ERP Adoption and Organizational Efficiency- Balance Score Card Approach among Manufacturing SMEs in Kenya

Abstract

ERP are comprehensive, fully integrated software packages that provide automated support for most of the standard business processes within organizations. The uptake of ERP in the industry has been impressive but not for SMEs. The SME market in the eyes of ERP developers has been un-lucrative because it is fairly fragmented and rudimental. This means that solutions adopted for one enterprise are not easily replicated on others in the same category. The paper determined the level and extent of ERP adoption in SMEs based in manufacturing sector and the accruing benefits towards organization efficiency as measured using a balance score card (BSC) approach. This study purposively sampled firms under Kenya Industrial Estate cells. In each cell, four firms were selected the inclusion criteria being a manufacturing enterprise and adoption of ERP. Using the BSC five factor model, the effect of ERP adoption was measured. Cross sectional data was collected on a five point Likert scale. This data set gave rise to categorical data. The relationship between ERP adoption and organizational performance was model using a Chi-Square test of independence. The study finds that there at the beginning phase except for customer satisfaction, financial strength, employee perspectives, internal business processes and innovation are independent of ERP adoption. At the consolidation and maturity phases the financial strength, employee perspectives, internal business processes and innovation become dependent on ERP adoption meaning the strength of these factors is determined by the ERP