Computerization And Its Impact On Organisation Efficiency

Project and Seminar Material for Accountancy / Accounting

Abstract

This study sought to determine the level of use of information technology and its relationship with organisational performance at AEDC Abuja. To achieve the objectives of the study, a descriptive survey was used. Primary data was collected using a semi-structured questionnaire. The population for this study comprised of the entire AEDC Abuja staff which was 438. The questionnaire was administered electronically for data collection, out of which 311 respondents responded to the study resulting in a response rate of 71 percent which was considered as a sufficient representation of the organisation. The study findings revealed that majority of the respondents had various IT company devices at their disposal to enable them perform their duties. The study findings also revealed that there was a positive relationship between the level of IT use and organisational performance at Population Services Nigeria. The study results indicated that IT use explains 82.4% of organisational performance at AEDC Abuja. The study recommends that organisations should embrace IT tools and services so as to have competitive edge and improve service delivery to their customers. The study also recommends that more study should be done on challenges facing information technology use in organizations in Nigeria.

Chapter One

Introduction

1.1 Background of the Study

Since the early years of the 20th century, the world has been experiencing a revolution known as information technology. Some consider it to be the most fascinating development since the industrial revolution around the mid-18th Century (Tom, 1991). This revolution is changing our daily lives at home and at work, in shops and banks, in schools, colleges and universities. It is changing the way people think, communicate and behave. Today, the world has become a global village with the internet, mobile phones and satellite networks shrinking time and space, bringing together computers and communications; resulting in new ways of communication, processing, storing and distributing enormous amounts of information (UNDP, 2001). Advancement in chip, satellite, radio, and optical fiber technology have enabled millions of people around the world to connect electronically regardless of national or international boundaries. This explosion in connectivity is the latest and the most important wave in the information revolution (Evans & Wurster, 1997).

Information Technology (IT) is clearly considered as a key growth area in this century, specifically, in a dynamic and highly competitive business environment which requires utilizing advanced IT tools to improve efficiency, cost effectiveness, and deliver high quality products and services to customers (Allen & Morton, 2004). IT is also considered as a tool of marketing, contacting customers and looking for possible customers, as well as presenting IT services as distinguished potential services for customers (UNDP, 2001; Werthner& Klein, 2005).

Organisations are increasingly using information technology to develop solutions to business problems, to improve both the efficiency and effectiveness of the decision-making process, to enhance productivity and service quality, to achieve dynamic stability, and compete for new markets (Attewell& Rule, 1984; Molloy &Schwenk, 1995; Boynton, 1993). According to Cerere (1993) organizations have always sought and adopted technologies that enhance efforts of their manpower in production and management. Indeed he noted that although it has evolved over a considerable period of time, information technology has emerged as an important tool in management of organizational operations.

1.1.1 Information Technology

Information technology refers to anything related to computing technology, such as networking, hardware, software, the Internet, or the people that work with these technologies. According to Daft (1997) IT can be defined as the hardware, software, telecommunications, database management, and other information-processing technologies used to store, process, and deliver information. Information technology is commonly used to assist managers with direct control over business functions, personnel and other resources. As managers oversee resource coordination and allocation, it can be difficult to coordinate business functions across various projects. Information technology is one of the key innovations that is frequently implemented to assist in this process (Hobday, 2000). Peansupap and Walker (2005) maintain that IT is often implemented as it is believed to facilitate communication, improve integration, enhance productivity and service delivery (Bjork, 1999).

As organisations grow and change, they depend more and more on information technology for their survival (Feeny& Willcocks, 1998). Companies today implement and use information technology to find solutions to business problems, to improve management decision-making, enhance productivity and quality, and compete for new markets in our global and aggressive business environment (Porter & Millar, 1985). Moreover, IT can be seen as a powerful force that opens exciting opportunities for organisations to achieve their missions and goals in an effective way. Therefore, leaders in organisations must obtain an overall appreciation of the potential of IT and link the acquisition and utilization of IT to the organizational mission (Hacker & Saxton, 2007).

1.1.2 Organisation Performance

Information technology is at the core of many business functions, operations, products and services. Today, organisations worldwide spend over 50% of their new investment funds on IT and related communications. How organisations manage these large investments is of critical importance to organisational efficiency and effectiveness. Further, IT is often the link between the business model and the critical drivers of success. Many organisations have been unsuccessful with their IT-based investments because of poor alignment of IT with the business.

Take for example Toyota; a Japanese automotive manufacturer, which has flourished in a highly competitive environment because it has created a set of finely-tuned business processes and information systems that simultaneously promote agility, efficiency, and quality. It can respond instantly to customers and changes in the marketplace as events unfold, while working closely with suppliers and retailers. As part of its ongoing effort to monitor quality, efficiency and costs, Toyota management saw there was an opportunity to use information systems to improve business performance. Even though technology alone would not have provided the solution, Toyota carefully revised its business processes to support a build-to-order production model that based vehicle production on actual customer orders rather than “best guesses” of customer demand. Once that was accomplished, Oracle e-business software was useful for coordinating the flow of information among disparate internal production, ordering, and invoicing systems within the company and with systems of retailers and suppliers.

This resulted in Toyota building only the cars customers have ordered, its vehicle order management system reduces inventory costs, because the company and its dealers do not have to pay for making and storing vehicles customers did not want. The system also increases customer satisfaction by making it easier for customers to buy exactly the model, make and option they desire. Information provided by the system helps management monitor trends and forecast demand and production requirements more accurately. The system creates value for Toyota by making its ordering and production processes more efficient and effective. Electronically integrating key business processes in vehicle ordering and inventory management has made this company much more agile and adaptive to customer demands and changes in its supplier and dealer network.

The impact of Information Technology on organizations’ services and performance has been examined by many studies (Beckey, Elliot, & Procket, 1996; McNutt, & Boland, 1999). Although most of these studies have suggested that IT plays a vital role in improving the quality and quantity of information, its potential for adoption and innovation is often uncertain (Mano, 2009). Different firms allocate their resources differently in a way that maximizes their objectives and those firms that allocate more resources on IT perform better than those firms that allocate less resources (McAfee & Brynjolfsson, 2008). Achieving high performance also requires good IT infrastructure supported by good IT management practice (Mwania & Muganda, 2012).

1.2 Statement of the Problem

The concept of performance has always been present in management literature covering various aspects such as efficacy, efficiency, competitiveness, relevance and financial viability. Marmouse (1997) highlighted that; organization’s performance represents the manner in which the company is organized to reach its objectives and the way it manages to reach them. Over the years, AEDC Abuja continued to grow as an organization and this involved a change in its operations and processes. There was tremendous growth in the number of technological devices used by staff at AEDC Abuja and investments on data management and communications systems. There was a need to find out if that was contributing positively to the organizational performance hence the essence of the research. Anticipated changes in organizational performance involve reduction in the duration taken in processing critical tasks and elimination of repetitive tasks resulting in higher productivity and efficiency as well as better and quality service delivery.

Information technology researchers have empirically demonstrated that IT investments enhances firm’s productivity, management capabilities and comparative advantage (Griffith, 1999). Studies in the developed world have attested that given the proper infrastructure, IT can be an enabler for socioeconomic development. Examples given from the developed world where significant IT investments have had major impacts include increasing the United States gross domestic product (GDP) by 7.8%, UK by 8.0%, Singapore by 8.3% and Australia by 8.4% (Kamel, Rateb& El-Tawil, 2009).

Illustrations of studies done on IT’s impact on performance included; a study of an information services firm by Pulley and Braunstein (1984), which found an association with increased economies of scope; another was by Diewert and Smith (1994) which provided an interesting case study of a large Canadian retail firm. According to their accounting frame-work, the distribution firm experienced an astounding 9.4% quarterly multi-factor productivity growth, for six consecutive quarters starting at the second quarter of 1988. They argued that “these large productivity gains were made possible by the computer revolution which allowed a firm to track accurately its purchase and sales of inventory items and used the latest computer software to minimize inventory holding costs”.

While Loveman (2001) found no evidence on performance increase from IT investments; Weill (1990) found that transactional IT had a positive impact onfirm performance but strategic IT or informational IT did not. Pourmirza (2006) found that IT labour produced substantial high returns in organizational performance but IT capital did not.
Similar studies that were done locally to shade some light on the subject under study included; Gakuo (2011) who conducted a study on the impact ICT at Nairobi Water & Sewerage Company and observed that its investments substantially increased the average organizational performance in achieving various milestones, overall revenue increment, enhancing research and development and product innovation. Katana (2011) studied electronic procurement adoption: the case of Nigeria Ports Authority and showed that firms that acquire extensive IT resources are able to create better competitive advantage. Kinuthia (2012) researched on the relationship between IT investment and performance of NGOs in Nigeria and concluded that IT was crucial in the efforts to improve performance and Waruguru (2012) explored the influence of ICT on performance of the airline industry in Nigeria concluded that ICT improved performance of the company to a large extent. These studies had not quite given detailed insights and analysis of the issues that were addressed in this study therefore leaving a knowledge gap on the impact of information technology on organizational performance in Nigeria. The purpose of this study was to determine the level of IT use at AEDC Abuja and its relationship with performance. In particular, the following research question was addressed; what is the impact of information technology on performance at AEDC Abuja?

1.3 Objectives of the Study

The objective of this study were to;

Determine the level of information technology use at AEDC Abuja.
Determine the relationship between information technology use and performance at AEDC Abuja.

1.4 Value of the Study

It is hoped that the management will use the findings as the base upon which to review organization performance and necessary improvements identified will be undertaken to enhance performance at the work place and increase operations efficiency. It is also hoped that the findings will also be used by human resource management to help in boosting employee performance. It is hoped that this study will be important to organizations in identifying unexploited opportunities in data management and communication systems and tools, and determine areas of wastage on these resources, implement controls and thus save on costs. It is also hoped that the findings of this study will also be beneficial to organizations and institutions in developing strategies for adopting information technology successfully and setting standards that should work towards improvement of service delivery.
It is also hoped that human resource teams and policy makers will use the findings of this study to formulate viable policy documents that will effectively boost productivity and operation efficiency. Lastly, researchers may benefit from the study as it adds on to the growing body of knowledge in IT and will act as a source of reference for studies to be done on technology.

Chapter Five

Summary, Conclusion and Recommendations

5.1 Introduction

The basic purpose of this chapter was to give the summary, conclusion and recommendation of the study. The findings of the study were based on the objectives of the study which were to determine the level of IT use at AEDC Abuja; and to determine the impact of information technology on organisation performance at AEDC Abuja.

5.2 Summary of Findings

This study aim was to assess the impact of information technology on the organizational performance at AEDC Abuja. It adopted cross-sectional survey research design where all the staff at the organisation were the targeted for the study. Data was collected using online administered questionnaires. All completed questionnaires proceeded to data analysis. A total of 311 questionnaires were returned. That represented a response rate of 71% which was sufficiently high to yield the results sought. Data was analyzed using IBM SPSS Version 21 for descriptive and inferential statistics.

The findings reveal that majority of the respondents were females aged between 21-40 years who had attained an undergraduate level of education. The findings further reveal that almost half of the respondents who participated in the study had worked at AEDC Abuja for 1-5 years.

The findings revealed that all the respondents agreed that AEDC Abuja had adopted IT to a large extent and use of IT services had improved the performance of the organization significantly. The study findings revealed that majority of the respondents gave the following as ways in which IT had improved performance at AEDC Abuja: Use of IT had facilitated better data and knowledge management for the organisation, IT had improved operational efficiency of employees, IT had also improved accountability for the organisation and in quality service delivery to its customers.

On the effect of IT on organizational sustainability, the study found that the use of IT enabled AEDC Abuja attract donor funding and collaborate with other partners respectively. On the achievement of its targets, the study established that IT use had moderately enhanced monitoring and reporting targets with accuracy; achieving organisational objectives; incorporating quantitative targets at planning stage.

Bivariate correlation studies show that there is a positive and significant relationship between information technology use and organization performance. The research therefore proves that IT use has a significant positive and direct effect on performance.

5.3 Conclusion

The study found that, AEDC Abuja had adopted and used IT to a large extent and that IT had a significant impact on performance. Some of the ways in which IT had an impact on organisation performance include; AEDC Abuja was able to attract donor funding and collaborate with other partners more effectively, AEDC Abuja was also able to achieve, monitor and evaluate organisational targets accurately while incorporating them at planning stages. IT use had enhanced service delivery standards; improved customer’s satisfaction and improved productivity of employees and increased flexibility in majority of organisations functions.

The study confirmed that there exists a positive relationship between information technology use and organizational performance. This was evident in all the operations information technology use variables analyzed: data management, accountability, target achievement and service delivery.

5.4 Recommendations

From the findings the study recommends that organizations should embrace IT tools and services so as to have competitive edge and improve service delivery to customers, have more self-service enabled services, automate all critical processes to achieve higher efficiency, reliability and control in the organization. Organizations should also build in house capacity to handle IT systems policies and procedures that attempt to retain IT staff and develop backup plans. The success of AEDC Abuja, with regard to the positive link between IT use and performance, offers a learning experience for other organisations in the country.

5.6 Areas for Further Research

This study sought to assess the impact of information technology on organisational performance in Nigeria with particular reference to AEDC Abuja in attempting to bridge the gap in knowledge that existed. The study mainly focused on one organization hence there is need to replicate the study using many other organisations so as to find out if there are any other factors on the impact of information technology on organisational performance in Nigeria.
The study also recommends that more study should be done on challenges facing information technology use in organizations in Nigeria.