Enterprise resource planning system adoption and organizational performance of manufacturing firms 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. The adoption and of the system has however not been measured by many firms in regard to organizational performance hence the need for the Study. This study had two objectives. First to determine drivers for ERP adoption by manufacturing firms in Kenya. Second was to determine the relationship between ERP system adoption and organizational performance for manufacturing firms in Kenya. This was largely motivated by the need to understand the relationship between adopting the system and organizational performance by manufacturing firms in Kenya where no conclusive research has been done before. In undertaking the study, manufacturing firms in Kenya were targeted. The primary data was collected using questionnaire from Finance, ICT team, supply chain, Factory and production team and top management. The analysis was done by using frequencies average, standard deviations and regression analysis and the findings were presented using tables, frequencies, charts and narratives. Through the study, the findings stipulated that the majority of the respondents agreed to a very great extent that the firm‟s competition from other companies; cost saving and other financial reasons, business innovations, business strategic positioning were the major drivers that motivated the organization to adopt the ERP system as indicated by scores. The findings on organizational performance also deduced that the majority of the respondents agreed to a very great extent that the firms have better return on investment, improved data security, improved decision making process and reduced cost of production. The study concludes that respondents were highly experienced owing to the accumulation of knowledge and skills throughout the working life and the level of education was medium to high. The study also concludes that majority of the firms were limited companies and locally owned. On adoption of the system, the study concludes that most manufacturing Firms have adopted the ERP System with virtually all modules implemented.