERP system on organizational performance in Shemu Plc?

1.5 Objectives of the study

1.5.1 General Objective
The scope of this study is limited to assessing the impacts of implementing ERPs on
organizational performance in Shemu Plc Dire Dawa. The study explores the factors that

5
determine successful implementation of ERPs and its effect on organizational performance and
the study use Shemu Plc as the case study.

1.5.2 Specific Objectives

1. To describe the extent of ERP implementation in Shemu Plc.
2. To identify factors that affect successful implementation of ERP system in Shemu
Plc.
3. To identify the effect of ERP system on organizational performance in Shemu Plc..

1.6 Significance of the study

This study adds some values in the knowledge of information systems specifically ERP systems.
The purpose of this study is to help Shemu Plc to show how implementing ERPs in the company
pays back and to stimulate it to implement ERPs on the rest of the company’s departments.

Findings of this research is used to the management of Shemu PLc and other private organization
with a strategic objective and this help the management in ensuring the performance of the
organization is in line with the strategic goal of the organization. This help the management
understand the influence of enterprise resource planning on the growth of private organization,
which is great assistance to different firms in achieving better success than others.
The researchers also help to make a way for students and researchers to do more researchers in
this area especially in Dire Dawa area.
1.7 Scope of the study
The scope of this study is limited to assessing the effect of implementing ERPs on organizational
performance in Shemu Plc Dire Dawa. The study explore the factors that determine successful
implementation of ERPs and its effect on organizational performance and the study use Shemu
Plc as the case study. In this case the researcher collected the required information from Shame
Plc workers in heavy. The study target population was 158 respondents which included the top
management, middle level management and lower level management in Shemu Plc. The types of
data for this research are cross sectional data that is collected once at time.

1.8 Limitation of the study

It would be more appropriate to cover more companies that use ERPs on their day to day
operations. But due to time and money constraints the study only focus on the case of Shemu plc.

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Since the sample is limited to the Shemu plc in Dire Dawa region, the sample size might not be
large enough to represent the entire organizations of the city or the nation. Therefore, another
study with a large sample size may be required to arrive at a more reliable conclusion about the
impacts of ERPs on organizational performance.

There researcher also expects to face some limitations when conducting the research such
limitation that, the company is located far from the main area of Dire Dawa city that makes it
time and money consuming to go and get the required information, some distributed
questionnaire forms may not be retuned and it might be difficult to secure the time of the
employees of the company to conduct interviews and to make them fill questionnaires and lastly
since the culture of private organizations in Dire Dawa is little bit harder for students to gather
the required information, the researcher expects the collection of data to be challenging.

1.9 Definition of Terms

1.9.1 Communication - Communication is the process through which information is passed and
exchanged amongst the banking employees during strategic planning process (Peng & Litteljohn,
2008).
1.9.2 Enterprise Resource Planning System (ERP) – This is a software system used by
organizations that helps automate and integrate majority of its business processes, production and
accessing information in a real time environment, and sharing common data and practices across
the organization (Hunton et al, 2013).
1.9.3 Management Skills – In all business and organizational activities is the act of getting
people together to accomplish desired goals and objectives using available resources efficiently
and effectively (Koch, 2011).

1.9.4 Managerial commitment - the willingness and involvement of people in the firm’s
management group to create a culture of teach (Olson, 2014).

1.9.5 Organizational Performance – An analysis of a company’s performance as compared to

goals and objectives. Within corporate organizations, there are three primary outcomes analyzed:
shareholder value performance, financial performance, and market performance (Nahm et al.,
2007).

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1.9.6 Training - Is a process to modify attitude, Knowledge or skill behavior through learning
experience (Bartram & Gibson, 2010).

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 CHAPTER TWO: LITERATURE REVIEW
This chapter looks at the issues related to the impact of ERP system on organizational
performance. The chapter develops a theoretical framework to justify the need for the current
study, conceptual framework to guide the study discussion and the empirical review on the
relationship between ERP system and organizational performance. The chapter also looks at the
research gaps.

2.1. Theoretical Review

2.1.1 ERP
An ERP system is a technology infrastructure that can assist a company in integrating
information from all internal departments with suppliers and customers. It links all areas of a
company‘s internal functions and processes with the external ones to create a close relationship
between customers and suppliers. ERP also allows information to be shared between different
partners, supports the effectiveness of the supply chain management, and improves the flow of
information. These should enable managers to make better decisions based on more accurate and
up-to-date information (Al-Mashari and Zairi, 2000).
Enterprise resource planning (ERP) systems have become very important in modern business
operations, as ERP has played a major role in changing organizational computing for the better.
One study found that more than 60% of Fortune 500 companies had adopted an ERP system
(Stewart et al., 2000). These systems have been credited with reducing inventories, shortening
cycle times, lowering costs, and improving supply chain management practices. ERP has been
credited with increasing the speed with which information flows through a company (Davenport,
1998). ERP has also been credited with creating value through integrating activities across a
firm, implementing best practices for each business process, standardizing processes within
organizations, creating one-source data that results in less confusion and error, and providing
online access to information (O‘Leary, 2000). All these features facilitate better organizational
planning, communication, and collaboration (Olson, 2004). Al-Mashari(2003) noted that, since
the 1990s ERP system have been considered by many researchers and practitioners as one of the
most innovative developments in Information Technology and one of the most well-known IT
solutions for this decade, and this is in fact because ERP system has become one of the main
prerequisites and the backbone of e-business era. There are many reasons why businesses are

9
adopting ERP. Some reasons include replacing existing legacy systems, reducing cost and faster
information transactions. ERP system provides consistency and visibility or transparent
information flow across the entire enterprise, which helps to improve the business process
efficiency and enhance the competitive advantage of organization. (Davenport, 1998;
Hallikainen et al., 2004)
- The Evolution of ERP
The evolution of ERP systems started in the 1960s when the main manufacturing systems in
companies are inventory control. At that time, the software main aim was to manage inventory
whereby the main emphasizes were placed on the activities of Bills of Material Processor
(BOMP). In the 1970, most organizations shifted their focus to Material Requirement Planning
(MRP) systems. MRP make use of software applications for preparation production processes.
With MRP systems, a master schedule which is built for the product is translated into time-
phased net requirements for the production activities such as subassemblies, components and raw
materials planning and procurement.

In the 1980s, MRP moved to its second stage whereby Manufacturing Resources Planning
(MRP-II) was developed and was an extension of MRP to utilize software applications for
coordinating manufacturing processes and distribution management activities. In the early
1990's, MRP-II started to cover a larger area in businesses and included areas such as
Engineering, Finance, Human Resources, Projects Management etc. i.e. the complete of whole
activities within any business enterprises. These MRP II extensions are what are now known as
ERP.
During the 1990s, Internet technologies start to grow. The growths of Internet technologies have
also improved ERP systems. ERP vendors looked at their system as an e-business suite, which
allows companies to add additional modules, and functions into their ERP systems as their needs
increased or business expanded. Such ERP system for example, might help integrate e-commerce
front store of companies and link it to the companies CRM and Supply Chain Management
Systems. As Internet technologies is low cost, and has a universal standard, the Internet enabled
ERP systems were able to allow customers to gain unmediated access into their supplier‘s ERP
system anytime, anywhere. There are many ERP systems vendors in the market today, but only a
handful of them share the ERP market, which dominates about 60 percent of it.

10
Figure: 1.2 Evolution of ERP (Rashid, M. A., Hossain, L., and Patrick, J. D. 2002)

- ERP Implementation
The implementation of an ERP system can be characterized as having six stages. They are
initiation, adoption, adaptation, acceptance, reutilization, and infusion (Kwon et al., 1987). The
initiation stage refers to the introduction of ERP implementation into organizational thinking.
The organization chooses to implement ERP for many reasons, such as to deal to change
strategy, and the interest of top management. These reasons evolve from organizational need or
technological innovation, or both (Cooper et al., 1990). The decision to implement an ERP
system is made in the adoption stage. In order to come to the decision, the organization has to
determine the rationale for implementation, including ERP strategic alignment, cost benefit
analysis in the short and long term, financial resources, and the readiness of other organizational
factors.

After the decision is made and an appropriate ERP vendor is selected, the adaptation stage
occurs in which current IT infrastructure and business processes are investigated, ERP modules
are configured and installed, and employees are trained, etc. At the end of the adaptation stage,
the ERP system is available for use in the organization. Next, the process moves to the stage of

11
employing ERP in organizational work. In this acceptance stage, employees are induced to
commit to ERP use. After that, in the reutilization stage, ERP is assimilated and becomes a
normal activity in the organization. In this stage, there are no major difficulties during ERP use
and the organization starts to achieve benefits. Finally, at the infusion stage, comprehensive and
integrated ERP use leads to increased organizational effectiveness and supports higher levels of
organizational work (Cooper et al., 1990).

Within every business today, it is important to seek the implementation of an ERP system.
According to Koch (2002), there are reasons why companies should implement an ERP system.
Five of those reasons for implementing an ERP system are: Integration of financial information,
Integration of customer order information, Standardization of and the speeding up of
manufacturing processes, Reduction of inventory level, and Standardization of Human Resource
information. According to Kremzar et al. (2001) operating a business in a rapidly changing and
highly competitive environment is a primary purpose of implementing an ERP system. Although
ERP implementation may be costly and time consuming, the benefits are worth the investment.
With careful planning and selection of the ideal ERP system, a company may expect to gain
significant benefits including dramatic increases in responsiveness, productivity, on-time
shipments and sales, decrease in lead times, purchase costs, quality, and inventories. In the
research conducted by Beheshti et al., (2014 ) they have found that the following were among the
major rationales to implement ERP in organizations: Top management demand, Improving
productivity/efficiency, Improving customer service/support ,Reducing operational costs ,Partner
pressure ,Merger/acquisition ,Access to global markets ,Customer pressure, Competitive threats,
Reducing labour costs, Technology upgrade.

2.1.2Theoretical Perspective of ERP systems

There are several theoretical models that explain the acceptance of information systems such as
Technology Acceptance Model (TAM), Information Systems Success theory, Cognitive fit
theory and theory of planned behaviour (Rajan and Baral, 2015).
Hence, this section reviews the significant application of theories,which are relevant to the area
of this research.

12
2.1.2.1 Technology Acceptance Model (TAM)
The perceived usefulness is "the degree to which a person believes that using a particular system
would enhance his or her job performance" and the perceived ease-of-use as "the degree to which
a person believes that using a particular system would be free from effort" (Davis,
1989).According to Mauti, Muranga, &Magutu (2013) understanding the factors that influence
user acceptance of information technology is undoubtedly of interest to both scholars and
researchers in a variety of fields as well as procurers of technology for large organizations.

This theory informs the study that since ERP systems are complex and in public institutions there
exists a level of uncertainty in decision making there the rate of adoption of IT systems is
governed by the degree of usefulness and ease of use.

Figure 1.3: Technology Acceptance Model (TAM), Davis (1989)

2.1.2.2 The DeLone and McLean model

The information system success theoryin figure 1.4was developed by DeLone and McLean
(1992). In their model, the success of information systems is dependent on information system
quality and the output quality of the information system. These dimensions influence the user
level and response to the information system. As a result, the user attitude and enterprises
performance are influenced.

13
Figure 1.4: Information System Success Model (DeLone and McLean, 1992)
To determine whether the system made attains its goals and objectives, there should be
measurements to measure whether the system has reached the target created to provide value to
information system management and investment (DeLone et al.,1992). This is to provide a
positive impact on enterprises.

2.1.2.3 Cognitive fit theory

Cognitive fit theory was developed by Iris Vessey (1991) where she explains how the
correspondence between task and information presentation format leads to superior
taskperformance for individual users demonstrated by performance differences among users
across different presentation formats such as tables, graphs, and schematic faces (Vessey, 1991).
The theory suggests that, for most effective and efficient problem solving to occur, the problem
representation and any tools or aids employed should all support the strategies required to
perform that task because problem solvers induce their mental representations by materials
presented, interpret problems and formulate a solution based on the type of information that best
supported the task solution (Vessey&Galletta, 1991).

14
Fig 1.5.Cognitive fit model (Vessey, 1991).

2.1.3 Factors affecting ERP implementation

Implementation factors are defined as areas where things must go right for a business to flourish
(Rockart, 1979). According to Leidecker and Bruno (1984), implementation factors are “those
characteristics, conditions or variables that, when properly sustained, maintained, or managed,
can have a significant impact on the success of a firm competing in particular industry”.
Different studies are conducted to identify ERP implementation factors. Hussien, (2010)
summarized and defined the implementation factors as;

Project Plan and Vision: One of the problems faced in ERP projects is justification of the huge
resources required to implement it. Nah (2003) stated that one of the biggest problems ERP
project leaders face comes not from the implementation itself, but from the expectations of board
members, senior staff and other key stakeholders. Thus, a business plan that outlines proposed
strategic and tangible benefits, resources, costs, risks and timeline is critical to clearly define
where the resources are going to be allocated and what are the reasonable returns from it (Wee,
2000).
An ERP plan should decide in advance what to do, how to do it, when to do it and who is to do
it. These may include the establishment of an intentional structure of roles though determination
of the activities required to achieve goals of an enterprise and each part of it, the grouping of
these activities, the assignment of such groups of activities to a manager, the delegation of

15
authority to carry them out, and provision for coordination of authority and informational
relationships horizontally and vertically in the organization structure (Koontz, 1980).

Top management Support: Top management role in following-up and controlling the ERP
project implementation is as important as its role in launching and facilitating it. Al-Mashari et
al. (2003) stated that top management support does not end with initiation and facilitation, but
must extend to the full implementation of the ERP system. Koontz (1980) defines controlling as
a "managerial function of measuring and correcting performance of activities of subordinates in
order to assure that enterprise objectives and plans are being accomplished". Thus, top
management should be kept updated about the project progress so they can maintain, control and
correct the implementation process if needed.

Project Management: ERP systems are organization-wide projects that deal with many aspects
and often require genuine changes; hence a powerful and qualified management that is able to
manage, steer and control it is essential for the success of implementation. ERP project managers
should enjoy a good technical experience, business knowledge and interpersonal skills.

Al-Mashari et al., (2003) stated that "the success of projects is related to the knowledge, skills,
abilities and experiences of the project manager as well as the selection of the right team
members". Manager therefore should be able to properly manage the project, set the required and
suitable strategies and continuously follow, direct, control and maintain implementation process.
According to Dennis Lock (1996), "project management has evolved in order to plan, coordinate
and control the complex and diverse activities of modern industrial and commercial projects".
Project management should there for set effective strategies.

User Training: Users have to be intensively trained to avoid any error or confusion during when
implementing and using it. Sufficient training can increase success for ERP systems.
Management should focus in training courses and willing to allocate all resources needed. The
quality of training is very important for a good understanding and proper utilization of the
system. Consultants play a key role by transferring their knowledge to the end users either
through training program or interaction during implementation (Nah et al., 2003).

Vendor Support: ERP system differs not only from other information systems but also from one
ERP system to another which requires a depth and expert knowledge in the selected system

16
particularly to implement it. Vendors and their trained consultants are usually the only parties
who have acquired such knowledge. Therefore, vendors play a substantial role prior, during and
after the implementation. Vendor should participate in the implementation plan architecting;
provide well designed training programs for the organization staff and dedicate specialized
consultants with good experience in the system as well as business process to assist the
organization throughout implementation phases (Holland et al., 1999).

Communication: Communicating ERP project with employees is essential to build awareness

about the importance of these projects to the organization. This will enhance them to cooperate
with the implementation team and participate in change. Another important point that should be
communicated with the employees is how the system will impact their jobs. Managers need to
communicate the importance of the project, and the employees should be informed in advance
about the scope, objectives and the changes that will occur (Sumner, 1999).

IT infrastructure: The IT staff’s quality (i.e., knowledge of technological changes and up-to-
date skills) is cited among the important factors required for IT systems success in general and
for ERP implementation success in particular (Essex et al., 1998). Empirical evidence suggests
that IT systems are more likely to succeed in organizations where general IT skills and relevant
in-house IT expertise exist (Igbaria, 1990).

2.1.4 Performance
Firm performance is one of the most important constructs in management research. The
definition of firm performance could vary from one and another. According to Richard et al.
(2009), organizational performance encompasses three specific areas of firm outcomes: financial
performance (profits, return on assets, return on investment, etc.); product market performance
(sales, market share, etc.); and shareholder return (total shareholder return, economic value
added, etc.) On the other hand, firm performance can also be measured using perceived
performance approach (also referred to as subjective performance measure) where Likert-like
scaling is used to measure firm performance from the top management perspectives (Selvarajan,
2007).

Organizational performance is a method of measuring the success of the organization to ensure

that it achieves its goals. The success of an organization is gauged from several indicators both

17
qualitative and quantitative (Fry et al., 2008). These include financial performance and non-
financial performance. Performance measures may be cost-oriented or non-cost oriented and can
be internal or external. Although organizational performance is the most extensively used
dependent variable in organizational research, it still remains vague and loosely defined.
Performance has been traditionally conceptualized in terms of financial measures; but some
scholars have proposed a broader performance construct that incorporates non-financial
measures including among others market share, product quality, and company image.

Financial measures of performance are criticized for lacking neutrality (Emmanuel et al., 1990);
and encouraging short-termism (Wilson and Chau, 1993). Most management practices built
around financial measures bear little relation to a company’s progress in achieving long-term
objectives. Financial measures are also criticized for lacking balance because they are more
concerned with physical assets and ignore, for instance, perspectives of customers, and internal
business processes. All these perspectives are necessary under the circumstances where
companies transform themselves for competition based on information. Under the circumstances,
non-financial measures of performance have also been used to gauge the performance of a firm
(Kaplan and Norton, 2009). Some studies Youndt et al., (2006) suggest asking managers to
assess their own firm’s performance relative to others in the same industry or sector. They
suggest the use of multiple items and multiple respondents to assess performance. This study
opts to use multiple items in order to assess the performance of the organizations under study.
The items are both cost and non-cost oriented including: quality of product, company image,
interpersonal relations, return on assets and return on equity.

2.1.5 Enterprise Resource Planning and Organizational Performance

ERP software integrates information used by the accounting, process, distribution, and human
resources departments into a seamless computing system (JaidepMotwani et al., 2005). The
business world’s embrace of enterprise systems may in fact be the most important development
in the corporate use of information technology in the 2000s. ERP systems specifically address
the need for integration of application programs for various business functions or processes in a
processing firm, such as sales, accounting and process. Different business applications can all
use a common database that serves as the integrating mechanism (John Olhager et al., 2003).
ERP systems are expected to provide at least in theory, seamless integration of processes across

18
functional areas with improved workflow, standardization of various business practices,
improved order management, accurate accounting of inventory, and better supply chain
management (Mabert et al., 2000). ERP arrived at a time when process improvement and
accuracy of information became critical strategic issues. The emphasis on supply chain
management and the advancement of information technology created a need for enterprise- wide
integration. In the past few years, ERP has become a ‘‘must have’’ system for almost every firm
to improve competitiveness.

Evidence from a survey on companies who have adopted ERP systems and their impact on
management practice confirms a number of such benefits. The most highly-rated perceived
benefits involve increased flexibility in information generation, improved quality of reports,
increased integration of accounts applications and improved decisions based on timely and
reliable accounting information. Evidence suggests that businesses expect ERP systems to
deliver improved company performance (CharalambosSpathis et al., 2005). Therefore, it is
highly unlikely that any two implementations will have identical requirements or consequences,
even if they are based on the same generic software packages. While the potential benefits might
be articulated, determination of the actual benefits from implementing an ERP system is difficult
to foresee.

Many managers doubt to gaining value and competitive advantages from ERP systems
(KengSiau, 2002). The main reason of organizations is objectives and acquires effectiveness
(Daft, 2003). ERP systems are by many regarded as a dream come true and are in most cases
implemented in order to improve organizational effectiveness. Some studies also described cases
where the implementation failed and the impact had the opposite effect on organizational
performance. However, ERP systems are huge and complex and have a different implementation
results. In the other hand, the effectiveness is multi concept and complicated to measurement.
(S.C. Lenny Koh, 2014).It includes strategic, operational, human resource and structural
properties of organization.

The literature points those asses Shemu PLCnt of benefits and risks of ERP has remained of
strategic interest to the adopting organizations. Achieving operational efficiencies such as
improvements in productivity, optimizing inventory and data integration capabilities are some of
the prime benefits being sought by ERP adopters (Kamhawi, 2008). In investigating adoption

19
motives, Raymond and Uwizeyemungu (2007) conclude in their study of Canadian Small &
Medium enterprises, that the firms with significant organizational capacities, commercial
dependence on major customers and tendency of bringing innovative products are internally
predisposed to ERP adoption, whereas those firms which are focused on networking and
partnerships with other firms are externally pre-disposed towards adoption of ERP. Unfavorably
disposed firms are profiled as having less conducive environmental, organizational and
technological tendencies towards the adoption of ERP.

Kamhawi (2008) finds that gaining strategic management and decision making capabilities are
the main themes influencing ERP adoption decision, whereas startup costs and availability of
resources are the main challenges to adoption of ERP. The findings indeed confirm the
standpoint of Huang and Palvia (2001) study in which they highlight the differences in
challenges in adopting ERP, in developing and developed countries. Huang and Palvia (2001)
find that the firms in developing countries face various cultural, economic and infrastructure
challenges to adoption of ERP in contrast to their developed countries counterparts. However,
Buonanno et al. (2005) contradict this position and conclude that firms do not regard financial
constraints as the impediment to ERP adoption, but consider organizational and structural factors
as the main influencing reasons thereof.

Given the considerable investment of time, money and resources in ERP projects, the researchers
have looked at the performance impacts of ERP in a post adoption scenario. Conducting a survey
of Hong Kong based firms, Law and Ngai (2007) find that user satisfaction of ERP and business
process improvement positively impacts the organizational performance. They claim positive
empirical relationship between the strategic intent behind the adoption of ERP and organizational
performance. Velcu’s (2007) study reinforces the above findings, as the study reveals that firms
driven by technologically-led motives versus business-led motives perceive differently towards
benefits of adopting ERP.

2.2. Empirical Review

In the study of Sadiq et al., (2016) conducted in Pakistan companies implementing ERP, they
have found that the five most important factors for the success of ERP implementation were top
management support, project management, clear goals and objectives, careful selection of ERP
software, and data accuracy. In addition, computer literacy training was the other factor

20
important in institutionalizing ERP in Pakistan companies. Su Wei et al. (2009) in their study of
Malaysian small and medium enterprises’ ERP usage ,they have found that system quality,
information quality and vendor/consultant quality will have a positive association with ERP
perceived benefits. The perceived benefits of ERP will also have a positive influence on the ERP
system success of Malaysian SHEMU PLC.

Changes in Hardware, User Training after Go-Live, Changes in Software, Change Management
are among the most important determinants of success in post implementation of ERP in
organizations to best internalize the new way of doing which came as a result of the new system,
according to the findings of (Perera et al., 2008). An analysis of the results reveal that having
clear goals and objectives, user training and education, interdepartmental communication as well
as user involvement in evaluation, modification and implementation are considered most critical
by five of the six participant manufacturing companies in Virginia where (Beheshti et al., 2014)
conducted their detail study in ERP implementation. According to Bukamal et al., (2016)
business process reengineering would be more flexible regarding time-saving and cutting costs
than customization of the ERP system according to the current operations flow, which would
increase unnecessary costs and delays and have confirmed in their studies that BPR is among the
key factors in successful implementation of ERP in organizations. Moreover, they recommend
that Organizations must select the appropriate system that would be effective in accordance with
its operation and organizations must concentrate on their employees’ capabilities, financial
abilities to what extent changes can be applied for the success of the new system.

The study made by Owusu-Mainu (et al., 2019) on the title of assessing the Impact of
Implementing ERP Systems on the Operational Performance of Businesses Kumasi, Ghana by
using a case study approach result shows that ERP system implementation has positively
influenced performance of businesses and the cost of purchasing, installation and maintenance of
ERP system are a factor that hindrance for many small/infant businesses. Finally recommended
all categories of businesses should endeavor to adopt ERP systems in their operations in order to
thrive on the global competitive and dynamic market environment.

The study Conducted by Mwawasi Martin (et al., 2015) on the title of Effects of Enterprise
Resource Planning on Organizational Performance on Kenya Power and Lighting Company: A
Case Study of Kenya Power and Lighting Company VOI Branch by using descriptive

21
quantitative research methodology, result shows that reduced operation costs; management
efficiency, competitive advantage and increased shareholder’s profitability and all the factors had
great extent of affecting the organization’s performance.

Johnson Karimi (2017) on title Effects of Enterprise Resource Planning Implementation on

Organizational Performance in The Transport Industry in Kenya by using adopted a descriptive
approach and analyzed using descriptive and inferential statistics shows that Management skills,
Top management support and training have a positive relationship with organization
performance and significant standardized coefficient value. As well the researcher recommend to
evaluates a broader range of the effects of enterprise resource planning implementation on
organizational performance in the transport industry and other industry in economy and have to
included variables such as operation cost, capital investment among others in order to improve
understanding on the factors.

The study made Tony Saleh and Mira Thoumy (2018) on The Impact of ERP Systems on
Organizational Performance in Lebanese wholesale engineering companies by using adopted a
descriptive approach and analyzed using descriptive and inferential statistics shows that sales and
distribution, and customer relationship management had a high level of influence on operational
performance.

The study conducted by Sreekumar A (et al., 2019) critical challenges in Enterprise Resource
Planning (ERP) implementation case study in the Canadian Oil and Gas Industry by a qualitative
exploratory single-case study design concluded that Organization critical challenges is during
implication.

Talluri Sai Kirana and A Vasudeva Reddy (2019) studied on Critical Success Factors of ERP
Implementation in SHEMU PLCS by review of literature on the impact of ERP implementation
in SHEMU PLCs and their result shows that Success factors of ERP implementations include
organizational commitment, full support from top level management, BPR with minimum
customization, effective communication procedures, suitable ERP package selection and
adequate training and change management. ERP failure factors include employee resistance, lack
of inadequate commitment from top level management, inadequate training and education,
inadequate requirements definition, inadequate resources, incompatibility between organization

22
business processes and ERP software, unrealistic expectations on ROI, poor selection of ERP
packages, heavy customizations and change management inefficiency. Successful
implementations have affected SHEMU PLCs to grow economically and in terms of
productivity as well.

Mutuku Kaunda Morrisson (2020) studies on Best Practice Models for Enterprise Resource
Planning
Implementation and Security Challenges Nairobi, Kenya by qualitative design in nature and use
of secondary sources like books, academic journals and other online sources and conclude that
the best practices for implementation are thorough planning, top management support and user
involvement, resource allocation, selection of the right ERP software and change management
have been found to be the best practices for ERP implementation.

Regarding research conducted on ERP system implementation in Ethiopian context, only limited
studies were conducted.
The study conducted by Enderas Addisse (2017) on the title of assess the benefits and challenges
of implementing Enterprise Recourses planning (ERP) in ethio-telecom with ERP
implementation issues in gov’t project result show that there is a lack of top management
commitment; lack of appropriate training for all system users and as well as lack of allowing user
to participate on the implementation process and recommended top management is expected to
provide in the area of committing to the ERP project. In addition the company has to consider the
way to give adequate training and development for both end user as well as super user.

Elsa Taddele (2015) has conducted study on ERP Post-Implementation Management Framework
in the case of Ethiopian Airlines. The main objective of the study is to investigate technical,
organizational, and operational issues of ERP post-implementation management in the context of
Ethiopian airlines and design a solution framework to address those issues. The general approach
of the research was a case study in which a combination of quantitative and qualitative methods
has been used to collect and analyze data. A research model was established which constitutes
three main themes: technical, organizational and operational concerns that influence ERP post-
implementation success.
Derese (2013) has conducted his MSc. thesis on ensuring successful implementation of ERP at
Ethio-Telecom, a government company. The main objective of the study was to present

23
experiences that are obtained from a successful ERP implementation project while the case study
organization implemented Oracle ERP system. As a research methodology, the researcher used a
case study approach with qualitative and quantitative methods. The researcher developed a
framework that identified CSFs that needs to be addressed during pre-implementation,
implementation and post-implementation phases.
However, the study mainly focused on the implementation phase of ERP adoption even if the
framework tried to address the three major phases. This is also supported by the researcher‘s
recommendation which says during testing CSFs for pre-implementation and post-
implementation could not justify which could be attributed for lack of clarity by the respondents.
Thus, these CSFs should be further studied. Besides, the researcher also recommended
conducting a comprehensive empirical study to further understand the direct and indirect
relationships among the critical success factors and the actual benefits of ERP adoption.
Literature Gap
The above shows related works which are conducted on ERP implementation and organizational
performance, all research findings are in Ethiopia and other country. This shows that the impact
of ERP on organizational performance each organization is not the same because the way of
change and how to implement it can differ from one organization to the other organization.
Concerning local researches since there is few research conducted on organizational performance
in relation with ERP implementation and as well they are focus on the public organization of
ERP system implementation. Therefore, this study will attempt to assess the Effect of ERP
system on private organizational performance at Shemu Plc.

2.3 Conceptual Framework

Independent variables

- ERP System Supports Dependent variable

Business Plan, Vision
- Top Management Support
and Commitment
management
- Training Organization performance
- Communication
- Financial Managements

24
 Table some Summary of recent published article on related topic

No Author Title Gap Method Finding Recommendation

1 Owusu-Mainu Assessin A case study -ERP system all categories of
R, Twum AD, g the approach implementation businesses should
Konadu A, Impact of descriptive has positively endeavor to adopt ERP
Ohene- Impleme tools, such as influenced systems in
Amoako D nting pie charts bar performance of their operations in order
(2019) ERP chat, and businesses to thrive on the global
Systems summarily -The cost of competitive and dynamic
on the presented in purchasing, market environment
Operatio tabular and installation and
nal graphical maintenance of
Performa forms ERP
nce of system is a
Business hindrance for
es many small/infant
Kumasi, business
Ghana
2 Mwawasi Effects descriptive the organization top leadership
Martin Of quantitative experienced should support the
Mjomba and Enterpris research reduced operation adoption of ERP system
Stanley e costs; management for to be successful,
Kavale 2015 Resource efficiency, adoption of cost effective
Planning competitive modules to improve
On advantage and efficiency, adoption of
Organizat increased cost friendly modules
ional shareholder’s
Performa profitability. All
nce On the factors had
Kenya great extent of
Power affecting the
And organization’s
Lighting performance.
Company
: A Case
Study
Of Kenya
Power
And
Lighting
Company
Voi
Branch
3 Enderas assess the ERP Descriptive there is a lack of Top management is
Addisse 2017 benefits impleme researches top expected to provide in

25
 and ntation management the area of
challenge issues in commitment; lack committing to the ERP
s of gov’t of appropriate project. In addition the
impleme project training for all company has to consider
nting system users and the way to give
Enterpris as well as adequate training and
e lack of allowing development for both end
Recourse user to participate user as well as super user
s on the
planning implementation
(ERP)in process.
ethio-
telecom,
Ethiopia
4 Johnson Effects adopted a Management To evaluates a broader
Karimi 2017 Of descriptive skills, Top range of the effects of
Enterpris approach management enterprise resource
e - analyzed support, training planning implementation
Resource using have a positive on organizational
Planning descriptive relationship with performance in the
Impleme and inferential organization transport industry and
ntation statistics performance and other industry in
On significant economy and can include
Organizat standardized variables such as
ional coefficient value. operation cost, capital
Performa investment among others
nce In in order to improve
The understanding on the
Transport factors
Industry
In Kenya
5 Tony Saleh and The adopted a sales and Managers should be
Mira Thoumy Impact descriptive distribution, and careful not to implement
2018 Of ERP approach customer unneeded
Systems - analyzed relationship modules that may lead to
On using management had a a lesser positive effect,
Organizat descriptive high level of than that of
ional and inferential influence on a tailored
Performa statistics operational implementation.
nce In performance
Lebanese
wholesal
e
engineeri
ng
companie

26
 s
6 Sreekumar A. critical a qualitative Organization
Menon1, Marc challenge exploratory critical challenges
Muchnick2, s in single-case is during
Clifford Enterpris study design implication
Butler3 & e
Tony Pizur4 Resource
2019 Planning
(ERP)
impleme
ntation
case
study in
the
Canadian
Oil and
Gas
Industry
7 Mohammad Investigat The quality of the
Samir Abdel- ing the project team,
Haq, Houcine Success The mission of the
Chatti and and the project team,
Evan Asfoura Advantag The presence of a
2018 es of champion or a
Using sponsor,
ERP User training and
System in User acceptance
Kingdom are in the top five
of Saudi ranks in the overall
Arabia success
(KSA) factors relating to
Context ERP projects
- Improving the
use of skills,
employee
empowerment,
communication
and the
development of a
common language,
are some of the
benefits of ERP
systems

8 Talluri Sai Critical review of Success factors of

Kirana* and A Success literature on ERP

27
Vasudeva Factors the impact of implementations
Reddy 2019 Of ERP ERP include
Impleme implementatio organizational
ntation In n commitment, full
Shemu in SHEMU support from top
PLCs PLCs level management,
BPR with
minimum
customization,
effective
communication
procedures,
suitable ERP
package selection
and
adequate training
and change
management. ERP
failure factors
include employee
resistance, lack of
inadequate
commitment from
top level
management,
inadequate training
and education,
inadequate
requirements
definition,
inadequate
resources,
incompatibility
between
organization
business
processes and ERP
software,
unrealistic
expectations on
ROI, poor
selection of ERP
packages,
heavy
customizations and
change

28
 management
inefficiency.
Successful
implementations
have affected
SHEMU PLCs to
grow economically
and in terms of
productivity as
well.
9 Laslo Seres, Critical in terms of their a sample of ERP
Pere Tumbas, Success perception of consultants with
Predrag Factors ERP adoption experience
Matkovic, In ERP CSFs’ in ERP system
Marton Sakal System significance, are implementation in both
2019 Adoption smaller sectors,
: than it was initially would reveal the impact
Comparat expected. of respondents’ limited
ive - the two experience on the
Analysis sectors differ more obtained research results
Of The in success in
Private fulfillment of ERP
And The adoptions CSFs,
Public than their
Sector perception of
the significance of
particular CSFs.
10 Mutuku Best qualitative in he best practices
Kaunda Practice nature and for
Morrisson Models use of implementation.
2020 for secondary Thorough
Enterpris sources like planning, top
e books, management
Resource academic support and user
Planning journals and involvement,
Impleme other online resource
ntation sources allocation,
and selection of the
Security right
Challeng ERP software and
es change
Nairobi, management have
Kenya been found to
be the best
practices for ERP
implementation.

29
 CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY
3.1. Research design
The research design of this study is Descriptive as the objective of the research is to analysis the
effect of ERP system on Organization performance, in the case of Shemu Plc, because
descriptive researches are those studies which are concerned with describing the characteristics
of a individual, or of group and it includes surveys and fact-findings enquire of different kinds
(Sakaran, 2003:58).
Due to the nature of the research and to achieve the specific and general objectives of the
study, a mixed quantitative and qualitative method used to analyze the collected data.
According to (Creswell, 2003:17) the use of both approaches is tandem so that the overall
strength the study is greater than either qualitative or quantitative research. Thus, this design
is selected to express the current phenomenon of a situation and gives prediction depending
on the finding of the research and to describe the basic questions stated in the research.
3.2. Sources of Data
These studies were employing both primary and secondary data sources in order to have more
reliable results.

3.2.1. Primary Data

The primary data sources were those original data collected and analysed by the researcher from
the field. The primary data for this study was mainly obtained from the responses of respondents
to self-completion questionnaires and semi structured interviews from shame PLC workers both
manager and non manager.

3.2.2. Secondary Data

The secondary data source was gather from available handbooks, annual reports, performance
reports, employment policies, relevant information from the organisations website, journals,
and other documented materials made up the secondary data was used by the researcher.
The data obtained from these sources was scrutinised for reliability, validity, adequacy and
suitability in answering research questions and to establish the truth and accuracy of any claim;
thus it is expected to enhance the reliability and validity of the study.

30
3.3. Study Population
In this study, the target population which is the entire set of units for which the research data was
use to make generalisation is the managers and non-managerial employees of Shemu Plc.

3.4. Sample Size and Sampling Techniques

This study was used managers and non-managerial employees of Shemu Plc. There are total of
430 employees. Among the employees of the organization 260 employees are directly involved
with the ERP system and then the researcher purposefully selected them for target population. In
the second step by using this target sample of (who participate in ERP 260 members), 158
sample respondents have been drawn using the mathematical equation developed by Yamane,
(1967). The researcher used the following formula to define the required sample size at 95%
confidence level, degree of variability of= 0.05 and with desired level of precision required =
5%.

=
1+ ( )
Where, n: is Sample Size,
N: is Total Population,
e: is permitted error of 5%
1: designates the probability of the event occurring

Therefore, = , n = 158
( . )2

Then in the last stage, the determined sample size distributed to each Department of Shemu PLC
on the basis of probability proportional to size (PPS). Probability proportional allocation formula
adopted according to (Kotari, 2004) as follow:

1
1=

Where: n= determined sample size N= target population N1= total number of population in each
department n1= number of samples in each Department (Table 1)

Table 1. Probability proportionate to sample size

31
S.N Name of Department Number of staff Probability
proportionate to size for
Total each Department (PPS)
1 HRM 15 9
2 Production ( Manufacturing) 112 68
3 Marketing 57 35
4 IT 35 21
5 Finance 17 10
6 EPR 20 12
7 Quality Assurance 4 3
Total 260 158
Source: Shemu PLC data, 2021
3.5. Data Collection Instruments
Data collection instruments are the tools used to collect information as part of a research. To
increase the extensiveness of information obtained from the respondents in relation to
ERP system this study will use two types of data collection instruments.

3.5.1. Questionnaire
In this study questionnaire was prepare to collect the required data in relation to the impacts of
ERP system on organizational performance from the sample respondents. Questionnaires were
having the advantage of securing relevant information effectively about phenomena that is not
directly observable. It is also an efficient and effective method in reaching a larger group. For
the purpose of this study, open and close ended types of questionnaire was use to collect primary
data from employees of Shemu Plc. A five point Likert Scale will use to measure the effects ERP
systems on the organizational performance.

3.5.2. Interview
Though questionnaires are considered as the major data gathering tool, in addition, a semi-
structured interview schedule was prepare to gather data from key informants of the Company
on ERP system and organisations performance. The participants were select through judgmental
method because of their closeness to execute the issues.

32
3.6 Research Procedures
The aim of the pilot study was to test the reliability of the questionnaires. According to Fisher
(2012), a pilot test is necessary for testing the reliability of data collection instruments. Cox
(2012), explains reliability of research as determining whether the research truly measures that
which it is intended to measure or how truthful the research results will be. Pilot study was
conducted to detect weakness in design and instrumentation and to provide proxy data for
selection of a sample. The researcher was selected a pilot group of 12 individuals from the target
population which were the top level managers, middle level managers and lower level managers
to test the reliability of the research instrument. The pilot data did not include the actual study.
The pilot study allowed for pre-testing of the research instrument. The clarity of the research
instruments to the respondents was established so as to enhance the instrument’s validity and
reliability. The pilot study enabled the researcher to be familiar with research and its
administration procedure as well as identifying items that required modification. The results
helped the researcher to correct inconsistencies that were seen to arise from the instruments,
which ensured they measured what was intended.
The interviewer explained to the respondents the intentions of the research study before
administering the same and also visited them at their premises to ensure success of the study.
3.7. Method of Data Analysis
After data collection, the filled-in and returned questionnaires were edited for completeness,
coded and entries made into Statistical package for social sciences (SPSS). Coding is technical
process where raw data are transformed into easily tabulated form by way of assigning symbols.
This helps in condensing the responses into few categories for the purposes of data analysis. The
dataset will then be subjected to a verification process to verify if the captured data correlated
with the data-capture into SPSS.

Both descriptive and inferential statistics were used to analyse the data. Descriptive analysis was
conducted on primary data. Mean and standard deviations were also be used as measures of
central tendencies and dispersion respectively. Correlation was used to analyse the degree of
relationship between the variables in the study. Further, ANOVA was used to carry out
regression analysis to find out the relationship between the independent variable and dependent
variable. Data was presented in the form of frequency distribution tables, percentage to facilitate
description and explanation of the study findings.

33
 CHAPTER FOUR
4. RESULTS AND DISCUSSION
4.1. Introduction
The purpose of this study was to analyze the effects of enterprise resource planning
implementation on organizational performance in the Shemu Plc. The results and discussion
below is devised in three parts corresponding to the research questions and also the sections of
the questionnaire. These divisions can help tackle one question at a time. The first part of the
results and discussion contains the findings of the questions directed towards demographic of
respondent and identifying effects of enterprise resource planning implementation on
organizational performance.
4.2 Response Rate
A total of 158 questionnaires administered, only 152 were returned. The overall response rate
was thus found to be 96.2% which is quite high compared to the usually expected response rate
According to Mugenda and Mugenda (2003), a response rate of 50% is adequate for analysis and
reporting; a rate of 60% is good and a rate of 70% and over is excellent. Based on this assertion,
the response rate (96.2%) for the data gathering instrument was excellent. Thus, the result
analysis in this study was based on data on 152 questionnaires.
4.3 Reliability Test
The Reliability Statistics show that the scale exhibits a high degree of reliability. A
Cronbach’s Alpha coefficient of 0.70 is a commonly suggested threshold of reliability test
(Fisher (2012). The cronbach - alpha of each scale is presented in the following table.
. Table 4.1: - Reliability Test
No Measurement Scale No. of items Cronbach-Alpha
1 Business Plan, Vision
4 .772
2 Top Management Support and
Commitment
8 .895
3 Training
8 .896
4 Communication
9 .910
5 Financial Managements for
Capacity Building Done on the 8 .754

34
 System

6 Performance
7 .656
Average 0.814
Source: - Own survey result, 2021
4.3 Demographic characteristics of the Respondents
Results of the demographic characteristics of respondents are shown in table 4.2 below. As
observed from the table the gender composition of the respondents is male 61.8% while the rest
38.2 % are female respondents. This indicates the male sample composition in this study is
greater female composition.

Table 4.2. Demographic and socioeconomic characteristics of samples

Demographic
Information Classification Frequency Percent
Male 94 61.8
Female 58 38.2
Gender Total 152 100.0
18-25 2 1.3
26-30 86 56.6
31-35 11 7.2
36-40 23 15.1
41- 45 21 13.8
46-50 9 5.9
Age Total 152 100.0
High school 42 27.6
Diploma 71 46.7
Degree 34 22.4
Master 5 3.3
Educational Total 152 100.0
Top level management 9 5.9
Middle level
32 21.1
management
Low level management 79 52.0
Employee Category Non Management 32 21.1
Total 152 100.0
0-2 years 16 10.5
3-5 years 50 32.9
6 -10 years 41 27.0
Experience 11-15 years 31 20.4

35
 Above 15 years 14 9.2
Total 152 100.0
Source: - Own survey result, 2021

Age
Out of total valid 152 respondents the most respondent‘s age group was between 26-30, which is
56.6 %. The age between 36-40 years old were ranking second who took about 15.1 % followed
by respondents who were with age range of 41- 45 which 13.8% , 31-35 which is 7.2% and 46-
50 which is 5.9%. This indicates that most of Shemu Plc employees are young and productivity.
Education Level
From the 152 valid respondents, 71 of them or 46.7% were Diploma, 42 of them were High
school which is about 27.6% and 34 of them or 22.4% were Degree. The rest 3.3% or 5
respondents were having Master or above. This implies that the majorities of the respondents are
Diploma holders and followed by degree holders.
Employee Category and Experience

Regarding the Employee Category of respondents revealed that 79(52%), 32(21.1%), 9(5.9%)
and 7(4.5%) were Low level management, Middle level management, and Top level
management respectively. This indicates that most of samples included in this study are Low
level management individuals. As to the respondent of work experience 16 (10.5%) of
respondents are served for 0-2 years, 50 (32.9%) of respondents served from 3-5 years, 41 (27%)
of respondents served from 6 – 10 years and the remaining 31 (20.4%) and 14 (9.2%)of
respondents served for 11-15 and above 16 year respectively.

4.4 Descriptive Analysis

In this particular section, forty four items used to measure organizational performance and five
element of ERP including Business Plan and Vision, Top Management Support and
Commitment, Training, Communication, Financial Managements for Capacity Building Done on
the System.
4.4.1 In what extent the current implemented ERP system of Business Plan and Vision is
contribute to the performance in Shemu Plc
On this section covers the data presentation and analysis on how much the current implemented
ERP system of Business Plan, Vision is contribute to the performance in Shemu Plc.

36
Table 4. 3 Descriptive Analyses of Business Plan and Vision

Statement Strongly Disagree Neutral Agree Strongly

Disagree Agree
No % No % No % No % No %
Our ERP system 0 0 5 3.3 20 13.2 105 69.1 22 14.5
supports our business
goals
The management of 0 0 8 5.3 27 17.8 95 62.5 22 14.5
our firm freely shares
information.
The different 0 0 4 2.6 55 36.2 76 50 17 11.2
departments are of
equal importance to
top management
Employees are happy 0 0 5 3.3 32 21.1 93 61.2 22 14.5
with the changes that
management decides
on ERP issues
Source: - Own survey result, 2021

During the interview conversation from the management side i.e in Business Plan and Vision
with total number of 9 managerial employees which asked Our ERP system supports our
business goals Shame PLC. 7 of them i.e 78% of the managers says there is cases ERP system
supports our business goals newly introduced system and 22% responds ERP system neutral in
the organizations process. Also when return back to the employee regarding on this question
which asked employees the Our ERP system supports our business goals Shame PLC, 83.6% of
the respondents replied that agree and strongly agree the ERP system of Business Plan and
Vision is contribute to the performance. From the remaining respondents 13.2% of respondents
are neither of the two sides and 3.3% of them reflecting against ERP system the supports our
business goals.

37
From this fact, we can deduce that there is no gap on detailed level of understanding on the area
of implemented ERP system between managerial and non-managerial employees.
Concerning the management of our firm freely shares information., 77% of the respondents
respond that the management of our firm freely shares information, this could be due to the high
understanding of organization plan and vision by employees from the company side or it’s
because the company have experts from abroad and local that can fully exploit the entire system
feature to meet the expectation of the employees in this regard. There also a triangulation of
ideas from the management side, because during interview time all managers i.e.100% forward
ideas we can say totally the management of our firm freely shares information.
Additionally, 17.8% respondents are at the middle of the road; they neither agree nor disagree
and 5.3% of the total respondent they oppose and disagree on the management of our firm freely
shares information.
From this interpretation we can comprehend that most of the respondents from both side believe
that the management of our firm freely shares information which was confirmed by the interview
result that triangulate the overall respondent’s response.
Regarding the different departments is of equal importance to top management. 61.1% of
respondents replied that agree on different departments is of equal importance to top
management. From the remaining respondents 36.2% respondents are at the middle; they neither
agree nor disagree and 2.6% of the total respondent they oppose and disagree on different
departments is of equal importance to top management.
Regarding the question asked on area of employees are happy with the changes that management
decides on ERP issues 75.7% of the respondent responds there is strong employees are happy
with the changes that management decides on ERP issues. In the contrary side 3.3% respondents
oppose cross and 21.1% of respondent either of the two.
4.4.2 In what extent the current implemented ERP system of top management Support and
Commitment is contribute to the performance in Shemu Plc
On this part of data presentation phases of to what extent implemented ERP system of top
management Support and Commitment is contribute to the performance in Shemu Plc

Table 4. 4 Descriptive Analysis of top management Support and Commitment

Statement Strongly Disagree Neutral Agree Strongly

38
 Disagree Agree
No % No % No % No % No %
Functional managers 0 0 6 3.9 30 19.7 98 64.5 18 11.8
willingly assign resources to
the ERP project as they are
needed.
The need for long-term ERP 0 0 4 2.6 28 18.4 100 65.8 20 13.2
support resources is
recognized by management.
Executive management is 0 0 8 5.3 23 15.1 104 68.4 17 11.2
enthusiastic about the
possibilities of ERP
Executives have invested the 0 0 7 4.6 20 13.2 94 61.8 31 20.4
time needed to understand
how ERP will benefit the
enterprise.
Executives mandate that 0 0 7 4.6 28 18.4 85 55.9 32 21.1
ERP requirements have
priority over unique
functional concerns.
Top management has clearly 0 0 7 4.6 28 18.4 85 55.9 32 21.1
defined commitments.
All levels of management 0 0 7 4.6 46 30.3 83 54.6 16 10.5
support the overall goals of
the ERP Entity.
Employees who support the 0 0 5 3.3 53 34.9 76 50 18 11.8
ERP project are distracted
by other commitments.
Source: - Own survey result, 2021

As depicted on the above table, on the questions that are functional managers willingly assign
resources to the ERP project as they are needed, were 76.3% of the employee respond functional

39
managers willingly assign resources to the ERP project as they are needed. On the contrary
around 3.9% of respondents respond disagree functional managers willingly assign resources to
the ERP project as they are needed. The remaining 19.7% respondents reflect their response as
either of the two.

Concerning the question the need for long-term ERP support resources is recognized by
management from the data 46.3% of respondent responds respond implementer of the new
system that is top management Support and Commitment contribute to performance. The
remaining 2.6% of the respondents view point were opposing that the top management Support
and Commitment was restricted and not brief and 18.4% of the respondents were neither support
nor oppose the issues that asked as question.

When we return back to the question that executives mandate that ERP requirements have
priority over unique functional concerns and top management has clearly defined commitments,
depending on the reflection from the respondent 77% of questionnaire response where there are
that executives mandate and clear committeemen. From the remaining 4.6% respondents oppose
or against of them and explains their issues on executives mandate and clear committeemen not
in accordingly clear. And 18.4% of the respondents respond on the middle of the way i.e having
neutral idea.

On question executive management is enthusiastic about the possibilities of ERP and executives
have invested the time needed to understand how ERP will benefit the enterprise more than 79%
of respondents agree on enthusiastic about the possibilities of ERP and invested the time needed
to system. The remaining 5.3% respondents view points were both executive management is
enthusiastic about the possibilities of ERP and executives have invested the time needed to
understand how ERP will benefit the enterprise. Out of that 15.1% of the respondents view
points were out of the two sides.

Generally we can summaries from respondents data that the current implemented ERP system of
top management Support and Commitment is contribute to the performance in Shemu Plc

40
 4.4.3 In what extent the current implemented ERP system of performance is affected by
Training

The study sought to find out how training affects organizational performance. The
findings were presented in table 4.5. The results indicated that 61.9% of the respondents
agreed that specific user training needs were identified early in the implementation, 75%
agreed that formal training program has been developed to meet the requirements of ERP
system users, 74.4% agreed that training materials have been customized for each specific
job, 61.8% agreed that they seldom update training materials to reflect system changes,
84.4% agreed that training materials target the entire business task, not just the ERP
screens and reports, 85% agreed that employees are tracked to ensure that they have
received the appropriate ERP system training, 73% agreed that all users have been trained
in basic ERP system skills, 72% agreed that ERP system training review sessions are
scheduled.
Table 4. 5 Descriptive Analysis of Training

Statement Strongly Disagree Neutral Agree Strongly

Disagree Agree
No % No % No % No % No %
Specific user training needs were 0 0 6 3.9 52 34.2 74 48.7 20 13.2
identified early in the
implementation.
A formal training program has been 0 0 6 3.9 32 21.1 99 65.1 15 9.9
developed to meet the requirements
of ERP system users.
Training materials have been 0 0 5 3.3 34 22.4 93 61.2 20 13.2
customized for each specific job.
We seldom update training 0 0 5 3.3 53 34.9 69 45.4 25 16.4
materials to reflect system changes.
Training materials target the entire 0 0 7 4.6 16 10.5 104 68.4 25 16.4
business task, not just the ERP
screens and reports.

41
Employees are tracked to ensure 0 0 4 2.6 19 12.5 102 67.1 27 17.8
that they have received the
appropriate ERP system training.
All users have been trained in basic 0 0 2 1.3 51 33.6 79 52 20 13.2
ERP system skills.
ERP system training review 0 0 6 3.9 27 17.8 92 60.5 27 17.8
sessions are scheduled.
Source: - Own survey result, 2021

4.4.4 In what extent the current implemented ERP system of performance is affect by
communication

The study sought to find out how communication affects organizational performance. The
findings were presented in table 4.6. The results indicated that 80.9% of the respondents
agreed that the ERP system of their company provides timely information, 73.6%
agreed that the ERP system of their company provides them with important
information, 90.8% agreed that the information and related reports that the ERP
system provides are useful to them in their work, 80.9% agreed that the
information and related reports on our ERP system are available to them when and where
they need them, 80% agreed that their ERP system is easy to use, 90%
agreed that their ERP system functions reliably, 81.5% agreed that their ERP
system is flexible, 85.5% agreed that their ERP system allows for customization
and 85.5% agreed that their ERP system combines data from different areas of
the organization.
Table 4. 6 Descriptive Analysis of Communication

Statement Strongly Disagree Neutral Agree Strongly

Disagree Agree
No % No % No % No % No %
The ERP system of our 0 0 6 3.9 23 15.1 99 65.1 24 15.8
company provides timely
Information
The ERP system of our company 0 0 7 4.6 33 2.7 82 53.9 30 19.7
provides us important

42
information.
The information and related 0 0 6 3.9 8 5.3 106 69.7 32 21.1
reports that the ERP system
provides are useful to me in my
work
The information and related 0 0 5 3.3 24 15.8 99 65.1 24 15.8
reports on our ERP system are
available to me when and where
I need Them
Our ERP system is easy to use. 0 0 6 3.9 24 15.8 81 53.3 41 27
Our ERP system functions 0 0 5 3.3 10 6.6 124 81.6 13 8.6
reliably.
Our ERP system is flexible. 0 0 6 3.9 22 4.5 94 61.8 30 19.7
Our ERP system allows for 0 0 5 3.3 17 11.2 118 77.6 12 7.9
customization.
Our ERP system combines data 0 0 7 4.6 15 9.9 114 75 16 10.5
from different areas of the
organization.
Source: - Own survey result, 2021

4.4.5 In what extent the current implemented ERP system of performance is affect by
Financial Managements for Capacity Building done on the System
The study sought to find out how financial managements for capacity building done on the
system affect organizational performance. The findings were presented in table 4.7 below. the
results indicated that 62.5% of the respondents agreed that there is adequate training material on
ERP modules in my organization, 85.6% agreed that the there is continuous training on new
technologies among staff, 72.3% agreed that the training given on the system was adequate and
useful to your functional module, 77.7% agreed that further enhancement training is required on
the system, 85% agreed that there was a gap between the imparted training and Shemu PLC
business requirements, 72.2% of the respondents agreed that the supports exerted by integrators
make the users familiar with the system, 83.6% agreed that the functional and technical support
of successful in relation to knowledge transfer, 90.1% agreed the level of dependency on

43
integrates are still high and 85.5% agreed that The training given on the system was adequate and
useful to your functional module.
Table 4. 7 Descriptive Analyses of Financial Managements for Capacity Building Done on
the System
Statement Strongly Disagree Neutral Agree Strongly
Disagree Agree
No % No % No % No % No %
There is adequate training 2 1.3 7 4.6 48 31.6 80 52.6 15 9.9
material on ERP modules in
my organization.
There is continuous training on 2 1.3 7 4.6 13 8.6 117 77 13 8.6
new technologies among staff.
The training given on the 1 .7 5 3.3 36 23.7 85 55.9 25 16.4
system was adequate and
useful to your functional
module.
Further enhancement training 2 1.3 7 4.6 25 16.4 91 59.9 27 17.8
is required on the system.
There was a gap between the 1 .7 6 3.9 16 10.5 107 70.4 22 14.5
imparted training and Shemu
PLC business requirements.
The supports exerted by 2 1.3 4 2.6 36 23.7 77 50.7 33 21.7
integrators make the users
familiar with the system.
The functional and technical 0 0 5 3.3 20 13.2 95 62.5 32 21.1
support of successful in
relation to knowledge transfer.
The level of dependency on 0 0 4 2.6 11 7.2 107 70.4 30 19.7
integrates are still high.
The training given on the 0 0 7 4.6 15 9.9 114 75 16 10.5
system was adequate and

44
 useful to your functional
module.
Source: - Own survey result, 2021

4.4.6 In what extent the current implemented ERP system have on organizational
performance
The study sought to find out the respondents opinion on organizational performance. The
findings were presented in table 4.8 below. the results indicated that 90.8% of the
respondents agreed that the Our firm has stronger growth in sales revenue, 80.9% agreed that the
Our firm is better able to acquire new customers, 80.3% agreed that the ERP system enhances
their performance, 80.2% agreed that Our firm has a greater market share, 98% agreed that Our
firm is able to increase sales to existing customers, 80.9% of the respondents agreed that the ERP
system enhances their awareness about the system, 92% agreed that ERP facilitates profit
maximization and eventually leads to improved business performance and 86.2% agreed that
ERP improves competitive advantage and lowers transaction costs s.

Table 4. 8 Descriptive Analysis of Performance

Statement Strongly Disagree Neutral Agree Strongly
Disagree Agree
No % No % No % No % No %
Our firm has stronger growth 0 0 6 3.9 8 5.3 106 69.7 32 21.1
in sales revenue.
Our firm is better able to acquire new
0 0 5 3.3 24 15.8 99 65.1 24 15.8
customers
The ERP system enhances my 0 0 6 3.9 24 15.8 81 53.3 41 27
performance.
Our firm has a greater market 0 0 5 3.3 10 6.6 124 81.6 13 8.6
share.
Our firm is able to increase 0 0 6 3.9 23 15.1 94 61.8 29 19.1
sales to existing customers
ERP facilitates profit 1 .7 3 2 8 5.3 99 65.1 41 27
maximization and eventually

45
 leads to improved business
performance.
ERP improves competitive 0 0 3 2 18 11.8 99 65.1 32 21.1
advantage and lowers transaction
costs.
Source: - Own survey result, 2021

4.5 Inferential Analysis

4.5.1 Correlation Analysis
On this study, Pearson’s product moment correlation coefficient was used to determine
the relationships between factors affecting ERP implementation and performance.
4.5.2.1 Correlation
Table 4.9 Correlations
1 2 3 4 5 6
Pearson
1
Business Plan and Vision Correlation
(1) Sig. (2-tailed)
N 152
Pearson
.869** 1
Top Management Support Correlation
and Commitment (2) Sig. (2-tailed) .000
N 152 152
Pearson
.860** .851** 1
Correlation
Training (3)
Sig. (2-tailed) .000 .000
N 152 152 152
Pearson
.833** .803** .827** 1
Correlation
Communication (4)
Sig. (2-tailed) .000 .000 .000
N 152 152 152 152
Pearson
Financial Managements for .892** .772** .820** .859** 1
Correlation
Capacity Building Done on
Sig. (2-tailed) .000 .000 .000 .000
the System (5)
N 152 152 152 152 152
Pearson
.843** .801** .838** .814** .851** 1
Performance (6) Correlation
Sig. (2-tailed) .000 .000 .000 .000 .000

46
 N 152 152 152 152 152 152
**. Correlation is significant at the 0.01 level (2-tailed).
Source: - Own survey result, 2021
To determine whether there are significant relationships between factors affecting ERP
implementation and performance, Pearson’s product moment correlation was computed. Table 4.9
above demonstrates the results of Pearson’s Product Moment Correlation on the relationship
between factors affecting ERP implementation and performance. It shows that, the correlation
coefficients for the relationship between factors affecting ERP implementation and performance and
its signs are linear and positive with high correlation coefficients. From the table, there is high
and statistically significant relationship between Performance and Business Plan and Vision(r =
0. 843, p < 0.01, Performance and top management support and commitment (r = 0. 801, p <
0.01), performance and training (r = 0. 838, p < 0.01), performance and communication (r = 0.
814, p < 0.01) and Performance and Capacity Building Done on the System(r = 0. 851, p < 0.01.
4.5.2 Regression Analysis
Regression is a technique used to predict the value of a dependent variable using one or more
independent variables (Albaum, 1997). Regression analysis is a statistical tool for the
investigation of relationships between variables. Usually, the investigator seeks to ascertain the
causal effect of one variable upon another. To explore such issues, the investigator assembles
data on the underlying variables of interest and employs regression to estimate the quantitative
effect of the causal variables upon the variable that he/she influences. The investigator also
typically assesses the “statistical significance” of the estimated relationships, that is, the degree
of confidence that the true relationship is close to the estimated relationship (Malhotra, 2007).
4.5.2.1 Assumptions of Linear Regression Analysis
Meeting the assumptions of regression analysis is necessary to confirm that the obtained data
truly represented the sample and that researcher has obtained the best results (Hair et al., 1998).
Multi-collinearity
One should check for the problem of multicollinearity which is present if there are high
correlations between some of the independent variables. The study checks this with the Variance
Inflation Factor (VIF) which calculates the influence of correlations among independent
variables on the precision of regression estimates. The VIF factor should not exceed 10 and
should ideally be close to one. Tolerance is an indicator of how much of the variability of the

47
specified independent variable is not explained by the other independent variables in the model
and is calculated using the formula 1–R2 for each variable. If this value is very small (less than
0.10), it indicates that the multiple correlation with other variables is high, suggesting the
possibility of multicollinearity.
A good regression model must not have a strong correlation among its independent variables or
must not have a multicollinearity problem and that the value of variance inflation factor (VIF)
must have a value between 1 and 10 and the tolerance level should be more than 0.2 (SPSS
Inc,2007).
Table 4.10 Multicollinearity Test
Model Collinearity Statistics
Tolerance VIF
(Constant)
Business Plan and Vision .191 5.240
Top Management Support and
.193 5.195
Commitment
1 Training .204 4.909
Communication .153 6.519
Financial Managements for
Capacity Building Done on the .120 8.365
System
a. Dependent Variable: Performance
Source: - Own survey result, 2021

As shown on the table above, based on the coefficients output (collinearity statistics), the
obtained variance inflation factor(VIF) for all independent variables was found to be between 1
and 10, which means that there is no multicollinearity problem.
Homoscedasticity
Homoscedasticity is an assumption in regression analysis that the residuals at each level of the
predictor variables have similar variances. That is, at each point along any predictor variable, the
spread of residuals should be fairly constant, for a basic analysis the researcher first plot
*ZRESID (Y-axis) against *ZPRED (X-axis) on SPSS because this plot is useful to determine
whether the assumptions of random errors and homoscedasticity have been met. The graph of
*ZRESID and *ZPRED should look like a random array of dots evenly dispersed around zero. If
this graph funnels out, then the chances are that there is heteroscedasticity in the data. If there is

48
any sort of curve in this graph, then the chances are that the data have broken the assumption of
linearity.

Figure 4.1 Scatter Plot

Source: - Own survey result, 2021

Linearity
The linearity of the relationship between the dependent and independent variable represented the
degree to which the change in the dependent variable is associated with the independent variable
(Hair et al., 1998). In a simple sense, linear models predict values falling in a straight line by
having a constant unit change (slope) of the dependent variable for a constant unit change of the
independent variable (Hair et al., 1998). The study checks for patterns in scatter plots of
Performance against customer satisfaction weather they have linear relation and the assumption

49
have met. From the graph above it can be seen that customer satisfaction and Performance have
linear relation.
Independent errors
For any two observations the residual terms should be uncorrelated (or independent). This
eventuality is sometimes described as a lack of autocorrelation. This assumption can be tested
with the Durbin–Watson test, which tests for serial correlations between errors. Specifically, it
tests whether adjacent residuals are correlated. The test statistic can vary between 0 and 4 with a
value of 2 meaning that the residuals are uncorrelated (Field, 2005). In the Table 4.14 Durbin–
Watson test result value is 1.556, which is so close to 2 meaning that the residuals are
uncorrelated (or independent).

4.5.2.2 Multiple Linear Regressions

Linear regression estimates the coefficients of the linear equation, involving one or more
independent variables that best predict the value of the dependent variable (Field, 2005).
Multiple linear regressions was conducted in order to determine the explanatory power of the
independent variables (Business Plan and Vision, Top Management Support and Commitment,
Training, Communication, Financial Managements for Capacity Building Done on the System)
to identify the relationship and to determine the most dominant variables that influenced the
organization performance. The significance level of 0.05 with 95% confidence interval was used.
The reason for using multiple regression analysis was to analysis effects of enterprise resource
planning implementation on organizational performance. The table 4.10 shows the model
summary of the regression analysis.
Table 4. 11 Model Summaries
Model R R Square Adjusted R Std. Error of Durbin-
Square the Estimate Watson
a
1 .893 .797 .790 .23885 1.556
a. Predictors: (Constant), Business Plan and Vision, Top Management
Support and Commitment, Training, Communication, Financial
Managements for Capacity Building Done on the System

b. Dependent Variable: Performance

Source: - Own survey result, 2021

50
The above regression model presents how much of the variance in the measure of organization
performance is explained by the underlying factors affecting ERP implementation. Furthermore,
to explain R, R2, adjusted R2 and Durbin–Watson in detail: -
R – Indicates the value of the multiple correlation coefficient between the predictors and the
outcome, with a range from 0 to 1, a larger value indicating a larger correlation and 1
representing an equation that perfectly predict the observed value (Pedhazur, 1982). From the
model summery (R = 0.893) indicates that the linear combination of the four independent
variables (Business Plan and Vision, Top Management Support and Commitment, Training,
Communication, Financial Managements for Capacity Building Done on the System) strongly
predict the dependent variable (organization performance).
R Square (R2) – indicates the proportion of variance that can be explained in the dependent
variable by the linear combination of the independent variables. In another word R2 is a measure
of how much of the variability in the outcome is accounted for by the predictors. The values of
R2 also range from 0 to 1 (Pedhazur, 1982). The linear combination of factors affecting ERP
implementation‟ i.e Business Plan and Vision, Top Management Support and Commitment,
Training, Communication, Financial Managements for Capacity Building Done on the System
79.7% of the variance in organization performance and the remaining 20.1 % is explained by
extraneous variables, which have not been included in this regression model.
Adjusted R Square (R2) – The adjusted R2 gives some idea of how well the model
generalizes and its value to be the same, or very close to the value of R2. That means it adjusts
the value of R2 to more accurately represent the population under study (Pedhazur, 1982). The
difference for the final model is small (in fact the difference between R2 and Adjusted R2 is
(0.797 - 0.79 = 0.007) which is about 0.7%. This shrinkage means that if the model were
derived from the population rather than a sample it would account for approximately 0.1% less
variance in the outcome.
Durbin-Watson- the Durbin–Watson statistic expresses that whether the assumption of
independent errors is acceptable or not. As the conservative rule suggested that, values less than
1 or greater than 3 should definitely raise alarm bells (Field, 2005). So that the desirable result is
when the value is closer to 2, and for this data the value is 1.556, which is so close to 2 that the
assumption has almost certainly been met.
Table 4. 12 ANOVA

51
Model Sum of Df Mean F Sig.
Squares Square
Regression 32.673 5 6.535 114.545 .000b
1 Residual 8.329 146 .057
Total 41.002 151
a. Dependent Variable: Performance
b. Predictors: (Constant), Business Plan and Vision, Top Management Support
and Commitment, Training, Communication, Financial Managements for
Capacity Building Done on the System
Source: - Own survey result, 2021

The next part of the SPSS output reports an analysis of variance (ANOVA). The summary table
shows the various sum of squares described in the table above and the degrees of freedom
associated with each. From these two values, the average sums of squares (the mean squares) can
be calculated by dividing the sums of squares by the associated degrees of freedom. The most
important part of the table is the F-ratio, which is a test of the null hypothesis that the regression
coefficients are all equal to zero. Put in another way, this F statistics tests weather the R2
proportion of variance in the dependent variables accounted for by the predictors is zero and the
table also shows the associated significance value that F-ratio(Field,2009). For this data, F is
114.545, which is significant at P<.0001(because the value in the column labeled Sig. is less than
0.001). This result tells us that there is less than a 0.1% chance that an F-ratio this large would
happen. If the null hypothesis proposed about F- ratio were true. Therefore, we can conclude that
our regression model results in significantly better prediction of organization performance and
that the regression model overall predicts organization performance significantly well.
Regression Coefficient
This study intends to identify the most contributing independent variable in the prediction of the
dependent variable. Thus, the strength of each predictor (independent variable) influencing the
criterion (dependent variable) can be investigated via standardized Beta coefficient.
The regression coefficient explains the average amount of change in the dependent variable that
is caused by a unit change in the independent variable. The larger value of Beta coefficient an
independent variable has, brings the more support to the independent variable as the more
important determinant in predicting the dependent variable.
Table 4. 13 Coefficients

52
Model Unstandardized Standardized t Sig.
Coefficients Coefficients
B Std. Error Beta
(Constant) .488 .152 3.210 .002
Business Plan and
.089 .108 .089 .824 .411
Vision
Top Management
Support and .137 .081 .144 1.692 .093
Commitment
Training .233 .076 .260 3.053 .003
Communication .089 .074 .099 1.195 .234
Financial Managements
for Capacity Building .354 .093 .362 3.806 .000
Done on the System
a. Dependent Variable: Performance

Source: - Own survey result, 2021

The marked column B is the value for the intercept (a) in the regression equation on the first row,
labeled (constant). The numbers below the column βeta are the values for the regression
coefficients for Business Plan and Vision, Top Management Support and Commitment, Training,
Communication, Financial Managements for Capacity Building Done on the System. In the
multiple regression, this standardized regression coefficient Bate (β) is useful, because it allows
you to compare the relative strength of each independent variable's relationship with the
dependent variable (Pedhazur, 1982).
The above coefficient table shows the constant beta value (β) and p-value of the variables to
examine the significance of the hypothesis. The significance level of each variable (P-value) is:
.01, .005, .001, and their standardized coefficients are 0.137, 0.233, & 0.354 respectively. The p-
value of all the independent variables is 0.1 which implies all have a significant relationship with
the dependent variable (organization performance). Based on these results, the regression
equation that predicts overall organization performance based on the linear combination of for
Top Management Support and Commitment, Training and Financial Managements for Capacity
Building Done on the System is as follows:
Regression equation of organization performance
Y= .488+ 0.137X1 + 0.233X2 + 0.354X3 +.152
Where

53
X1= Top Management Support and Commitment
X2= Training
X3= Financial Managements for Capacity Building Done on the System
E= Sampling error

4.6. Discussion of Results

As examined in this research, ERP systems present an investment that highly improves
operational performance.

Business Plan and Vision and Performance

Business Plan and Vision was found to have a non-statistically significant relationship with
performance

Top Management Support and commitment and Performance

Top Management Support and commitment has a positive and significant standardized
coefficient value (β=0.137, p<0.1) as indicated in table 4.12. The positive relationship means if,
Top Management Support and commitment increases by 1, organization performance in the
Shemu Plc will increase by 0.137.

Training and Performance

Training has a positive and significant standardized coefficient value (β=0.233, p<0.1) as
indicated in table 4.12. The positive relationship means if, training increases by 1, organization
performance in the Shemu Plc will increase by 0.233.

Communication and Performance

Communication was found to have a non-statistically significant relationship with
performance
Performance and Financial Managements for Capacity Building Done on the System
Performance and Financial Managements for Capacity Building Done on the System has a
positive and significant standardized coefficient value (β=0.354, p<0.1) as indicated in table
4.12. The positive relationship means if, top management support increases by 1, organization
performance in the Shemu Plc will increase by 0.354.

54
 CHAPTER FIVE
5. SUMMARY, CONCLUSION AND RECOMMENDATION
5.1. Summary

This study was aimed at analysis the effect of ERPs on organizational performance in case of
Shemu Plc based on the questionnaire consisting of 152 for sample employee in Shemu PLC at
Dire Dawa.

In descriptive part of the analysis, the results indicated that majority of the total
respondents (61.8 %) are male, (56.6 %. %) aged in the range of 26-30 years, (46.7 % are
Diploma holders.

The output of the test as indicated Cronbach’s alpha for the independent variable scale of
Cronbach α is 0.814. So, the result shows that the questionnaire was reliable.

The demographic profile of sample respondents could be summarizes as; from the total 152
sample respondents are male 61.8% while the rest 38.2 % are female respondents. In terms of
age distribution majority of the respondents, 86 (56.6%) are in the age category 26-30, 23
(15.1 %) of respondents between age 36-40 years, and 21 (13.8 %) of respondents between age
41- 45 years. The educational attainments for the sample respondents is also given by; 34
(22.4%) of respondents were first degree holders, 71 (46.7 %) were Diploma/level, 42(27.6 %)
were High school and the remaining 5 (3.3%) of respondents have a master’s degree holders. In
terms of experience in the organization; 16 (10.5%)) served for 0-2 years, 50 (32.9) % of
respondents worked from 3 – 5 years, 41 (27.0 %) of respondents served for 6-10 years and 31
(20.4 %) were served for 11-15 years.

Results from Pearson’s Product Moment Correlation Coefficient revealed that, there is
high and statistically significant relationship between factors affecting ERP implementation and
performance for the sample respondents which are statistically significant at 99% confidence
level.

The R square value of the multiple linear regressions given by 0.797 reveals that 79.7% of
variance in organization performance is explained by factors affecting ERP implementation which is
statistically significant at 99% confidence level, as indicated by the F-statistic. From five variable

55
(Business Plan and Vision, Top Management Support and Commitment, Training,
Communication, Financial Managements for Capacity Building Done on the System) only three
independents variable are significant(Top Management Support and Commitment, Training and
Financial Managements for Capacity Building Done on the System) that indicates there is direct
relation relationship between organization performance and those variable which is statistically
significant at 99% confidence level.

5.2. Conclusion
Communication is inevitable but its effect can be reduced by adoption of various
strategies by the Shemu PLCs so as to get more revenue. Communication is a key success factor
in ERP implementation but firms do not have a two-way communication program that permits
and solicits questions from employees about issues regarding the formulated strategy. Moreover,
a delayed communication with employees is a hindrance to ERP implementation. Therefore, the
study recommends that managers should invest in free flow of communication between the
organization and ensuring that the junior stuff can easily communicate their ides to the senior
without any limitations on hierarchies which de motivate the juniors and deny them a chance to
air out their views and also making decisions which are crucial for the benefit of the organization
at large.

Managers are responsible for ensuring that staffs working in the organization are properly
trained and refresher course is always provided for them. It is evident that organizational
performance practices in the organization are dependent on workers skills in the
organization. This study has proved that staff training should be done on routine basis to
instill staff with required knowledge on ERP so as to ensure high levels of organizational
performance.

The study concludes that top management support and commitment affects the organizational
ERP implementation. It further concludes that lack of manager’s support to performing their
roles leads to the lower ranks of employees missing support and guidance through
encouragement of entrepreneurial attributes and that lack of top management backing
being the main inhibiting factors to ERP implementation. The study also concluded that
communication is a key factor on ERP implementation in Shemu PLCs and that communication
process affects implementation of the strategy. It also concluded that lack of a two-way

56
communication program that permits and solicits questions from employees about issues
regarding the formulated strategy and that lack of communication causes more harm as
the employees are not told about the new requirements, tasks and activities to be
performed by the affected employees. The Shemu PLCs hierarchy when reduced enables the
institution to gain competitive advantage by increasing the revenue. High support of top
management is important if the organization is to gain competitive advantage over the
others.

5.3. Recommendation
Communication involves the two ways that is between an organization and its public. It
requires listening to the constituencies on which organization depends as well as
analyzing and understanding the attitudes and behaviors of the audience. The strategic
role of communication with responsibility from the top of the organization is becoming
increasingly recognized. By the turn of the century top management will need to
champion the cause of internal communication and will need to read by example. Support
from the highest level of the organization is necessary to show middle management that
communicating effectively is not just another initiative to live through until the next
management that come along, but something that is the most important managerial
activity in this company. Specialist in communication should help management think
about its relationship with employees and how the latter can help to contribute to the
changing organization. There should be smooth flow of communication to enhance
efficiency and effectiveness of employees and enhancing the implementation strategies
which are set up by the organization so as to set a competitive edge in the Shame PLC,
communication channels should be well defined so as to create teamwork and
cooperation.
Proper and continuous training of staff should be done to keep abreast with the changing
world. Staff has the most important factor in ERP implementation. The organization should
ensure that staff training is done often through orientation on job and off the job
training to fully equip the employees with confidence and courage to face work with
minimal supervision.
The commitment of top management for any organization should be spelled out as part of
the organization terms. It is important for the management and employees in the Shemu Plc to be

57
committed in the operations of the organization and more important be
committed in ERP implementation. The Shemu PLCs can engage a consultant. The consultants
will assist the Shemu PLCs on strategizing, thus becoming more competitive in the operations of
the organization. The management should not be at any point in time pushed to be
committed in ERP implementation, there should be maturity and no follow ups on the
happenings of the organization which in return leads to wastage of time and resources.
But when the management is committed in ERP implementation, thus the organization
yields high performance levels.

5.4. Suggestions for further Research

The study recommends that another study should be carried out on the same topic that
evaluates a broader range of the effects of enterprise resource planning implementation
on organizational performance in the Shemu PLC or covers another industry in the
economy such as the banking industry, manufacturing industry, and the agricultural
industry among others. The study can study variables such as Business Plan and Vision, Top
Management Support and Commitment, Training, Communication, Financial Managements for
Capacity Building Done on the System among others in order to improve understanding on the
factors that affect enterprise resource planning implementation on organizational performance.
The study was carried out in the Shemu PLC.

58
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APPENDIX
QUESTIONER
SECTION A: GENERAL INFORMATION

1. Gender: Male [ ] Female [ ]

2. What is your age group?
18 – 25 years [ ] 26 – 30 years [ ] 31 – 35 years [ ] 36 – 40 years [ ]
41 – 45 years [ ] 46 – 50 years [ ] Over 50 years [ ]
3. What is your area of specialization?
HR [ ] Finance [ ] ICT [ ] Engineering [ ] Procurement[ ] Manufacturing [ ]
Marketing [ ] Others (Please specify) _______________________________________
4. What is your highest level of education?
High School [ ] Diploma [ ] Level IV [ ] First Degree [ ]Masters and above [ ]
5. How long have you been working with your organization?
0-2 years [ ] 6 -10 years [ ] Above 15 years [ ]
3-5 years [ ] 11 -15 years [ ]
6. Position in Organization: Top level management { } Middle level management { }

Low level management { } Non Management { }

64
SECTION B: ERP SYSTEM SUPPORTS BUSINESS PLAN, VISION
Please indicate the extent to which you agree or disagree with the following statements by
circling the relevant number. (1=Strongly Disagree, 2=Disagree, 3= Neutral 4=Agree,
5=Strongly Agree).
No. Business Plan, Vision 1 2 3 4 5
BPV1
Our ERP system supports our business goals
BPV2
The management of our firm freely share information.
BPV3 The different departments are of equal importance to
top management
Employees are happy with the changes that
BPV4 management decides on ERP issues
SECTION C: TOP MANAGEMENT SUPPORT AND COMMITMENT
Please indicate the extent to which you agree or disagree with the following statements by
circling the relevant number. (1=Strongly Disagree, 2=Disagree, 3= Neutral 4=Agree,
5=Strongly Agree).
No. Top management Support and Commitment 1 2 3 4 5

TMS1 Functional managers willingly assign resources to the

ERP project as they are needed.
TMS2 The need for long-term ERP support resources is
recognized by management.
TMS3 Executive management is enthusiastic about the
possibilities of ERP.
Executives have invested the time needed to
TMS4 understand how ERP will benefit the enterprise.
Executives mandate that ERP requirements have
TMS5 priority over unique functional concerns.
TMS6 Top management has clearly defined commitments.
TMS7 All levels of management support the overall goals of
the ERP Entity.
TMS8 Employees who support the ERP project are
distracted by other commitments.
SECTION D: TRAINING
Please indicate the extent to which you agree or disagree with the following statements by
circling the relevant number. (1=Strongly Disagree, 2=Disagree, 3= Neutral 4=Agree,
5=Strongly Agree).
No. Training 1 2 3 4 5

TR1 Specific user training needs were identified early in the

implementation.

65
TR2 A formal training program has been developed to meet
the requirements of ERP system users.
TR3 Training materials have been customized for each
specific job.
We seldom update training materials to reflect system
TR4 changes.
Training materials target the entire business task, not just
TR5 the ERP screens and reports.
Employees are tracked to ensure that they have received
TR6 the appropriate ERP system training.
TR7 All users have been trained in basic ERP system skills.
TR8 ERP system training review sessions are scheduled.

SECTION E: COMMUNICATION
Please indicate the extent to which you agree or disagree with the following statements by
circling the relevant number. (1=Strongly Disagree, 2=Disagree, 3= Neutral 4=Agree,
5=Strongly Agree).
No. Communication 1 2 3 4 5
The ERP system of our company provides timely
COMM1 Information
The ERP system of our company provides us important
COMM2 information.
The information and related reports that the ERP
COMM3 system provides are useful to me in my work
The information and related reports on our ERP
system are available to me when and where I need
COMM4 Them
COMM5 Our ERP system is easy to use.
COMM6 Our ERP system functions reliably.
COMM7 Our ERP system is flexible.
COMM8 Our ERP system allows for customization.
Our ERP system combines data from different areas of
COMM9 the organization.

SECTION F: FINANCIAL MANGEMENTS FOR CAPACITY BUILDING DONE ON

THE SYSTEM

66
Please indicate the extent to which you agree or disagree with the following statements
by circling the relevant number. (1=Strongly Disagree, 2=Disagree, 3= Neutral 4=Agree,
5=Strongly Agree).

Financial Managements For Capacity Building Done

No. On The System 1 2 3 4 5

There is adequate training material on ERP modules in

FMCB1 my organization.

There is continuous training on new technologies among

FMCB2 staff.

The training given on the system was adequate and

FMCB3 useful to your functional module.
FMCB4 Further enhancement training is required on the system.
There was a gap between the imparted training and
FMCB5 Shemu PLC business requirements.
The supports exerted by integrators make the users
FMCB6 familiar with the system.
The functional and technical support of successful in
FMCB7 relation to knowledge transfer.
FMCB8 The level of dependency on integrates are still high.

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SECTION G: PERFORMANCE
Please indicate the extent to which you agree or disagree with the following statements by
circling the relevant number. (1=Strongly Disagree, 2=Disagree, 3= Neutral 4=Agree,
5=Strongly Agree).
No. Performance 1 2 3 4 5
PERF1 Our firm has stronger growth in sales revenue..

PERF2 Our firm is better able to acquire new customers

PERF3 The ERP system enhances my performance.

PERF4 Our firm has a greater market share.

PERF5. Our firm is able to increase sales to existing customers

PERF6 ERP facilitates profit maximization and eventually

leads to improved business performance.
PERF7 ERP improves competitive advantage and lowers
transaction costs.