Addis Ababa University College of Business and Economics

Department of Accounting and Finance

ENTERPRISE RESOURCE PLANNING (ERP) SYSTEM

IMPLEMENTATION: EVIDENCE FROM ETHIO-

TELECOM By

Hailemeskel Gazu Mane (Id. No.GSR 3049/07)

A Thesis Submitted in partial fulfillment of the requirements for Master of

Arts Degree in Accounting and Finance

Advisor:

Sewale Abate (PhD)

May, 2016

Addis Ababa Ethiopia

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Addis Ababa University

School of Graduate Studies

College of Business and Economics Department of Accounting and Finance

Enterprise Resource Planning (ERP) System

Implementation: Evidence from Ethio-Telecom

By

Hailemeskel Gazu

Name and Signature of Members of the Examining Board

Name Title Signature Date

____________ Chairperson ____________ _____________

____________ Advisor ____________ _____________

___________ Examiner ____________ _____________

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ACKNOWLEDGMENT

I would like to thank all who have cooperated and contributed for this work. First, I am very

grateful to my advisor Dr Sewale Abate for his overall guidance, understanding, reviews of the

work and constructive comments. I also extend my gratitude to all the questionnaire participants

for their cooperation and support.

I am also thankful to all my friends and family for their encouragement, and all who have

contributed to this work in one way or the other.

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Table of Contents

1. INTRODUCTION ................................................................................................................................ 1

1.1. Background of the Study............................................................................................................... 1

1.2. Statement of the Problem .............................................................................................................. 3

1.3. Objectives of the Study ................................................................................................................. 5

1.3.1. General Objective ................................................................................................................. 5

1.3.2. Specific Objectives ............................................................................................................... 5

1.4. Research Questions ....................................................................................................................... 5

1.5. Significance of the Study .............................................................................................................. 5

1.6. Scope of the Study ........................................................................................................................ 6

1.7. Limitation of the Study ................................................................................................................. 6

1.8. Organization of the Report ............................................................................................................ 6

2. LITERATURE REVIEW ..................................................................................................................... 7

2.1. Theoretical Review ....................................................................................................................... 7

2.1.1. Concepts and Definitions ...................................................................................................... 7

2.2. Empirical Review ........................................................................................................................ 13

2.2.1. Critical Success Factors (CSFs) in ERP implementation.................................................... 19

2.2.2. Challenges of ERP Implementation in Business ................................................................. 22

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Table 1.1. Top Ten risk factor of ERP …………………………………………………..…………11

3. RESEARCH DESIGN AND METHODOLOGY .............................................................................. 25

3.1. Research Design .......................................................................................................................... 25

3.2. Data Source ................................................................................................................................. 25

3.3. Sampling Technique ................................................................................................................... 25

3.4. Data Collection ........................................................................................................................... 26

3.5. Data Presentation and Analysis................................................................................................... 26

4. RESULTS AND DISCUSSION ......................................................................................................... 28

4.1. Demographic Profiles and Characteristics of the Respondents .................................................. 28

4.2. ERP Implementation and Constraints ......................................................................................... 30

4.2.1. Stepwise ERP Implementation ............................................................................................ 30

Table 4.2. Job position of Respondent ……………………………………………..…………………….17

4.2.2. Top Management Support ................................................................................................... 31

Table 4.3. Steep wise implementation …………………………………………………………………18

4.4. Top management Support ……………………………………………………………………………19

4.2.3. The Rate of Training, Documentation and Knowledge Transfer ........................................ 33

Table 4.5 the Rate of Training, Documentation and Knowledge Transfer ......................................... 34

4.2.4. Compatibility with ERP Module ……………………………………………………….35

Table -4.6. Compatibility with ERP module ……………………………………………………….23

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4.3. Common Challenges ................................................................................................................... 37

4.4. Constraints Peculiar to Ethio-telecom ......................................................................................... 39

Table:- 4.7. Summary of common Challenge ……………………………………………………………25

5. CONCLUSION AND RECOMMENDATION .................................................................................. 41

5.1. Summary and Conclusion ........................................................................................................... 41

5.2. Recommendations ....................................................................................................................... 42

6. Budget and Work plan ........................................................................................................................ 44

Bibliography ............................................................................................................................................... 46

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Abstract

This research work finds challenge and constraint of an Enterprise Resource Planning (ERP) system implementation with particular reference to Ethio telecom. An Enterprise Resource Planning system is a corporate wide information system which is used to integrate the business processes and resources of a company. When the business environment of a company increases and becomes complex, it is difficult to continue with the traditional decentralized information systems for timely decision making and other activities. In today‟s competitive business environment, ERP systems are found to be essential for companies to get competitive and strategic advantages. Therefore, the major objective of this study is to assess the implementation challenge of Enterprise resources planning in ethio telecom and to recommend possible solutions for the gap created during the implementation. As result, the researcher has tested the implementation effectiveness by selecting major challenge and other related concepts. This research has a exploratory nature which elaborates the existing phenomenon as it exists. The data was collected using questionnaires from ERP user. The collected data was analyzed using mainly by computer such as SPSS (Statistical Package for the Social Sciences) version 23

Furthermore, the units/strata have been selected since these work units are the major owner of the modules in the system, accordingly the total of 38 employees select randomly among ERP user as a sample by using stratified random sampling technique and questionnaires were distributed accordingly Consequently, results shows that the deploy ERP system is not properly implemented and practiced on the basis of the selected effectiveness variables; it is observed that the ERP system is not effective across the divisions the system is implemented. In addition, problems which hinder the practice of the system were identified. As a result, lack of top management support, the rate of training, documentation and knowledge transfer, compatibility issues with ERP module were found major challenges in ERP implementation in Ethio-telecom. However, the priori criteria “stepwise implementation” was not considered as putting the challenge and constraint in the implementation of ERP in Ethio-telecom.

Hence, the researcher has recommended that the company should re-consider its system with regard to the support of top management in assisting successful implementation of ERP in Ethio-telecom. Moreover, user interface of the system should easily be understandable, there should be mechanism so that users can work on the system without any challenge . Finally, the company should give emphasis for the reporting formats so that any decision maker or external stakeholder can the reporting formats should be easily understandable.

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CHAPTER I

1. INTRODUCTION

1.1. Background of the Study

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. However, not all ERP implementations

have been successful. Since ERP implementation affects entire organizations such as process,

people, and culture, there are a number of challenges that companies may encounter in

implementing ERP systems. Currently in Ethiopia, not a good deal of business in large

organizations have been implemented the enterprise resource planning system. Ethio-Telecom

,Ethiopia airline Commercial bank of Ethiopia and Miderock Ethiopa are among a few to

implement ERP system in Ethiopia.

Telecommunications services in Ethiopia date back to 1894 and by the time it was named as

Telecommunications Corporation. Since then various re-organizations have been made due to

the change in regime and responsibilities vested to the company. Notably, after the end of the

war with Italy it was re-organized as Telephone, Telegraph and Postal Services but shortly

after it was re-named as The Imperial Board of Telecommunications of Ethiopia (IBTE) by

proclamation no. 131/52.

The Imperial Board of Telecommunications of Ethiopia became the Ethiopian

Telecommunications Authority in 1981. In 1996, the government established a separate

regulatory body, the Ethiopian Telecommunication Agency (ETA) by Proclamation 49/1996,

and during the same year, by regulation 10/1996, the Council of Ministers set up the Ethiopian

Telecommunications Corporation (ETC). In 2010, the Ethiopian Telecommunications

Corporation was replaced by Ethio Telecom by Regulation No.197/2010 of the Council of

Ministers under the Ministry of Communication and Information Technology (MCIT).

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The company, which is the sole telecom provider, is delivering telecommunication services all

over the country with diversified products and services including fixed line telephony,

wireless (mobile) telephone service, data and internet service, rural connectivity service and

General packet radio service (GPRS).Currently, the company is expanding its network

coverage in the capital city and all over the country aiming to provide the latest telecom

services including the Fourth Generation (4G) service.

According to 2014annual report of the company, the number of customer base reached over

30 million, gross revenue in excess of 15 billion and number of permanent employees reached

over 9 thousand dispersed all over the country under the 14 regional offices and over 200

shops, (Ethio Telecom, 2014).

Throughout in most of these changes, the company continued to use the accounting software

known as AS400, which was developed by IBM long time ago to process and store customer,

supplier, employee and financial data. However, the recent increase in product and service

line, revenue, expenditure and customer base due to the mass telecom expansion makes

evident that the legacy system will not be capable enough to process and store such bigger

information. Therefore, due to such changes the company recently replaced AS400 with

modern enterprise software known as Enterprise Resource Planning (ERP),(Ethio Telecom,

2014).

The vision of an integrated information system worldwide started in the 1960s.It was evolving

from the inventory tracking systems to Materials Requirements Planning MRP , and finally

to Enterprise Resource Planning ERP ERP system initially focused on

automating back office functions that didn‟t directly affect customers and the general

public. Front office functions, such as customer relationship management (CRM), e–business

systems and supplier relationship management (SRM) became integrated later, when the

internet simplified communicating with external parties Brady, Monk & Wagner, 2001

An enterprise resource planning (ERP) is an enterprise-wide application software package that

integrates all necessary business functions into a single system with a common database. The

system basically integrates and streamlines the business processes of an organization across

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departmental and geographical borders. According to Nah and Lau (2001) ERP is a packaged

business software system that enables a company to manage the efficient and effective use of

resources (materials, human resources, finance, etc.) by providing a total integrated solution

for the organization information-processing needs(Nah and Lau,2001).

Specifically, ERP is the process of integrating all the business functions and processes in an

organization to achieve numerous benefits First, a single point of data entry helps to reduce

data redundancy while saving employees time in entering data, thereby reducing labor and

overhead costs. Secondly, the centralization of information, decision-making, and control

leads to increases in efficiencies of operations and productivity, as well as coordination

between departments, divisions, regions, and even countries Thirdly, the sharing of a

centralized database provides business managers with accurate and up-to-date information to

make well-informed business decisions Fourthly, functional integration will consolidate all

sorts of data, such as financial, manufacturing, and sales, competitive

advantage over competitors Jacobs, Whybark, 2000

1.2. Statement of the Problem

Today, many public and private organizations worldwide are implementing ERP systems in

place of the functional legacy systems that aren‟t anymore well-compatible with modern

business environment. ERP system is a modular integrated business software system that

facilitates an organization to use its resources efficiently and effectively. The integration

brought by ERP enables organizations to respond to competitive forces and market

opportunities, to improve product portfolio, to reduce carrying costs and to maintain supply-

chain relations strictly( Mishra et al. 2011)

ERP systems, similar to other management information systems, are often perceived as very

complex and difficult to implement. System implementation success depends on many factors:

the ERP system and academia. The evidence of enterprise implementation failures go back to

the late 1990s. For many organizations, ERP systems are the largest systems they have worked

with in terms of the financial resources invested, the number of people involved and the scale

of implementation. Several cases of ERP system implementation have experienced

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considerable difficulties. The failure rate of ERP implementation is very high, ( Mishra et al.

2011).

Although the outstanding advantages of ERP systems have led organizations to move towards

adopting them, failures in ERP implementations that invoke attention to the nature of ERP

implementation are commonly reported. On one hand, ERP system implementing causes

massive change that needs to be carefully managed in order to acquire the benefits of its

solution (IBID). On the other hand, typically, ERP systems are expensive, take a longer time to

implement and have a risk of failure during implementation for systems demanding trained and

skilled implementation. Hence, to ensure the successful implementation of ERP system, there

are critical issues that must be carefully considered. Among which are the commonly called

Critical Success Factors (CSF) in the ERP implementation, which are general to almost all

using the system. These factors are organization‟s vision and objectives, organizational change

process, people and the different approaches to implement it. To name, but some of the

challenges common to organizations implementing ERP include implementation is done i

n stages, appropriate training, proper analysis, support from senior management, compatibility

issues with ERP modules, cost overheads, and investment in infrastructure (Holland, C. P., &

Light, B. 1999). So here it is rational posing questions as „are these challenge common to Ethio

Telecom?‟, „are there any new challenges peculiar to Ethio-Telecom in relation to

implementing ERP?‟ and so „what likely solutions could be recommended as a ways

forward?‟. These are pressing issues that need be dealt with so as to make progress as

envisioned by the company.

Therefore, the common challenges faced taken in to account, it is deemed important to assess

and evaluate the overall ERP implementation process in Ethio Telecom.

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1.3. Objectives of the Study

1.3.1. General Objective

Following the problem statement stated above the general objective of this study is to assess

and evaluate the overall effectiveness of ERP system implementation in Ethio-Telecom.

1.3.2. Specific Objectives

The specific objectives of the study that emanate from the general objective are as under:

To assess the overall ERP system implementation process in the Ethio-Telecom;

To identify ERP system implementation challenges peculiar to Ethio-Telecom other

than the common ones due to the very nature of the company.

To devise solution for the challenge of ERP implementation in Ethio -Telecom

1.4. Research Questions

The study is dedicated to answer the following leading questions:

- What is the nature of the whole process of the ERP system implementation in Ethio-

Telecom?

- What are ERP system implementation constraints in Ethio-Telecom?

- What peculiar ERP system implementation challenges does the Ethio-Telecom face

from its very nature?

1.5. Significance of the Study

Due to the increase in globalization and competition, it is evident that information is a key

factor on the success of any company. As ERP is an integral system that encompasses

different activities and used by various functions, its successful implementation will provide a

great opportunities for organizations to enhance their services and being customer focused.

This study is dedicated to identify ERP implementation challenges in Ethio Telecom and

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communicate the organization for further corrective actions. In addition, the study will share

any success stories to other organizations planning to implement ERP system in near future.

1.6. Scope of the Study

The researcher is intended to study the effectiveness of ERP implementation in Ethiopia

specifically in the sole telecom company, Ethio Telecom. The study focuses on evaluating

how Ethio Telecom implemented ERP system and sees if there is any post implementation

challenges. Evaluation will be done by comparing the globally accepted Critical Success

Factors (CSF).

1.7. Limitation of the Study

Due to the absence of enough organizations that implemented ERP system with in Ethiopia

and the monopolistic structure of telecommunication service will limit comparability of Ethio

Telecom implementation process with similar organizations. Some important responses may

not be obtained because of bureaucratic procedures and business secrecy.

1.8. Organization of the Report

This report contains a total of three chapters. Chapter one of the study focuses only

introductory aspects including background of the study statement of the problem, objectives

of the study, significance, scope and limitation of the study. Chapter two presents the review

of related literature. Chapter three presents the research design and methodology including

data source and method of data collection, sampling techniques used, and measurement and

analysis parts.

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CHAPTER II

2. LITERATURE REVIEW

2.1. Theoretical Review

2.1.1. Concepts and Definitions

Enterprise Resource Planning (ERP) systems provide integration and optimization of various

business processes, which can lead to improved planning and decision quality, and a smoother

coordination between business units, resulting in higher efficiency and a quicker response

time to customer demands and inquiries. It is also a software solution that integrates business

functions and data into a single system to be shared within a company. In the past two

decades, companies around the world have implemented ERP Systems. ERP systems are

software packages that enable companies to integrate their business processes and all the

information relevant to their organisation. With ERP systems, firms are able to manage all

their resources (i.e. physical or intangible assets, finances, human resources, production, etc.)

more effectively. The ERP system not only aids in standardizing business processes across an

enterprise but also helps management increase their visibility of the business by providing

real-time financial and production information. (Seddon, Shanks &Sylvia 2013).

An ERP system is a packaged business software system that allows a company to automat

eand integrate the majority of its business processes, and share common data and practices

across the entire Enterprise. ERP also accesses information in a real-time environment. Many

companies use ERP software to integrate the enterprise-wide information and process for

example their financial, human resources, manufacturing, logistics, sales and marketing

functions. ERP is designed mainly to provide a total, integrated company‟s resource to

manage the business process efficiently and effectively (Seddon, Shanks &Sylvia 2013).

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2.2 Empirical Review

2.2.1 Core ERP components

ERP system is commonly viewed as a back-office support system. But practically it is also

affront office system. Components or modules of ERP system are divided in to two as core

ERP n components and extended ERP components .Core ERP components are the traditional

components which are included in most ERP systems and they primarily focus on internal

(back-office) operations(Aladawani,A.M).

Extended ERP component are extra components that meet the organizational needs not covered

by the core components and primarily focus on external (front-office) operations. Core ERP

components are accounting and finance (FI), human capital management (HCM) and logistics

(LOG) which contains production and materials management. Extended components are

modules such as business intelligence, customer relationship management and porta.These core

and extended ERP modules are themselves comprised of different sub-modules. Finance core module

includes general ledger, receivables, payables, asset management and related sub-modules. Payroll,

personnel planning and time management are some of the sub modules in human resources

core module while materials management and production planning are sub-modulesof logistics

core component(Ibid). Some of the ERP main modules are explained as here below.

Financial Accounting - FI

This module collects all the data relevant to financial accounting into an integrated General

Ledger . It provides comprehensive and consolidated financial reports and integrates the

different sources of financial data including Accounts Payable, Accounts Receivable, Asset

Management and Treasury. It also provides up-to-date or real time information for enterprise-

wide control and planning. The FI module is for external reporting purposes and it is

compatible with the international accounting standards(Ibid).

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Controlling – CO

CO module includes a variety of planning and controlling tools for enterprises following a

uniform system of reporting. It provides comprehensive reports to support most common cost-

accounting issues. Controlling module is usually for internal reporting purposes(Ibid).

Human Capital Management – HCM

HCM is the other common ERP module. ERP HCM module is used as the core employee

record with details of personnel actions, benefits administration and payroll, position

management and compliance with government regulations. HCM consists of three sub-

modules namely Organizational Management (OM), Time Management (TM) and Payroll

(PY) (Ibid).

Materials Management – MM

MM module supports the procurement or purchasing process to optimize the logistics chain

within the enterprise. MM enables automated supplier evaluation and can lower procurement

and warehousing costs with accurate inventory and warehouse management. It also integrates

invoice verification. Tools for inventory control and purchasing information help to identify

trends and plan accordingly(Ibid)..

Production Planning – PP

This is a module which supports production planning, manufacturing processes, analysis and

production control. PP covers the production process from the creation of master data to

production planning, material requirement planning and capacity planning up to the production

control and costing(Ibid)..

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Project System – PS

Project system module coordinates and controls all phases of a project with direct cooperation

with Purchasing and Controlling, from quotation to design and approval, to resource

management and cost settlement(Ibid)..

The core and sub-modules of ERP system are summarized as in table 2.2.1.1below.

In traditional IT systems, each of the system components are found separated as applications

by their own with one database system for each of them. However, ERP system integrates all

of the components through one central database which is common for all the modules.

Table 2.2.1

ERP system ERP Main Modules Sub-Modules

Financials • GL - General Ledger

• AP - Accounts Payable

• AR - Accounts Receivable

• AM - Asset Management

• Cash Management

• Banking

• Profitability Analysis

• Budgeting and Controlling

Human Resources • PY - Payroll

• OM - Organizational

Management

• Personal planning

• TM - Time management

• Travel expenses

• Training

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Logistics & Operations • MM - Materials Management

• PP - Production planning

• Materials planning (MRP)

• Inventory management

• Quality management

• PS - Project System management

• Shipping

Sales & Marketing • Order management

• Sales management

• Sales planning

Unlike the traditional function-oriented departmental systems, ERP systems are enterprise-

wide and oriented towards processes instead of being function-oriented. Corporate computing

with ERP systems allows companies to implement a single integrated system by replacing and

re-engineering their mostly incompatible old traditional information systems

Figure 2.2.1 Non-integrated system versus integrated ERP system

(Source:http://www.tutorialspoint.com/managementconcepts/enterprise_resource_planningm)

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Table 2.1 below is a typical example of how ERP systems avoid manual processes and data

redundancy which is common with the traditional non-ERP systems.

Table 2.1: Non-ERP system process versus ERP process (source: L. Olson

Non-ERP system process ERP system process

1. Salesperson enters customer order

2. Salesperson notifies CRM of order

3. CRM employee records order

4. Salesperson notifies accounting

5. Accounting employee records sale

6. Salesperson notifies warehouse

7. Warehouse employee records order

8. Warehouse employee notifies

packing & shipping

9. Shipping employee records order

10. Shipping employee notifies

procurement

1. Sales person enters customer order on

sales order system (SOS)

2. SOS:

2.1. Notifies CRM

2.2. Notifies Accounting

2.3. Records sale in Accounting System

2.4. Notifies Warehouse

2.5. Records order on Warehouse

Management System (WMS)

3. WMS

3.1. Notifies packing & shipping

3.2. Records order on Packing and

Shipping System (PSS)

11. Procurement employee records

order for raw materials replacement

12. Procurement employee notifies

production to make more

13. Production employee records order

4. PSS

4.1. Notifies procurement

4.2. Records order for raw materials

with Procurement Management System

(PMS)

5. PMS

5.1. Notifies production to do more

work

5.2. Enters manufacturing order on

Production Planning System (PSS )

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ERP systems are based on a relational database. Using a relational database and appropriate

process design allows companies to capture data once and then make that data available for use

throughout the firm; by all appropriate users [22]. ERP system mostly runs on a three-tiered

client/server system with three layers of logic as diagramed in figure 1.3

The presentation layer

This is a graphical user interface (GUI) or a web browser which allows users the ability to

access and analyze information and system functions (Rashid et al., 2002).

The Application layer

It consists of business rules, functions, logic, and programs where business processes and end-

users interact with the system (Ibid).

The Database layer

This is the management of the organization‟s operational or transactional data. This is usually

built up on industry standard relational database systems like Oracle or SQL server. There are

three types of data in ERP systems namely master data, transaction data and configuration data.

o Master data is data in database tables which are used as references for day to day business

transactions.

o Transaction data is data which contains the day to day business activities.

o Configuration data is data in tables which contain the settings and configurations of the

system to suit and fit to the business logic of the company.

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Figure 2.2.3: A three-tiered ERP architecture (Source: Rashid et al., 2002, Idea Group

Publishing)

ERP system is used not only as operational or transactional system, but also as controlling and

executive decision support system. According to Chung , the data and information in ERP

systems is divided into three layers as operational system (transactional data entry layer),

tactical system (controlling layer) and strategic or Executive Information Systems (EIS) layer

as in

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figure 2.2.4. Data layers of an ERP system (source: Chung, 2007)

PROS AND CONS OF ERP SYSTEMS

There are different initiatives and reasons for acquiring ERP systems. ERP systems have the

advantage of seamless integration between all parts and processes of a company, and this in

turn gives the possibility of proper control . They are used to control and reduce data

redundancy and accuracy. Redundant tasks will be removed and the efficiency of the company

increases.

The other advantage of ERP systems is that easier and timely reports functionality. Users can

get self-services of data needs and access. They can run their own reports and have better

access to their data and the ability to manipulate and report on this data.

The advantages of ERP systems are summarized as here below.

Integrate financial information of different sources such as revenues, sales and cost.

Standardize Human Resources information for simple tracking of employees time and

benefits data.

Standardize and speed up operating processes

Reduce inventory and lower costs

Integrated, on-line, secure, self-service processes for business

Eliminate costly mainframe / fragmented technologies

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Empower and enable employees, partners, customers and suppliers as clearly

demonstrated in figure

Figure2.2.5 Architecture of ERP system(Source: http://www.maturski.org/EN-

Management/Enterprise-Resource-Planning.html)

In general, compared to the traditional functional IT systems, ERP systems provide different

benefits to a company and these benefits can be viewed in different dimensions as operational,

managerial, strategic, IT infrastructure and organizational as in table2.f 2.3.

Table 2.3: ERP System benefits in different dimensions

Dimensions Benefits

Operational

o Productivity improvement

o Cost reduction

o Quality improvement

o Customer satisfaction

Managerial

o Decision making

o Resource management

o Performance management

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Strategic

o Business growth

o Business cooperation

o Business leadership

IT Infrastructure

o Business change flexibility

o IT co

On the other hand, ERP systems have some drawbacks and limitations. These systems are

usually complex. Regardless of their long-term benefits and reduced maintenance costs, initial

one time implementation is expensive. And even if data accuracy and integration is achieved

by ERP systems, it is hard to correct or amend data once it is maintained in the system as it will

affect many modules and processes. While ERP systems have more efficient methods, freedom

and self-creativity practice with the system is minimal(Ibid).

Limitations of ERP systems are discussed and summarized below.

• Cost and length of implementation

Even if ERP systems can save costs in long term, initial implementation is too expensive. This

cost depends on the scope and number of ERP modules which are selected and installed, size

of the company, use of consultants, software license and hardware and length of the

implementation time. As ERP systems are integrative and complex, it takes long time to

implement these systems. ERP implementation costs millions of dollars and takes 1-3 years of

tim(Whyte, D. & Fortune, J. 2002).

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• Business process re-engineering and customization

ERP systems are developed based on industry best practices. If these best-practice solutions in

the ERP system do not match the business processes, then organizations are required to re-

engineer their business processes to fit these best practices. However, changing all processes

may lead to a loss of competitive advantage. Strategic processes which give competitive

advantage to a company should not be changed. In this case, the ERP system must be

customized and configured properly to fit the business processes (Ibid).

Configuration refers to setting and filling of parameters and tables in the system whereas

customization is changing the code of the system. On the other hand, customization of the ERP

software is limited and major change is not allowed. In addition, customization has problems

related to upgrading. When the ERP software is upgraded by the vendor, all customizations

may have to be re-checked. So, there should be clear and prior decision about the processes to

be preserved and those to be re-engineered(Ibid).

User interface and usage

ERP systems can be difficult to use. They are too restrictive and rigid (highly controlling) and

do not allow much flexibility in implementation and usage. Moreover, users may have to go

through many screens in order to maintain a single data set. This is because screens are

developed based on the program flow and logic. It is when they are used more and more that

ERP systems are appreciated by users(Ibid).

• Interoperability and interface

The system can suffer from the weakest-link problem. Inefficiency in one department or at one

of the partners may affect other participants. So, the integrated links need high accuracy in

other applications to work effectively. There are frequent compatibility problems with the

various legacy systems of the partners(Ibid).

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• Responsiveness

ERP systems have low response time to user actions and information requests. Due to the

complexity and user interface screens, ERP systems usually take long time to respond to data

entry and report generation processes(Ibid).

2.2.2 Critical Success Factors (CSFs) in ERP implementation

One of the first researches about CSF in ERP implementation is accomplished by Holland in

1999 titled “A Critical Success Factors Model for ERP Implementation. He divided CSF in two

dimensions including of strategic and technical then he classified legacy system, business

vision, ERP strategy, top management support and project schedule and plans under strategic

dimension and client consultation, personal, software configuration, client acceptance,

monitoring and feedback, communication and trouble shouting under technical dimension

(Holland & Light, 1999).

After investigating critical success factors in ERP implementation in Malaysia, Jafari, Osman

& Tang concluded that there are 10 critical factors that contributed for successful ERP

implementation. These are top management support, clear goals and objectives,

communication, effective project management, business process reengineering, data accuracy

and integrity, suitability of software and hardware, vendor support, education and training, and

user involvement are critical in Malaysia (Jafari, Osman, & Tang, 2006).

CSFs for ERP projects have been studied from a number of different perspectives. Elisabeth et

al. 2003 emphasized social enablers such as strong commitment by top management, a great

implementation team, extensive education and training, clear understanding of strategic goals

and empowered implementation team as necessary qualifications to a successful

implementation.

Beside the leadership commitment (Majed et al 2003) suggested that a clear vision and

business director is fundamental for the success of ERP system implementation. It also

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considers IT strategic process a sub-set of the business strategy planning process where it sets

the architecture and requirement for the short, medium and long-term requirements.

The success or failure of ERP implementation is closely related to how the companies handle

the process. The ERP implementation process could differ in every company. The differences

might concern to the implementation goals, the scope, or the available resources. But among

all the differences in every implementation process there are some general points that are

important in the process and would strongly result in the success or failure in the

implementation of ERP. Those important points were identified as critical success factors (Li

& Sylvia 2005).

CSFs are defined as “those few critical areas where things must go right for the business to

flourish” (Li & Sylvia 2005). Understanding the critical success factors in ERP

implementation would give some guidelines on what factors that should be given more

attention in order to bring the implementation process into success. The CSFs could either be

a risk or opportunities, depends on how the organizations handle them.

CSFs are classified in to seven categories; Business plan and vision, Change management,

Communication, ERP team composition, skills and compensation, Project management, Top

management support and championship, Systems analysis, selection und technical

implementation(Fiona & Santiago, 2006)

In this research, (The researcher) will use organization vision and objectives, top management

support, project management, team composition, education and training and post

implementation support will be used as CSFs in ERP system implementation in Ethio

Telecom.

Top management support refers to the extent to which top managers in the organization

provide direction, authority, and resources during and after the acquisitions of IT systems,

including ERP systems (Princely, 2008). The ERP project must receive approval and support

from top management before it can be started. As ERP projects span divisional boundaries

and affect many stakeholders in an organization, senior executives need to mediate between

21

various interest groups to resolve political conflicts when necessary (Ngai et al, 2008). Top

management support in ERP implementation has two main facets: providing leadership; and

providing the necessary resources (Jafari et al, 2006).

ERP systems implementation is a set of complex activities, involving all business functions

and often requiring between one and two years of effort, thus companies should have an

effective project management strategy to control the implementation process, avoiding

overrun of budget and ensuring the implementation within schedule. Having a realistic time

frame is very important. If the target completion time schedule were unrealistically short, the

pressure to rush through would result in the implementation being carried out in a haphazard

manner. On the other hand, if the implementation delayed for too long, people would tend to

lose faith and/or patience, which also will result in low morale and resistance. Conducting

periodic project status meetings in which each team member reports progress and problems is

an invaluable means for evaluating the progress of the ERP implementation. Selecting the

right project leader is also important for the project implementation success. (Zhang et al,

2002). Another decisive element of ERP implementation success or failure is related to the

knowledge, skills, abilities, and experience of the project manager as well as selection of the

right team members, which should not only be technologically competent but also understand

the company and its business requirements (Somers & Nelson, 2001).

ERP implementation teams should be composed of top-notch people who are chosen for their

skills, past accomplishments, reputation, and flexibility. It has also been repeatedly mentioned

throughout the literature that there is a critical need to put in place a solid, core

implementation team that is comprised of the organization‟s best and brightest individuals

(Umble et al, 2003). This factor is about the combination of member and skill in ERP team.

The practitioners that organization should practices are, ensure that in the ERP team includes

people both business and technical knowledge. The selection of the implementation, vendors

and consultant is important to the project. Ensure that team leader possess the authority that is

recognized throughout the organization. Team should be balance and cross functional. The

representative should include both internal staff and consultant (Stephan, et al, 2009).

22

Decision maker in the project team should be empowered to make quick and effective

decisions (Ngai et al, 2008).

The main purpose of ERP training must be the effective understanding of the different

business processes embedded in the ERP system. The training and education program should

commence with the ERP project team, senior management and finish with the end users

Furthermore, the different users and each level in the project group need diverse training. For

instance, the ERP end users need to learn those functions that are associated with their

occupations. The ERP project team should have a comprehensive understanding of the

system‟s functionality. It has been suggested that reserving 10–15% of the total ERP

implementation budget for training will give an organization an 80% chance of

implementation success. (Umble et al, 2003).

2.2.3 Challenges of ERP Implementation in Business

In spite of ERP‟s significant growth from the late 1990s to the present day, there are a number

of challenges that companies may encounter when implementing ERP. Today, most

multinational firms are using ERP and that more small and midsize companies have begun to

adopt ERP. However, despite ERP‟s promises to benefit companies and a substantial capital

investment, not all ERP implementations have successful outcomes. ERP implementations

commonly have delayed an estimated schedule and overrun an initial budget. Furthermore,

ERP implementations have sometimes failed to achieve the organization‟s targets and desired

outcomes. Much of the research reported that the failure of ERP implementations was not

caused by the ERP software itself, but rather by a high degree of complexity from the massive

changes ERP causes in organizations (Scott & Vessey, 2000; Helo et al., 2008). These failures

can be explained by the fact that ERP implementation forced companies to follow the

principle of „best practices‟ in most successful organizations and form appropriate reference

models. According to Helo et al., (2008), “Unlike other information systems, the major

problems of ERP implementation are not technologically related issues such as technological

complexity, compatibility, standardization, etc. but mostly [about] organization and human

related issues like resistance to change, organizational culture, incompatible business

23

processes, project mismanagement, top management commitment, etc”. For instance, Huang,

Chang, Li and Lin (2004) presented the top ten risk factors causing ERP implementations

failure.

Table 2.2.4 Top ten risk factors of ERP risk

Priority Name

1. Lack of senior manager commitment

2. Ineffective communications with users

3. Insufficient training of end-users

4. Failure to get user support

5. Lack of effective project management methodology

6. Attempts to build bridges to legacy applications

7. Conflicts between user departments

8. Composition of project team members

9. Failure to redesign business process

10. Misunderstanding of change requirements

Source: Huang et al., 2004

The risk factors depicted in the table above illustrate various organizational considerations:

organization fit, skill mix, project management and control, software system design, user

involvement and training, and technology planning. Since ERP implementation inevitably

causes organizational changes, it requires the engagement of senior management from across

the organization that is able to resolve conflicts. Without the commitment of senior

24

management, ERP implementation has a high risk of failure. In other words, due to changes

in business processes across an organization, there can be resistance to adopting the ERP

system. ERP connects and integrates all business functions within the organization. Therefore,

it is critical that management staff be committed, and particularly that they equip employees

who are using business functions influenced by ERP with clear channels of communication.

Excellent project management is also needed for successful ERP implementation. Project

teams should have clear guidelines to execute ERP implementation from their project

objectives and work plan to their resource allocation plan. Without good project management,

ERP implementation projects that are large in scale and must take place over longer time

periods may end in failure. Furthermore, the composition of team members plays a crucial

role in ERP implementation. ERP integrates diverse business functions across an organization

into one single system, necessitating a complex and integrated software package. If a project

team does not clearly understand the changes in its organizational structure, strategies, and

processes from ERP implementation, it will not be in a position to benefit from ERP‟s

competitive advantage. In order to best implement ERP, project team members should be

selected with a balance between members with business experience within the organization

and external experts with specialties in ERP.

25

CHAPTER III

3. RESEARCH DESIGN AND METHODOLOGY

3.1. Research Design

The objective of the study, as put above, is to assess and evaluate the practice and constraints

of implementing ERP in Ethio-telecom, which by nature following describing what is going on

in the company with regard to ERP implementation. Hence, for the study with the

aforementioned objectives Exploratory type of research is worth using. The research design of

this study is Exploratory. Data Source

The researcher would mainly use primary data sources. These sources include Ethio Telecom

management group, ERP users, project team members, and key suppliers and customers. In

addition, secondary data sources such as management reports and ERP project related

documentations would be used.

3.2. Sampling Technique

The population of study includes Ethio-Telecom management group, ERP users, project team

members, and key suppliers and customers. Taking size of population (from which sample was

to be taken) in to consideration, random sampling method would be employed to select

representative sample from the population. Generally representatives of the total population

have been included in the research study. All parties involved in the implementation process of

Enterprise Resources planning System are represented by the sample. As a division human

resources, Finance & Sourcing and Facility divisions are major source of information. The

organization has five hierarchical levels. These are chief Officers, officers; manage

supervisors, and staffs‟; among this hierarchal level chief officer, officer and manger are key

users of ERP .As result of this statement show that the majority of key user taken as for

respondent and the other taken randomly, Therefore out of 38 randomly select sample a 11

them are form key user and the rest of 27 of supervisor and staff member . In determining the

26

actual sample size the researcher taken in to account the minimum required returned sample

size, type of data analysis to be used and the expected rate of missing data. Because of the

geographical, time, cost and transportation constraint, the study was concentrated on Addis

Ababa. Moreover, studying different zones and, regions would not bring significant different

since company follows centralized management system most of the activities are similar. As a

result, almost all ERP user head office of Ethio -telecom were taken as a population for this

study.

3.4 Data Collection

In order to achieve the stated objectives the study was planned to base on both primary and

secondary data. The secondary data would be collected from the company‟s work processes,

policies, procedures, forms and other documents which are linked with the ERP

implementation and also from different literatures on the area; whereas primary data for the

study would be collected from the concerned sources through questionnaire and focused group

discussion. To reach the wider stakeholders, survey method is believed to be efficient data

collection method. The survey questionnaire was be prepared using 5 point Liker scale after

having sufficient and appropriate literature review. Critical Success Factors (CSF) such as

organizational vision and objectives, top management support, vendor selection process,

project management methodology, education, training and support activities would be used as

a framework in questionnaire design. Moreover, focused group discussion would be used to

broaden the discussion in the analysis. Secondary data was collected by accessing the

company‟s archives and databases, and publications.

3.5 Data Presentation and Analysis

The collected data would be presented by using tables and charts that to be expressed in the

form of frequency, percentage and mean. Then, descriptive analysis technique was applied to

manipulate the organized data using SPSS (of appropriate version) as the main tool. The output

obtained from the system will be analyzed quantitatively.

27

3.6. Validity

According to Kothari, (2004), Validity is the most critical criterion and indicates the degree to

which an instrument measures what it is supposed to measure. Validity can also be thought of

as utility. In other words, validity is the extent to which differences found with a measuring

instrument reflect true differences among those being tested. As stated above, questionnaire

was used to collect the primary data (see Appendix).Meanwhile, the questionnaire was adopted

from Adopted from Beadles, Lowery, & Johns,(2005), Batool, Sajid, & Raza (2012), and Shiri

(2012) scientific Standardize questionnaires. Therefore, to assure validity of the instrument the

researcher has given a chance for professionals on the area to review the questionnaire and it

was finally validated by the advisor. Ethical Issues

The study was in line with the organizations policy in relation to any intellectual

property rights of the organization.

Regarding privacy of the respondents, their responses are strictly confidential and

only used for academic purposes.

It could not be ethical to access some confidential documents of the organization. So,

the organization‟s code of ethics taken in to account without significantly

compromising the findings of the study.

Concerning references, all the materials and sources are properly acknowledged

28

CHAPTER IV

4. RESULTS AND DISCUSSION

This chapter presents the results of the study and interpretation of the findings. The chapter

comprised of two sections. The first part presents the profile of respondents showing gender,

age group, level of education, work experience, and position of respondents using simple

description. The second part presents analysis of the study variables by using bar chart, tables

and consisting of percentages and mean. And it also contains the discussion of results and

overall responses.

4.1. Demographic Profiles and Characteristics of the Respondents

This section presents the findings from descriptive statistical analysis for demographic

characteristics of the respondents namely gender, educational status and age group. The

description is made using percentages, mean, minimum as well as maximum values and

standard deviations.

Accordingly, based on the collected data from the respondents, among the total respondents

males cover higher number (76.3 per cent) and the remaining is covered by female respondents

(23.7 per cent).

29

Table 4.1 demographic characteristics of respondents

Variables Frequency Percent Valid Percent Cumulative Percent

Gender

Male 29 76.3 76.3 76.3

Female 9 23.7 23.7 100.0

Total 38 100.0 100.0

Frequency Percent Valid Percent Cumulative Percent

Educati

on

Diploma 1 2.6 2.6 2.6

BA/BSC 33 86.8 86.8 89.5

masters and

above

4 10.5 10.5 100.0

Total 38 100.0 100.0

Frequency Percent Valid Percent Cumulative Percent

Age

<25 4 10.5 10.5 10.5

25-30 18 47.4 47.4 57.9

31-40 5 13.2 13.2 71.1

>40 11 28.9 28.9 100.0

Total 38 100.0 100.0

Source: Own Survey data, 2016

Regarding educational level of respondents of the company, majority (86 per cent) of the

respondents were found first degree holders; while masters and diploma holders among the

respondents take 10.5 per cent and 2.6 per cent respectively. Therefore, majority of the ERP

users found to have at least a first degree and hence it could be deduced that the human

resources profile of the ERP users in terms of educational background is in a good status. On

the other hand, the result reveals that Enterprise Resource Planning can well be implemented

and managed by a minimum educational status requirement of first degree.

When age group of the respondents is referred majority of the respondents in the group of the

ERP users were found to lie down in the age group range of between 25 and 30 (47.4 per cent).

30

The rest of the ERP users were lied down in the age groups of >40 (28.9 per cent), 31 – 40

(13.2 per cent) and <25 (10.5 per cent). Therefore, youngsters comprise of nearly 60 per cent

of the ERP users in Ethio-telecom head office, which could guarantee the future of enterprise

resource planning in the company.

Table 4.2 job positions of the respondents

Variable Frequency Percent Valid Percent Cumulative Percent

Job position

Supervisor 4 10.5 10.5 10.5

Manager officer 7 18.4 18.4 28.9

Non-managers 27 71.1 71.1 100.0

Total 38 100 100.0

From the point of view of the job positions that the ERP users hold in the company the

respondents were divided in to managerial (supervisory or managerial office position) and non-

managerial positions. Accordingly, majority (71.1 per cent) of the ERP users in Ethio-telecom

were seen to be non-managerial employers. The remaining share (28.9 per cent) of workers

goes to that of managerial (supervisory or managerial office position). Therefore, the results of

descriptive analysis reveal that enterprise resource planning is exercised in non-managerial

positions than managerial or supervisory positions.

4.2. ERP Implementation and Constraints

Challenges and constraints in implementing ERP solutions are quite normal. Though it is not

completely a technical job, a lot of planning and proper communication is very much essential

to implement ERP across the organization. In line with Ethio-telecom was not thought an

exception. The next section is dedicated to analyze matters related to the challenges and

constraints in implementing and exercising enterprise resource planning in Ethio-telecom.

4.2.1. Stepwise ERP Implementation

From the theoretical perspective it is very important, that ERP implementation is done in

stages; because trying to implement everything at once will lead to a lot of confusion and

31

chaos. Therefore, while implementing ERP in a given organization it is worth going through

with in steps so as to avoid any kind of complication and complexity that might come from the

very nature of the solution itself or the context in which it is deployed.

To test or check whether ERP solution is implemented in stepwise manner or not (adapted at

once), respondents were asked to rate the process of implementation of ERP in their

organization as king them as “the current deployed ERP system meets stepwise achieving the

goal of making the working process automat”. The respondents from their experience of ERP

implementation rated as very low, low, neutral, high or very high. Accordingly, majority of

ERP users (78.9 per cent) rated the ERP solution was adapted and done in stages. From this

fact, hence it could be concluded that the priori criteria “stepwise implementation” was not

considered as putting the challenge and constraint in the implementation of ERP in Ethio-

telecom.

Table 4.3 stepwise implementation

Frequency Percent Valid Percent Cumulative Percent

Stepwise

implemen

tation

Low 4 10.5 10.5 10.5

Neutral 4 10.5 10.5 21.1

High 19 50.0 50.0

71.1

Very high 11 28.9 28.9 100.0

Total 38 100.0 100.0

Source: own survey data, 2016

4.2.2. Top Management Support

Obviously lack of support from senior or top management in implementing solutions like ERP

will lead to unnecessary frustrations in work place. Also, it will cause delay in operations and

ineffective decisions. So, it is essential to ensure that the senior management supports the

transformation in a company to a higher level of technology. And this issue of management

32

support can be checked through functional and technical support, level of dependency or

training.

This study most preferably used three measures – functional and technical support of

integrators, level of dependency on integrates and user training – to test whether top

management support is available in place and time in the company or not; by asking the

respondents to rate each of the criteria in a Likert scale.

The result of the study showed that from “the functional and technical support of integrators”

point of reference, it was found that 47.4 per cent of the respondents (ERP users) rated that the

functional and technical support of integrators were successful in relation to knowledge

transfer; whereas only 26.3 per cent not successful – rated the knowledge transfer as low and

very low. From this fact hence, the functional and technical support of integrators in relation to

knowledge transfer is not a sever constraint putting problem in implementing ERP for Ethio-

telecom.

However, with respect to level of dependency on integrates, most (57.9 per cent) of the

respondents responded that level of dependency on integrates was high and very high implying

that ERP users aren‟t essentially proficient enough in exercising the solution.

Table 4.4 top management support

Criteria Frequency Percent Valid % Cumulative Percent

functional and

technical support

Very low 3 7.9 7.9 7.9

Low 7 18.4 18.4 26.3

Neutral 10 26.3 26.3 52.6

High 16 42.1 42.1 94.7

Very high 2 5.3 5.3 100.0

Total 38 100.0 100.0

Frequency Percent Valid % Cumulative Percent

Level of Low 3 7.9 7.9 7.9

33

dependency on

integrates

Neutral 13 34.2 34.2 42.1

High 17 44.7 44.7 86.8

Very high 5 13.2 13.2 100.0

Total 38 100.0 100.0

Frequency Percent Valid % Cumulative Percent

Supper users

training

very low 14 36.8 36.8 36.8

Low 12 31.6 31.6 68.4

neutral 3 7.9 7.9 76.3

High 9 23.7 23.7 100.0

Total 38 100.0 100.0

Source: own survey data, 2016

Similarly, ERP users‟ responses on “Ethio-telecom super users are trained in a way that can

fully replace the integrators support” were sought. And the result revealed that majority (68.4

per cent) of the respondents responded that Ethio-telecom super users weren‟t well trained in a

way that can fully replace the integrators support.

In sum, hence, with regard to the support of top management in assisting successful

implementation of ERP in Ethio-telecom, an observable gap is evident implying that proper

support is urgent.

4.2.3. The Rate of Training, Documentation and Knowledge Transfer

Appropriate training is very essential during and after the implementation of a new technology

in a company. The staff should be comfortable in using the application or else, it will backfire,

with redundant work and functional inefficiencies. Accordingly, the issue of training could be

addressed by analyzing whether training was given, whether it is exhaustive and adequate

(training availability, training exhaustiveness and training adequacy).

34

Table 4.5 the Rate of Training, Documentation and Knowledge Transfer

Frequency Percent Valid Percent Cumulative %

Training was given

exhaustively for all

users

Very low 9 23.7 23.7 10.5

Low 12 31.6 31.6 55.3

Neutral 4 10.5 10.5 65.8

High 12 31.6 31.6 97.4

Very high 1 2.6 2.6 100.0

Total 38 100.0 100.0

Frequency Percent Valid Percent Cumulative %

The training given

on the system was

adequate and

useful to the

functional module

Very low 14 36.8 36.8 36.8

Low 10 26.3 26.3 63.1

Neutral 7 18.4 18.4 81.5

High 4 10.5 10.5 92.1

Very high 3 7.9 7.9 100.0

Total 38 100.0 100.0

Frequency Percent Valid Percent Cumulative %

There was a gap

between imparted

training and Ethio

telecom business

requirement

Very low 14 36.8 36.8 36.8

Low 15 39.5 39.5 76.3

High 6 15.8 15.8 92.1

Very high 3 7.9 7.9 100.0

Total 38 100.0 100.0

Source: own survey data, 2016

For the first question raised to assess if the ERP users had got training on ERP system

implementation exhaustively to all the users, the majority of the respondents (55.3 per cent)

had responded that training wasn‟t given exhaustively for all users. Hence, this indicates that

Ethio- telecom didn‟t deploy an intensive training program in order to equip those employees

35

who are expected to work on the system as main tool. From this the study concludes that lack

of training was observed as one common constraint for ERP implementation in Ethio telecom.

In addition to what has been raised just before, the respondents were asked if the training given

to group of users was adequate and useful for functional module. The result revealed that 63.1

per cent of the respondents responded that the training given on the system wasn‟t adequate

and useful to the functional module. By this, it could be said that the respondents believe on

that on the top of the already imparting training program, additional enhancement training

program is highly required. By this reflection, the research concludes that lack of training is

also another challenge constraining successful ERP implementation.

Moreover, from the responses of the ERP users, it was found that there was a gap between

imparted training and Ethio-telecom business requirements pertaining to the successful

implementation of ERP for the fact that 76.3 per cent of respondents replied the same. In line

with this, Weltin (1999) indicates that training and changing management are the matters that

affect all phases of ERP implementation. Similarly, O‟leary D. (2000) stresses that by saying

the importance of training cannot be neglected and it is not something that could be conducted

only before and after implementation but rather it has to be present in each part of ERP life

cycle; but the company doesn‟t exhaustively exert its effort to enhance the knowledge of its

employees through different means (i.e. class room training, on job training, coaching,

monitoring, and so on) as result the company‟s employing the integrator beyond their state

time frame since employees are not capable handling it with their own way.

4.2.4. Compatibility with ERP Module

Compatibility issues with ERP modules usually lead to issues in integration of modules.

Companies associate different vendors to implement different ERP modules, based on their

competency. Therefore, it is very essential that there is a way to handle compatibility issues in

dealing with implementation of technologies such as ERP solutions. In this study to deal with

the issues of compatibility, user friendliness, ease of understandability and ease of

understandability of the reporting formats were used as yardsticks. Hence, respondents (ERP

36

users) were asked a series of questions in relation to compatibility issues with ERP modules

and rate using the five scales (Likert scale).

Table 4.6 compatibility with ERP module

Frequency Percent Valid % Cumulative %

User interface of the

system is easily

understandable

Very low 8 21.1 21.1 21.1

Low 22 57.9 57.9 79.0

High 5 13.2 13.2 92.1

Very high 3 7.9 7.9 100.0

Total 38 100.0 100.0

Frequency Percent Valid % Cumulative %

User can work on the

system without any

challenge

Very low 12 31.6 31.6 31.6

Low 11 28.9 28.9 60.5

Neutral 1 2.6 2.6 63.2

High 13 34.2 34.2 97.4

Very high 1 2.6 2.6 100.0

Total 38 100.0 100.0

Frequency Percent Valid % Cumulative %

The reporting

formats are easily

understandable

Very low 12 31.6 31.6 31.6

Low 16 42.1 42.1 73.7

Neutral 1 2.6 2.6 76.3

High 7 18.4 18.4 94.7

Very high 1 2.6 2.6 100.0

Total 38 100.0 100.0

Source: own survey data, 2016

The questions rose for the respondents to rate compatibility includes: “user interface of the

system is easily understandable”, “user can work on the system without any challenge” and

37

“the reporting formats are easily understandable”. Accordingly, the result of the study showed

that 79 per cent of the ERP users responded that user interface of the system isn‟t easily

understandable; 60.5 per cent responded that users can‟t work on the system without any

challenge; and 73.7 percent responded that the reporting formats aren‟t easily understandable.

Therefore, in all the three cases the highest rates in the Likert scale were found to be for low or

very low implying that ERP users were dissatisfied concerning the compatibility issues with

ERP module (table 4.5). For example, there are things that need to be done on the reporting

format of the system, because external users or the company decision makers need to

understand what exactly every generated reports saying in order to make sound decision.

Hence, the ERP users of the company aren‟t properly supported through different capacity

building programs so that they can efficiently work on the system for Ethio-telecom realizing

tangible and observable benefits.

In a nutshell, the compatibility issue with ERP module from the above discussion,

compatibility is recognized as one major challenge and constraining successful ERP

implementation in the company.

4.3. Common Challenges

Generally, ERP implementation in a given organization is a function of many factors where the

factors put problematic situation in assuming a desired benefits from the solution. In

developing countries like Ethiopia, where backwardness in business infrastructural setups

prevailing, are constrained by multifaceted problems, which in turn adversely affect the

success that they would likely to achieve from the adopted technologies. Among the problems

constraining healthy running of ERP solutions in Ethio-telecom, according to the focused

group discussion results are summarized as follows:

Lack of management support,

Ineffective communications with users,

Insufficient training of end users,

Failure to get user support,

38

Lack of effective project management methodology,

Attempt to build to the legacy application,

Conflict between user departments, composition of project team members,

Failure to re-designing business process and

Misunderstanding of change requirement.

From literatures and own experiences, for this study some factors were identified as check list

for the ERP users in Ethio-telecom. The analysis results showed that misunderstanding of

change requirements, ineffective communications with users, lack of management support,

lack of effective project management methodology, insufficient training of end users, failure to

get user support, conflict between user departments, failure to re-designing business process,

composition of project team members and attempt to build to the legacy application were

computed to be 1st to 10th major challenges determining the success of the implementation of

ERP.

Table 4.7 summary of common challenges

No. Challenges Relative % Rank

1. Attempt to build to the legacy application, 6.29 10

2. Composition of project team members, 7.24 9

3. Failure to re-designing business process 8.00 8

4. Conflict between user departments, 9.07 7

5. Failure to get user support, 9.50 6

6. Insufficient training of end users, 10.17 5

7. Lack of effective project management

methodology

11.90 4

39

8. Lack of management support 12.09 3

9. Ineffective communications with users, 12.45 2

10. Misunderstanding of change requirement 13.29 1

Source: own survey data computation, 2016

4.4. Constraints Peculiar to Ethio-telecom

This sub-section is dealing with some constraints which are peculiar to Ethio-telecom from its

very nature. Obviously the business environment in which Ethio-telecom is working is

different from those working in other countries. Business infrastructures like electricity and

internet networking are basic requirements needed for ERP solution implementation, but to

mention only few.

In this study it was tried to conduct focus group discussion so as to identify ERP system

implementation challenges/constraints which distinguishable to Ethio-telecom. Accordingly,

the following were raised in the discussion:

- Newness to the country

- Poor internet network

- Lack of equipment or facilities required for proper functioning of the system

- Inadequate proper training

- Lack of pilot data

- Timetable for the implementation

- Lack of skilled/trained manpower

- Accessibility and poor speed

- Late implementation after training

- Integrators reluctance for knowledge transfer

For the underlying problems constraining ERP system implementation and there by affecting

success, the remedy is in the hands of the company, as the sampled respondents replied. The

40

sole responsible body to alleviate the problems is the company. Hence, the focused group

discussion with different experts of the company indicated that the following remedial

measures are urgent:

- Continuous and sustainable training

- Providing materials and facilities adequately

- Immediate implementation after training

- Upgrading the system continually

- Proper planning

- Clear communication to end users

- Less dependence on integrators.

From all these, it emerges that employees in the side of the implementation of the ERP in the

Ethio telecom need proper training so that they work with it in a friendly manner. Therefore,

employees responsible for technical support and problem-solving for an organization‟s

electronic systems need necessary technical training that includes hardware management and

database input. Likewise, management divisions who are responsible for selecting and

overseeing an ERP system need special training as for instance functional area training.

Finally, end-user training would cover the general staff of an organization who are using the

new system day-to-day. General information, fostering new skills, and evaluation progress

reports are vital components of end-user staff training so that they can plan, communicate and

implement the system as standard required by the organization.

41

CHAPTER V

5. CONCLUSION AND RECOMMENDATION

5.1. Summary and Conclusion

The study is conducted in the Ethio-telecom head office in Addis Ababa. It focused mainly on

the challenges affecting proper implementation of ERP in the company. For the purpose,

primary data were gathered through structured questionnaire and focus group discussion using

structured check list, respectively.

As per the results of the study major challenges to ERP implementation were identified.

Accordingly, lack of top management support, the rate of training, documentation and

knowledge transfer, compatibility issues with ERP module were found major challenges in

ERP implementation in Ethio-telecom. However, the priori criteria “stepwise implementation”

was not considered as putting the challenge and constraint in the implementation of ERP in

Ethio-telecom.

With regard to the support of top management in assisting successful implementation of ERP

in Ethio-telecom, an observable gap is evident implying that proper support is urgent. Again,

the study indicates that Ethio- telecom didn‟t deploy an intensive training program in order to

equip those employees who are expected to work on the system as main tool. From this the

study concludes that lack of training was observed as one common constraint for ERP

implementation in Ethio telecom. Besides, compatibility is recognized as one major challenge

and constraining successful ERP implementation in the company.

Moreover, the analysis results showed that misunderstanding of change requirements,

ineffective communications with users, lack of management support, lack of effective project

management methodology, insufficient training of end users, failure to get user support,

conflict between user departments, failure to re-designing business process, composition of

42

project team members and attempt to build to the legacy application were computed to be 1st

to 10th major challenges determining the success of the implementation of ERP.

In this study it was also tried to conduct focus group discussion so as to identify ERP system

implementation challenges/constraints which are distinguishable to Ethio-telecom.

Accordingly, the following were raised in the discussion: Newness to the country, Poor internet

network, Lack of equipment or facilities required for proper functioning of the system,

Inadequate proper training, Lack of pilot data, Timetable for the implementation, Lack of

skilled/trained manpower, Accessibility and poor speed, Late implementation after training,

Integrators reactance for knowledge transfer. Finally, for the underlying problems constraining

ERP system implementation and there by affecting success, the remedy is in the hands of the

company, as the sampled respondents replied. The sole responsible body to alleviate the

problems is the company. Hence, the focused group discussion with different experts of the

company indicated that the following remedial measures are urgent: Continuous and

sustainable training, Providing materials and facilities adequately, immediate implementation

after training, upgrading the system continually, proper planning, Clear communication to end

users, less dependence on integrators.

5.2. Recommendations

Based on the results and findings of the study, to improve ERP system implementation, some

recommendations are suggested to be addressed by the Ethio-telecom. Those variables which

are most important challenges of ERP implementation as per the analysis result are lack of top

management support, the rate of training, documentation and knowledge transfer, compatibility

issues with ERP module were found major challenges in ERP implementation in Ethio-

telecom.

Sticking to the major challenges described above the following has been suggested as a

remedy.

43

- Training – with regard to the support of top management in assisting successful

implementation of ERP in Ethio-telecom, an observable gap is evident implying that

proper support on training is urgent

- Compatibility issues – the compatibility issue with ERP module from the above

discussion, compatibility is recognized as one major challenge and constraining

successful ERP implementation in the company. Therefore, user interface of the system

should easily be understandable, there should be mechanism so that users can work on

the system without any challenge and the reporting formats should be easily

understandable

- In sum, the focused group discussion with different experts of the company indicated that

the following remedial measures are recommended for urgency: Continuous and

sustainable training, Providing materials and facilities adequately, immediate

implementation after training, upgrading the system continually, proper planning, Clear

communication to end users, less dependence on integrators

44

6. Budget and Work plan

Table 6.1 time table

No

.

Activities to be performed March April May June

1. Prepare and submit first draft proposal

2. Final commented proposal submission

3. Designing Questionnaires

4. Data collection

5. Data encoding and entry

6. Data analysis

7. Preparation of draft report

8. Final report writing and submission

45

Table 6.2 Cost and budget required for this study

No Description Unit Quantity Unit Price ( Br) Total Cost (Br)

1. Writing pad Pad 1 400 400

2. Photocopy paper Pad 2 450 900

3. Pen (blue and black) Pkt 1 200 200

4. Stapler Pcs 1 30 30

5. Staples Pkt 5 20 100

6. Photocopying Page 1000 0.50 500

7. Binding Pcs 6 30 180

8. . Transportation cost Km 500 4 2,000

9. Internet and telephone Pcs 50 100 5,000

10. Sub total 9,310

11. Contingency (10%) 931

Grand total 10,241.00

46

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48

Questionnaire for ERP implementing survey in Ethio – telecom

ADDIS ABABA UNIVERSITY

College of Business and Economics

Department of Accounting and Finance

Master of Arts Degree in Accounting and finance

Researcher: Hailemeskel Gazu

Dear Respondent

The main purpose of this questionnaire is to gather information about the practice and

challenges of ERP (Enterprise resource planning) implementation Ethno telecom for Master of

Arts Degree in Accounting and finance in Addis Ababa University. The outcome of this study

will be used for academic purpose only.

Therefore, your genuine response to the quest9on is vital for the quality and successful

completion of the study. The accuracy of the information you provide highly determine there

liability of the study. Places feel free the your reopens is confidential.

Contact Addis

Hailemeskel G.

Mobile - + 2051 9 13 07 49 54

E- mail- manehailemskel@agmain.com /hailemeskel @yahoo.com thank you in advance for

your unreserved cooperation

Part 1: Demographical information – places circle your choice

1.1. Gender 1. Male 2. Female

49

1.2. Age group 1. <25;2) 26-30 3. 31-40 4. 41 and above

1.3. Educational status 1. Below Diploma 2. Diploma 3. BA/BSC, 4. Master and above

5. Other please specify

1.4. Which Davidson are you working in 1.Fiancé 2.Sourcing and facilities 3. Human

resource

1.5. The position you working in the organization 1. Supervisor 2. Manger officer

3. Other

Part 2. Issues related with ERP implementation in your organization

- In all of the following cases, please choose among the alternative given under each

proposition

2.1. The currently deployed ERP system meets set up step wise achieving the goal of

making the working process automat?:

1. Very low 3. Neutral 5. Very high

2. Low 4. High

2.22. Top management support and commitment

2.2.1. Functional and technical and technical support of integrators are success full in

relation to knowledge transfer

1. Very low 3. Neutral 5. Very high

2. Low 4. High

2.2.2. Level of dependency on integrates

1. Very low 3. Neutral Very high

2. Low 4. High

50

2.2.3 Ethio-telecom super users are trained in a way can full replace the integrators

support

1. Very low 3. Neutral 5. Very high

2. Low 4. High

2.3. The rate of training documentation and knowledge transfer

2.3.1. Training was given exhaustively for all users

1. Very low 3. Neutral 5. Very high

2. Low 4. High

2.3.2. The training given on the system was adequate and useful to your functional

module

1. Very low 3. Neutral 5. Very high

2. Low 4. High

2.4. Compatibility issues with ERP modules

2.4.1. Users interface of the system is easily understandable

1. Very low 3. Neutral 5. Very high

2. Low 4. High

2.4.2. Users can work on the system without any challenge

1. Very low 3. Neutral 5. Very high

2. Low 4. High

51

2.4.3. Reporting formats are easily understandable by external users and decions

makers

1. Very low 3. Neutral 5. Very high

2. low 4. High

2. Questions related to challenges constraints in implementation

3. 3.1. the following table ERP implementation constrains so called as risk factors are listed

and please rank them in accordance with the severity of occurrence in your organization.

If in the list not occurring you many ignore or jump it

No Constraints Rank

1. Lack of management (top, middle or lower level mangers

commitment)

2 Ineffective communication with users

3 Insufficient training of end users

4 Failure to get user support

5 Luck of effective project management methodology

6 Attempts between bridges to legacy application

7 Conflicts between user department

8 Composition of project tram members

9 Failure to redesign business process

10 Misunderstanding of (resistance to) change requirement

3.2. What other ERP system implementing challenges/ constraints you think peculiar dose

Ethio- Telecom face form its very nature? Places put them in the order of their severity.

a. _________________________________________________________

b._________________________________________________________

c. _________________________________________________________

d. _________________________________________________________

e._________________________________________________________

52

3.3. Why do you think are these lists of the problems peculiar to Ethio-Telecom.

____________________________________________________________________________

____________________________________________________________________________

___

3.4. What possible solutions (remedial actions) would you recommend to do with the list of

peculiar problems to wards successful implantation of ERP system in the Ethio Telecom?

Please put in their order of importance.

a. _________________________________________________________

b._________________________________________________________

c. _________________________________________________________

d. _________________________________________________________

Thank you so much!