Prime Journal of Business Administration and Management (BAM) ISSN: 2251-1261. Vol. 5(11), pp. 1957-1963, November 23rd, 2015 www.primejournal.org/BAM © Prime Journals

Full Length Research Paper

Factors influencing implementation of e-procurement in county governments: A case of Nairobi County 1

Caroline Wawira Njuki and 2Dr. Assumptah Wairimu Kagiri

1

School of Human Resource Development, Jomo Kenyatta University of Agriculture and Technology, P. O. Box 62000,00200 Nairobi, Kenya. E-mail: [email protected]. 2 School of Human Resource Development, Jomo Kenyatta University of Agriculture and Technology, P. O. Box 62000,00200 Nairobi, Kenya. Accepted 9th November, 2015 The study sought to examine the factors influencing implementation of e-procurement. Over the years, procurement process has continued to evolve in both private and public sector. The traditional manual procurement process has recently received a facelift to electronic procurement process courtesy of the advancement in Information Communications Technology (ICT) that has been able to provide an electronic interphase in procurement processes. As part of the Government’s initiative to reform the Public Finance Management (PFM) system and restore the public confidence in the use of public funds, the government of Kenya introduced an Integrated Financial Management Information System (IFMIS), e-procurement module that would enhance efficiency in planning, budgeting, procurement, expenditure management and reporting in the National and County Governments. The business case for implementing the e-procurement system in Nairobi City County was guided by the following research objectives; to establish the effect of Information Technology infrastructure in implementation of e-procurement in Nairobi City County; to assess the effect of technological skills in implementation of e-procurement in Nairobi City County and to examine the effect of finances in implementation of e-procurement in Nairobi City County. The study adopted descriptive research design; therefore it sought to find out and collected facts in procurement sections within Nairobi City County government ministries establishing the causal linkage between factors influencing the implementation of e procurement. The study population comprised of 11 County departments within Nairobi City County. Both quantitative and qualitative approaches were adopted. The study respondents consisted of County Procurement Executives in their respective Departments within Nairobi City County. Data was collected from both primary and secondary sources. Primary data was collected through the use of questionnaires. Data was analyzed with Statistical Package for Social Scientists (SPSS) version 21.0. Inferential statistics was used to analyze the data collected. Inferential statistics utilized included correlation and regression analysis. Correlation analysis was used to study the nature and strength of association among study variables. Presentation of data was in form of tables, pie-charts and bar graphs only where it provides successful interpretation of the findings. Keywords: E-procurement, IT complexity, Information Technology infrastructure, Technological skills, Finances, Nairobi City County government. INTRODUCTION Background and Research Gap In today’s dynamic global business competition scenario, web based technology is no longer an afterthought, rather it is a must. With emergence of internet and information, communication technology (ICT) applications, business entities are strained to shift their operations from traditional way to the virtual e-business,

e-procurement and e-supply chain philosophy (Oketch, 2014). E-Procurement has been defined as the use of Internet-based (integrated) information and communication technologies (ICTs) to carry out individual or all stages of the procurement process including search, sourcing, negotiation, ordering, receipt, and postpurchase review (Croom and Brandon-Jones, 2004).

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Local Authority Strategy for e-procurement report (2003) identifies the three areas where e-procurement implementation strategy in the public sector should be focused to ensure that the required practices, processes and systems are developed and rolled out in a consistent manner across the public sector. These areas are organization and management, practices and processes and systems and technology. E-procurement systems have been proven within various Government organizations as an effective tool for instituting procurement reforms and establishing a fully transparent and open procurement environment. However, e-procurement implementation particularly in Government sector has been faced with many challenges (OGC, 2008). Some of the challenges faced includes: lack of awareness and capacity building programs; lack of proper IT infrastructure and internet readiness lack of cross-Governmental coordination and ineffective implementation of the system and resistance to convert to e-procurement. Past studies have identified Technology Acceptance Model Wu and Chen (2005) and Theory of Planned BehaviorWu and Chen (2005) to predict and understand the adoption of an online system such as e-procurement system. Integrating the two theories provides a more comprehensive model of e-procurement adoption and contributes to the theoretical development of behavior formatting toward e-procurement adoption. The public sector procurement has been riddled with allegations of fraud, corruption and inefficiencies arising from weaker controls in procurement processes. E-Procurement has today become a common theme of many organizations for the promotion of transparency and good governance in procurement for many developed and developing nations. It has also become an effective tool for instituting procurement reforms and establishing a fully transparent and open procurement environment. To this end, the Kenyan Government through the Integrated Financial Management Information System (IFMIS) has established a platform through which e-procurement system will be conducted in order to automate procurement process all the way from requisition, tendering, contract award to payment (CIO East Africa, 2014). A study by Consortium for Global Electronic Commerce (2002) indicate that a significant portion of the initial value proposition often is not ultimately delivered due to problems related to technology, business process, and people or organizational issues. A report by Local Authority Strategy for e-procurement indicate that eprocurement implementation strategy should be focused to ensure that the required practices, processes and systems are developed and rolled out in a consistent manner across the public sector. Difficulty in establishing a single e-procurement adoption and implementation model stems from the diversity of e-procurement applications across various entities domains, diversity of

e-procurement system’s adoption and buyers as well as its impact on inter-public entity systems and internal business processes. Hence, public entities should ensure that implementation perspectives such as organization and management, practices and processes and systems and technology are incorporated due to their significance in the implementation of an e-procurement system. (Local Authority Strategy for e-procurement report IBM, 2003). Problem Statement E-procurement has become an effective tool for instituting procurement reforms and establishing a fully transparent and open procurement environment. Information and Communication Technology enabled technology especially public e-procurement plays an important role for minimizing the risk of corruption in public procurement processes by enabling transparency, accountability and efficiency (OECD, 2008). As such, the Government has called on the Government procuring entities and the Government suppliers for goods, works and services to automate their procurement processes all the way from requisition, tendering, contract award to payment. These reforms are aimed at strengthening the procurement systems by enhancing transparency, accountability and responsiveness to public expenditure and to fight against wasteful spending and corruption. A number of studies have been carried out on eprocurement and public procurement. Ruth (2012) in her study of information technology and procurement process in Kenya found out that, information technology if used appropriately can offer: smoother and faster process flow, efficient distribution of information, decentralization of tasks and decisions, increased transparency and better control in public procurement. Her findings however fall short of focusing on eprocurement as the main ICT tool that radically enhances procurement performance in the public sector which was the domain of the current study. A research by Doherty, McConnell and Ellis-Chadwick (2013) on the applicability of E-procurement failed to address the readiness of the public entities to implement e-procurement system in order to curb the challenges that affect the uptake and application. Orina (2013) in her study on E-procurement readiness factors in Kenya’s Public sector found that resistance to change, lack of enthusiasm, staff skills, and to some extent procurement policies impacted the readiness of e-procurement in public institutions. According to her findings, the main eprocurement readiness factors include: technology, organization’s finance, leadership and integrity, legal framework and technical preparedness, international law and employee attitude, procurement policy and national procurement law, e-procurement adoption and staff I.T adequacy, and online marketplace and government support. Her study however fails to outline the impact of e-procurement in light of enhancing performance in public procurement an objective the current study aimed at

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Table 1: Response Rate Response Responded Did not respond Total

Frequency 40 4 44

Percentage 90.91 9.09 100

Figure 1: Adequate information technology infrastructure

achieving. It’s against this backdrop that this study seeks to examine the factors influencing implementation of eprocurement in County government of Nairobi. Research Objectives 1. To establish the effect Information Technology infrastructure in implementation of e-procurement in Nairobi City County. 2. To assess the effect of technological skills in implementation of e-procurement in Nairobi City County. 3. To examine the effect of finances in implementation of e-procurement in Nairobi City County. Research Methodology The study adopted a descriptive research design to examine the factors influencing implementation of eprocurement in Nairobi City County. The target population was eleven County Departments in Nairobi City County. The study respondents consisted of County Procurement Executives. Due to small population size, the study adopted a census approach. The study used both primary and secondary data. Questionnaires were used as the main primary data collection instruments. The questionnaire items comprised of both open-ended and close-ended questions. Open ended questions allowed the respondents to give answers in their own way while closed ended questions on the other hand provided a number of alternative answers from which the respondent were instructed to choose. The study used thematic analysis to analyze qualitative data to capture the complexities of meaning within the textual data set. Quantitative data was analysed using SPSS V21

software. Descriptive statistics was used to summarize the data and establish characteristics of the study population. The specific descriptive statistics used included mean, standard deviation, frequency distributions, percentages, and totals. Inferential statistics was used for the purposes of hypotheses testing and estimation of relationships between study variables. Regression and correlation analysis were the specific inferential statistics used. FINDINGS AND DISCUSSION Response Rate The total number of questionnaires that were distributed to the field were 44 and out of these questionnaires, 40 questionnaires were returned fully answered which represent 90.91 % of the total questionnaires that were administered to the field. This was adequate and representative for statistical analysis to yield reliable results (Table 1). This is a reliable response rate for data analysis as Mugenda and Mugenda (2010) pointed that for generalization, a response rate of 50% is adequate for analysis and reporting, 60% is good and a response rate of 70% and over is excellent .while 4 questionnaires which represent 9.09 % were not returned. Descriptive statistics Adequate information technology infrastructure The results in figure 1 indicates that 25.0% of the total respondents strongly agreed that their departments have adequate information technology infrastructure; 35.0% of the total respondents agreed that their departments have adequate information infrastructure to handle voluminous

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Table 2: Information Technology Infrastructure on E-procurement Implementation Aspects of IT Infrastructure Computer hardware e.g Computers, servers Computer software-windows, Linux Unix Networking infrastructure

Mean 3.77 3.75 3.54

STDEV 1.044 0.89 0.947

Figure 2: Influence of Technological skills on implementation of e-procurement

e-procurement work; while, 12.5% and 10.0% of the total respondents were neutral and disagreed that their departments have adequate information technology infrastructure such as the computers, while 17.5% strongly disagreed. Failed investments in technology infrastructure may cause operation breakdown and also lead to dissatisfaction among employees or the targeted group (Venkatesh, 2000). On the other hand, Turban et al, (2006) pointed that the development and implementation of electronic commerce business models such as a procurement portal in organizations is a challenge that goes beyond mere technological functionality.

implementation as illustrated by mean score of 3.75 and 3.54 respectively. According to Mose et al. (2013) private and public sector organizations have been utilizing information technology systems to streamline and automate their purchasing and other processes over the past years (table 2).

Information technology infrastructure on eprocurement implementation The researcher requested the respondent to indicate their level of agreement on the aspects relating to information technology infrastructures that influence e-procurement implementation. From the findings most of the respondents agreed that computer hardware such as the computers, servers’ influences implementation to a great extent as shown by mean score of 3.77. Likewise, respondents pointed that computer software and networking infrastructure influences e-procurement

Influence of technological skills on implementation of e-procurement The study sought to establish the extent to which technological skills and staff training influences implementation of e-procurement. Most (65%) of the respondents purported that staff training and technological skills influences implementation of eprocurement to a very great extent, 15% were neutral, 12.5% and 7.5% to disagreed and strongly disagreed respectively (Figure 2) . Armstrong (2000) points out that training is the formal and systematic modification of behavior through learning which occurs as result of education instruction development and planned experience. The fundamental aim of training is to help the organization achieve its purpose by adding value to its key resources the people it employs. Training means investing in people to enable them to make the best use of their natural abilities.

Influences of Finances on implementation of Eprocurement Results in table 3 summarize the findings of the study on the extent that finances influences e-procurement implementation. Most of the respondents agreed that acquisition costs, supplier search costs, cost of

maintenance and implementation cost influence e procurement a great extent as depicted by the mean scores of 3.72, 3.62, 3.25 and 3.14 respectively. Walczuch, Braven and Lundgren (2000) attributed that the failure to utilize ecommerce is due to the lack of ecommerce and internet knowledge by the suppliers and

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Table 3: Influences of Finances on implementation of E-procurement Aspects of finances Acquisition costs Supplier such costs Maintenance costs Implementation cost

Mean 3.72 3.62 3.25 3.14

STDEV 1.067 1.133 0.91 0.947

Table 4: Implementation of E-procurement Extent of Implementation Yes No Partially

Frequency 30 8 2

Percentage 75 20 5

Table 5: Benefits of E-procurement implementation Benefits of E-procurement implementation Cost reduction Improved operation efficiency Improve production Access to information Improved service delivery Increase operational effectiveness

Mean 3.71 3.62 3.56 3.66 3.53 3.49

STDEV 0.067 0.133 0.191 0.027 0.121 0.940

Table 6: Regression Coefficients Variable (Constant) Information technology infrastructure Technological skills for staff Finances

the targeted population.

Implementation of E-procurement Majority (75%) of the respondents pointed that Nairobi City County adopted and implemented e-procurement in its procurement practices in their respective departments, 20% indicated that their department had not adopted eprocurement while the rest (5%) alleged that the Nairobi City County had adopted e-procurement only partially (Table 4).

B 1.407 0.662 0.756 0.785

Std.Error 1.342 0.310 0.15 0.32

Beta 0.172 0.210 0.067

Sig 0.35 .027 .028 .020

Y = β0 + β1X1 + β2X2 + β3X3 +ε became: Y= 1.407+ 0.662X1+ 0.756X2+ 0.785X3

Benefits of E-procurement implementation Results in table 5 show that the benefits of e-procurement implementation, the study established that cost reduction, access to information, improved operational effectiveness and improved service delivery were some of the benefits that would accrue to the respective departments under the Nairobi City County.

The regression equation established that taking all factors into account that is (Information technology Infrastructure, technological skills or staff training and finances) constant at zero, implementation of eprocurement will be 1.408. The findings presented also shows that taking all other independent variables at zero, a unit increase in information technology infrastructure will lead to a 0.662 increase of e-procurement implementation; a unit increase in Technological skills or staff training of procurement executives will lead to a 0.756 increase of e-procurement implementation and a unit increase in finances to a 0.785 increase in eprocurement (Table 6).

Regression analysis Multiple regression analysis was conducted so as to determine the relationship between the dependent variable and the independent variables.

SUMMARY OF FINDINGS Influence of IT Infrastructure on the implementation of eprocurement In regard to information technology infrastructure, the

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study established that availability of computer hardware, Network topology, Computer hardware for example computers ,server and Computer software such as windows, linux , unix influences e-procurement implementation to a great extent The study found that the more we embrace on the technology, the more we adopt e-procurement as the most preferred mode. Eprocurement is deemed more appropriate to be used rather than the manual way. Influence of technological skills on implementation of e procurement In the area of technological skills or staff training, the study established that developing the skills, competences of employees, operational flexibility, the form of training and changes in job behavior influences e-procurement implementation to a great extent. Influence of the e-procurement system The study found out that e-procurement system has more benefits than the manual system. The study also found out that e-procurement leads to cost reduction, improved service delivery by the Nairobi City County. The study also established that e-procurement implementation had benefits such as improved access to information and improved operational effectiveness in Nairobi City County. Conclusion The study sought to establish the factors that influence implementation of e-procurement in Nairobi City County. Based on the findings, the study concluded that information technology infrastructure variables such as availability of computer hardware such as servers, availability of computer software such as linux and unix and network topology influences implementation of eprocurement by a great extent. In regard to technological skills, the study established that developing employee skills, competences, operational flexibility and form of training and changes in job behavior influences eprocurement implementation to a great extent. The study also found out that finance costs such as acquisition costs of the e-procurement software, Acquisition costs, supplier search costs, cost of maintenance and implementation cost influences the implementation of the e procurement. Recommendations The study recommends that for e-procurement to be effective and become an important part of supply chain management the county governments should adopt progressive ICT policies to ensure supportive ITinfrastructure are in place for example enough computers, servers for backing up voluminous data regarding the e procurement. Government should play a crucial role in ensuring that IT infrastructure and thus technology is available to the public institutions so as to

support e procurement strategies. This can be done through increased ICT budget allocations and consultative stakeholder roundtables. There is also need for the County governments to provide continuous learning and education with comparative benchmarking opportunities to ensure the optimum use of the implemented e-procurement system. There is also need to establish and develop the IT competences of supply chain staff so as to acquire the requisite knowledge and skills which are necessary for the successful implementation of a public e-procurement system. This can be done through periodic comprehensive training need analysis. The study also recommends increased budget allocations to ensuring costs associated to implementation of e-procurement are met. Particular benefits of e-procurement in the public sector are thought to include greater transparency in procurement through electronic publishing of tender notices and contract awards. This in turn is likely to enhance accountability and reduce the instances of corruption and abuse of office. This study therefore recommends that the government critically assess the baseline benefits and costs associated with the process of e-procurement implementation in order to understand and proactively develop the necessary strategies to deal with the probable outcomes of the process. REFERENCES Armstrong (2000). Performance management. Human resource management, 69-84. CIO East Africa. (2014, August 14). Kenya Government Procurement Finally moves online.Retrieved from CIO East Africa: http://www.cio.co.ke/news/mainstories/kenyagovernment-procurement-finally-moves-online Croom, S., and Brandon-Jones, A. (2007). Impact of eprocurement: experiences from implementation in the UK public sector. Journal of Purchasing and Supply Management, 13(4), 294-303. Doherty, N. F., McConnell, D. J., & Ellis-Chadwick, F. (2013). Institutional responses to electronic procurement in the public sector. International Journal of Public Sector Management, 26(6), 495515. Mose, J. M., Njihia, J. M., & Magutu, P. O. (2013). The critical success factors and challenges in eprocurement adoption among large scale manufacturing firms in Nairobi, Kenya. European Scientific Journal, 9(13). Mugenda, O., & Mugenda, A., (2003). Research Methods: Quantitative and Qualitative Approaches. Nairobi: African Centre of Technology Studies Office of Government Commerce. (2008). A guide to eprocurement for the public sector. Retrieved from OGC Website: http://www.ogc.gov.uk Oketch, C. A. (2014). Implementation of the government electronic procurement system in the county of

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Mombasa, Kenya (Master Thesis, University of Nairobi). Orina, D. (2013). E-procurement readiness factors in kenya’s Public sector (Master Thesis, University of Nairobi). Ruth, K. (2012). Information Technology and procurement process in Kenya (Master Thesis, School Of Business, University Of Nairobi). Venkatesh, V. (2000). Determinants of Perceived Ease of Use: Integrating Control, Intrinsic Motivation, and Emotion into the Technology Acceptance Model. Information Systems Research, 11(4), 342. Walczuch, R., Van Braven, G., & Lundgren, H. (2000). Internet adoption barriers for small firms in the Netherlands. European Management Journal, 18(5), 561-572. Wu, I. L., & Chen, J. L. (2005). An extension of trust and TAM model with TPB in the initial adoption of on-line tax: an empirical study.International Journal of Human Computer Studies, 62(6), 784-808