TABLE OF CONTENTS
Page
Title page i
Declaration ii
Approval iii
Dedication iv
Acknowledgement v
List of Tables
x
List of Figures
xi
List of Appendices xii
Abstract xiii
Chapter
1: Introduction
1.1 Background of the Study – – – – 1
1.2 Statement of the Research Problem – – 5
1.3 Objectives of the Study – – – – – 8
1.4 Research Questions – – – – 9
1.5 Research Hypotheses – 9
1.6 Significance of the Study – – – 10
1.7 Scope of the Study – – – 10
1.8 Limitations of the Study – – 11
1.9 Definitions of Terms – – – – – – 12
1.10 Profiles of the Studied Commercial Banks – – – 13
References – – – – – 20
Chapter
2: Review of Related Literature
Introduction – – – – – 22
2.1 The Conceptual Framework of ERP systems- 22
2.2 ERP Systems Modules – – – 27
2.3 Evolution of Enterprise Resource Planning 28
2.4 Theoretical Framework – – – 30
2.5 Organizational Performance: Trends and
Framework – 42
2.6 ERP Systems and Organizational Performance Measure- 50
2.7 Empirical Review of ERP systems
Implementation and
Organizational Performance – – – – – 54
2.8 Selection Criteria for an ERP Systems – 60
2.9 ERP Systems Implementation – 62
2.10 Key Resources Across Functional Areas- – – – 69
2.11 What Makes an Enterprise Resources Valuable – 73
2.12 Framework for IT and ERP Investment – 74
2.13 Impact of ERP Systems on Organizational Performance – 77
2.14 Overview of the Nigerian Banking Industry – 80
2.15 Nigerian Banking Industry and Information
Technology 82
2.16 Drawbacks of the ERP Systems – – 84
2.17 ERP: Managing the Paradigm Shift for Success 88
2.18 Summary of the Review of the related
Literature – – 94 References – – – – – – 96
Chapter
3: Research Methodology
Introduction – – – – – 107
3.1 Research Design – – – – 107
3.2 Sources of Data – – – 107
3.3 Population of the Study – – – 108
3.4 The Sampling Technique – – 108
3.5 Description of the Research Instrument – 109
3.6 Reliability of Research Instrument – 110
3.7 Validity of Measurement – – 110
3.8 Data Analysis Techniques – – – 111
References – – – – – 113
Chapter
4: Data Presentation and Analysis
Introduction – – – – – 114
4.1 Data Analysis – – – – – 114
4.2 Reliability Analysis- – – 116
4.3 Analysis of ERP Systems General Concept Questions – 117
4.4 Analysis Using Z-Test – – 122
4.5 Cross
Tabulated Analysis – – – – – 126
4.6 Testing the Research Hypotheses – – 127
4.7 Categorization
of the Responses of the Studied Banks on
the Research Objectives – – – 134
4.8 Discussion of the Research Findings – – – 136
4.9 Management Implications of Relevant Findings – 146
4.10 Research
Model on the Impact of ERP Systems on Bank performance – 148
References – – – – – – – 151
Chapter
5: Summary of Major Findings, Conclusion and Recommendations
5.1 Summary of Major Findings – – – – – 154
5.2 Conclusion – – – – – – 155
5.3 Recommendations – – – – – 155
5.4 Contribution to Knowledge – – – – 157
5.5 Suggestions for Further Research – – – – 160
References – – – — – – 161
Bibliography – – – – – – 165
Appendices – – – – – – – 178
List
of Tables
2.1 Information Systems Functional Scorecard – – 51
2.2 Unified CSFs for ERP Implementation – – 66
2.3 An Explanation of IT and ERP Investment Types – 76
2.4 Impact /Benefits of ERP Systems – – 80
4.1 Analysis
of the Response Rates of Questionnaires Administered – 115
4.2-4.3 Demographic Characteristics of the Respondents – 116
4.4 The Reliability Analysis Related to the Five Objectives – 117
4.5-4.18 Tables on the Analysis of Questionnaires on ERP Systems – 118
4.19 Categorization
of the Responses of the Studied Banks on
the
Research Objectives – – – – – – 135
List
of figures
2.1 ERP Systems’ Modules – – – – 26
2.2 Overview of Information Processing Theory – 31
2.3 Model
of the Effect of Interdependence on Plants Running ERP
System – – – – – – – – 33
2.4 Schematic
Diagram of ERP Systems Performance Framework – 35
2.5 Keegan Performance Measurement Matrix – 47
2.6 Fitzgerald
Results and Determinants Performance Framework – 48
2.7 Brown’s Input-Process-Output-Outcome Framework – 49
2.8 The
Conceptual Model of ERP Systems and Organizational
Performance – – – – – – – 52
2.9 Framework for IT and ERP Investments — – 75
2.10 Drawbacks of ERP Systems – – – – 86
2.11 ERP Paradigm Shift Model-Hierarchy of Purpose 89
2.12 ERP Paradigm Shift Model-Impact Roles – – – 91
2.13 ERP Paradigm Shift-Model Continuous Changes 92
2.14 ERP Paradigm Shift-Model (Full Paradigm Shift Model)- 93
4.1 Model
on the Impact of ERP Systems on Bank Performance – 150
List
of Appendices
Appendix I: The Questionnaire – – – – 178
Appendix II: The Milestones of Commercial Banking in Nigeria – 186
ABSTRACT
This study seeks
to evaluate the effect of enterprise resource planning (ERP) systems on the
performance of commercial banks in South-west Nigeria. The study objectives are
to evaluate the impact of ERP systems on the performance of commercial banks in
southwest Nigeria; determine the impact of the type of ERP systems on the
productivity of commercial banks; ascertain the impact of ERP systems adoption
on customer satisfaction in commercial banks; ascertain the effect of ERP
systems adoption on employees satisfaction in commercial banks; and evaluate
the impact of ERP systems adoption on the overall efficiency of commercial
banks under study. A combination of sample survey and oral interview were used
to collect data on several aspects of performance from five selected commercial
banks in South-west Nigeria. A total population of 750 respondents from the
five selected commercial banks was considered manageable and therefore
constitutes the sample size of this study. The data collected was analyzed
using simple percentages and relative frequencies while the hypotheses
formulated were tested using Z-test statistics and Test of Population
Proportion at 5% level of significance. The findings from data analyzed
indicates that ERP systems adoption have significant impact on the performance
of the studied commercial banks; the type of ERP systems adopted also have
significant impact on the productivity of commercial banks; ERP systems
adoption have significant impact on customer satisfaction through efficient
service delivery; ERP systems adoption have significant impact on employees’
satisfaction through participative management and continuous training; ERP
systems adoption have significant impact on the overall efficiency of the
commercial banks under study. The study however revealed that commercial banks
adopting ERP systems should know that it is a continuous process that is
embodied in a rapidly changing information technology world, hence they must be
abreast of the latest development in the industry or they will face the risk of
losing out in today’s competitive and turbulent operating environment. The
study also recommends that ERP systems is an important strategic tools for
surviving in today’s highly competitive operating environment, hence any commercial
bank (irrespective of size) that must compete favourably and surpass its rivals
must adopt ERP systems as an essential infrastructure. Also, commercial banks
adopting ERP system must at the outset select the ERP systems modules that fit
the business practices and processes of their banks, a strategic fit analysis of
operational requirements and ERP systems features with the involvement of
technical staff and key users is a necessity in this regard. Besides, commercial
banks implementing ERP systems must identify the relevant critical success
factors that must be in place for the successful ERP systems implementation in
order to realize its full benefits. The findings of this study can contribute
to improved decision making and commercial banks’ efficiency especially in the
aspect of setting ERP systems performance standards at the time of acquisition
and implementation.
CHAPTER
ONE
INTRODUCTION
Background of the Study
The most significant development of the
millennium which has substantially influenced business operations globally is
the emergence of the information age. Taking advantage of rapid technological
progress and financial market development, a number of innovative products have
been developed in recent years. As we live in a world that is driven by
information and Information Technology (IT), IT is changing every aspect of
human endeavour including business and organization. The business environment
is equally changing dramatically, and in order to stay competitive in the
market, organization must improve their business practices and procedures by
upgrading their capability to generate and communicate accurate and timely
information toward the realization of stated objectives (O’Bren, 2008).
A tidal wave of IT-enabled initiative
known as Enterprise Resource Planning (ERP) systems has elevated the importance
of investing strategically in IT (Ross and Beath 2002:51). An ERP system is a
packaged software system that enables an organization to manage the use of
resources (materials, human resources and finances) by providing a total,
integrated solution to its information processing needs (Nah et al 2003:20). ERP system is a business
management system that comprises integrated sets of comprehensive software
which can be used, when successfully implemented to manage and integrate all
the business functions within an organization (Shehab et al 2004:372). Though ERP systems evolved in the early 1990s from
Manufacturing Resource Planning (MRP II) Systems but while MRP II which focused
on manufacturing, ERP systems serve other businesses and services by
integrating all data relating to production, materials, marketing, accounting, finance,
human resources, etc. allowing organizations to price product/services, produce
financial statements and manage human, materials and financial resources
effectively. ERP system is now considered to be the price of entry for running
a business; hence, many of the world’s leading organizations consider ERP
system as essential IT infrastructure for surviving in today’s competitive and
turbulent operating environment (Cook, 1996:12).
Despite the fact that the idea of
commercial banking activities in Nigeria started in 1891 when the first foreign
commercial bank known as the British Bank for West Africa (BBWA) which later
metamorphosed to the present First Bank Nigeria Plc was established, informal
ERP systems and other means of managing organizational resources had earlier be
in place. Notable among them are material requirements planning (MRP),
Manufacturing resource planning (MRP II). It was however, in the late 1990s
that the formal ERP systems as a specific form of information technology were
applied to commercial banking activities in Nigeria. Since its adoption, the
application of ERP systems concept, techniques, policies and implementation
strategies to banking services has become a subject of fundamental importance
and concerns to all banks and indeed a prerequisite for local and global
competitiveness.
The commercial banking industry in
Nigeria has also witnessed tremendous changes (since its inception in 1891 till
date) as a result of various government interventions through various reforms
linked with effective management of resources and compliance with global best
practices. The quest for survival, global relevance, maintenance of existing
market share and sustainable development has made exploitation of the many
advantages of information and communication technology (ICT) through the
adoption of ERP systems imperative in the industry (Agboola and Salawu, 2008:1-15).
The global success of Enterprise
Resource Planning (ERP) systems has not only attracted the interest of
researchers from the IT discipline, but from all major disciplines in business
research including management and accounting. The emergence of ERP systems has
moved the topic “Computerized business information systems” increasingly from
IT domain to the business domain; from systems design and programming to
business configuration, process mapping and re-engineering. ERP impose their
logic on organizations and force employee to think in terms of integrated
processes and to change the way they do accounting, management, production
planning and control. All these changes brought about by ERP systems made them
very attractive research object of many business disciplines, and management is
by nature the one from which we expect an answer to the question which
ultimately counts in business: Are those systems worth the investment? (Wieder et al 2006:15).
Hossain et al (2002:232), observe that ERP systems affect organizations and
are implemented mostly to enhance organizational effectiveness. The main
purpose for deploying ERP systems is to improve control over organizational
processes (Hanseth, et al 2001:35).
ERP systems are information systems packages that are configurable and
integrate information and information-based processes within and across
functional areas in organization (Gattiker and Goodhue, 2004:438). ERP systems
automate and structure an organization’s business process by furnishing
reference models and process templates across the enterprise (Allen et al 2002:232). ERP systems are
implementations of standard software modules for core business processes and
are usually combined with specially tailored customization to provide
competitive differentiation. The goal of ERP systems is to provide integration
and functionality across multi-functional and frequently multi-national
organizations. Implementing ERP system involves a change management initiative,
which includes a review of processes across the organization, and entails more
than just installing stand-alone pre-written software (Skok and Legge, 2001:194).
The change management initiative almost certainly requires some form of
business process re-engineering.
With respect to the banking sector, the
utilization of ERP system as a specific information technology application has
increased attention from key players (bankers, customers, policy makers) in the
financial services industry. This is partly due to the rapid and significant
growth in electronic commerce and the notion that electronic banking and payments
such as on-line, real time, automated teller machine, mobile and internet
banking etc will likely advance more in tandem with electronic commerce.
Besides, industry analysis outlining the potential impact of electronic banking
on costs, savings, revenue growth and increased customer convenience have also
generated considerable interest and speculation about the impact of ERP systems
as a specific ICT application on the banking industry.
Allen et al (2002:234) observe that ERP systems improved decision making
speed, enhanced control of operations and costs, reduced costs, and boosted
enterprise wide information dissemination. However, the complexity of ERP
systems implementations; the drastic organizational, cultural, and human
changes; the typical high customization expenses; and implementation problems
all contribute to new customers’ reconsidering their ERP systems implementation
plans. Hossain et al (2002:232) observe that ERP systems implementations are
likely to be the largest change project in cost and time that most
organizations have taken on in their history. However, inconclusive findings
have been reported on the effect and benefit of ERP systems implementations. It
is on this premise that various researchers such as Wilson (1993:102), Furst et al (2000:58) and others have been
engaged in unending discourse on the positive pay-offs emanating from the
utilization of specified information technology in various enterprises. Such
academic debates have resulted in the birth of IT productivity paradox which is
concerned with appraising the impact of IT on operational efficiency and the pro
