Influence Of Open Source Enterprise Resource Planning and System Success Features On Performance of Saving and Credit Co-Operatives in Kenya

Abstract

Kenya‟s vision 2030 under the economic pillar on financial services sector, seeks to create a vibrant and globally competitive financial sector that seeks to transform the country Deposit-Taking SACCOs operation through adoption of innovative information system. In Kenya, Deposit-Taking SACCOs are legal financial institutions under SACCO Societies Act 2008. They serve demand for access for credit to underserved populations excluded by commercial banks and face challenges such as stiff competition for membership from other deposit taking institutions particularly commercial banks. Other challenges are poor information delivery channels, inconsistent financial records and high operational costs due to obsolete information system. Challenges have necessitated SACCOs to adopt and utilize open source enterprise resource planning. Despite adoption and use of open source ERP, deposit taking SACCOs still faces performance challenges. Lack of a model for open source ERP adoption-use and system success features for prediction of organisational performance has seen failures by these SACCOs to effectively adopt and apply open source ERP to enhance their performance. The main purpose was to study the influence of open source enterprise resource planning and system success features on performance of saving and credit co-operatives in Kenya. The specific objective are: effect of adoption factors on open source ERP adoption-use; effect of open source ERP adoption-use on organisational performance; mediating effect of system success features on relationship between open source ERP adoption-use and organisational performance. The study adopted positivism philosophy and correlational research design to explore the relationships between variables. The study was carried out in Kenya. The study unit of analysis were 164 Deposit–Taking SACCOs licensed in 2016 and 378 respondents were sampled using multi-stage sampling consisting of stratified, proportionate and convenience sampling. The primary data were collected using questionnaires. Quantitative data was analyzed using descriptive in SPSS 21 and PLS-SEM bootstrapping using SmartPLS 3.2.8. The extent of adoption-use of open source ERP among Deposit-Taking SACCOs is at 85.5% meaning there is moderately high adoption-use of open source ERP. The study identified key factors influencing adoption of open source ERP as environment (competitors influence, market scope and long-term viability of the technology), attitude (perceived usefulness and ease of use) and normative structure (peer influences and superior influences). Other factors are technological (cheap support cost, effective maintenance cost in the long-run), organisational (top management support) and perceived behavior. Adoption factors had significant influence on adoption –use with (β = 0.74, t= 24.28) and R2 of 0.56, while adoption-use had significant influence on the organisational performance (β = 0.73, t= 20.32) and R2 of 0.53. On further analysis adoption-use factor had significant influence on all organisational performance constructs namely learning and growth, internal process, customer and finance. Finally system success features had partial mediation effect on the relationship between adoption-use and organisational performance with (β = 0.78, t= 22.20) and R2 of 0.61. On further analysis system success features namely system quality, information quality and service quality had partial mediation effect on the organisational performance constructs with service quality noted as a key quality with the highest effect size across all the organisational performance factors compared to other two system success features and therefore organisations should focus on service quality to increase the effectiveness of the open source ERP for organisational performance. The study therefore recommends more support and sensitization on open source ERP to increase its adoption-use by the Deposit-Taking SACCOs. Additionally the Deposit-Taking SACCOs and other policy makers such as Sacco Societies Regulatory Authority should formulate strategies aimed at increasing adoption-use of open source ERPs.