Survey of the causes of information systems failure among microfinance institutions in Kenya

Abstract

This study sought to identify the state of information systems among the micro finance institutions (MFls) in Kenya and what causes their failure after they have been implemented. This study emanated from realization that though information lies at the very heart of microfinance; information systems have remained as one of the key constraints facing MFls in Kenya and other parts of the world. The nature of the operations of MFls necessitates collection and management of high volumes of data and information. This presents a big challenge to the sector. The research was carried out on 37 MFls operating in Kenya. Relevant data was collected through use of questionnaires. A drop and pick method of questionnaire administration was used. A total of 30 responses were received representing 81% response rate. The findings revealed that majority of the MFls were operating manual systems (53%) and further 64% of those using computerized information systems are not satisfied with their systems. Various causes of this scenario were expressed and included among others financial constraints to acquire and maintain good systems, inadequate managerial support and leadership to systems implementation, unavailability of appropriate software, unreliable telecommunication, poor training to users, poor documentation, defective system development process and ever changing operational policies and procedures. The study revealed that information systems used in the sector were inadequate. Factors contributing to this inadequacy and failure include poor systems development and implementation process used, lack of management support, inadequate financial and personnel resources, poor supportive telephone and infrastructures and inadequate support from vendors.