Enterprise Resource Planning System And Performance Of State Corporations In Kenya

ABSTRACT

Enterprise resource planning (ERP) system has been one of the most popular business

management systems, providing benefits of real-time capabilities and seamless communication

for business in large organizations. However, not all ERP implementations have been successful.

Since ERP implementation affects entire organizations such as process, people, and culture, there

are a number of challenges that companies may encounter in implementing ERP systems. The

purpose of this study was to investigate effect of enterprise resource planning system on

organizational performance in state corporations in Kenya. The study was guided by the

following specific objectives: to examine the effects of financial integration, human resource

management integration, procurement integration and ICT on organizational performance in

state corporations in Kenya. Theories anchoring the study were Contingency theory, stakeholder

theory and balanced score card. This study employed a descriptive research design. The target

population were three selected state corporations in Kenya namely: Agricultural Development

Corporation, Agricultural Finance Corporation and Pest Control Products Board. The targeted

respondents were 330 respondents. A census method was used to select 15 managers from four

departments (finance, human resource, ICT and procurement) and simple random sampling was

used to select the 60 employees from the four departments (finance, human resource, ICT and

procurement). The data collection instruments for this study were questionnaires for the

employees and interviews for the sectional managers. The study concluded that financial

integration systems are critical to the production of quality accounting information on a timely

basis and the communication of that information to the decision makers. Proper management of

the human capital or resource is the main objective for HR in supporting the organization’s

strategic development. Through procurement best practices the state corporation focuses to

achieve key performance indicators on different aspects of a procurement system, including cost,

quality and timeliness of processes, system productivity and system integrity. The changes to the

organization’s operational practices, business system and ICT infrastructure have improved

operational processes and efficiency of the company. Consequently, this has reduced operating

and transaction costs, increased turnover and enhanced profitability. This study recommended

that State corporations in Kenya should support ability and facilitate coping with effectiveness of

accounting information system (AIS) (reliability, relevance and timeliness) and performance.

Accounting field success need, therefore, to incorporate the competencies associated with

learning organization and organization support. The HR functions should be properly and

strategically developed in order to enhance the human capital at different levels including hiring

of staff, compensation /remuneration, performance reviews, training and development,

separation, succession planning among other aspects. Management in State Corporations in

Kenya should ensure that there is an appropriate focus on good practice in procurement and that

there is a significant procurement procedure in place to ensure compliance with all relevant

guideline. The current information and communications technologies should be updated,

upgraded and seamless integration both internally and externally should be done to improve the

State Corporations operations. The integration of ICT in State Corporations would benefit both,

service providers and customers bringing together other stakeholders as well, on a common

platform.