AMBO UNIVERSITY

COLLAGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF MANAGEMENT

PROGRAM: MBA IN MANAGEMENT CEP AMBO

RESEARCH PROPOSA WILL SUBMIT TO SCHOOL OF GRADUATE

STUDIES DEPARTMENT OF BUSINESS ADMINISTRATION FOR
PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR MBA. IN THE
CASE OF CENTRAL WESTE REGION AMBO ETHIO TELECOM

ASSESSMENT OF ENTERPRISE RESOURCE PLANNING (ERP)

IMPLEMENTATION.

NAME OF STUDENTS: ID NO

Dr. FIRI GADISA PGE/47152/13

INSTRUCTOR NAME: DR. DANIEL TADESSE TULU (ASST. PROFESSOR)

SUBMITION DATE: AUGUST 2021

AMBO, ETHIOPIA

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Table of Contents

LIST OF FIGURES...........................................................................................................................................v

LIST OF TABLES............................................................................................................................................vi

List of Acronyms and Abbreviations...........................................................................................................vii

CHAPTER ONE..............................................................................................................................................1

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

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

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

1.3 Research Question.............................................................................................................................5

1.4. Objective of the Research.................................................................................................................6

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 1.4.1. General Objective......................................................................................................................6

1.4.2. Specific Objectives.....................................................................................................................6

1.5. Significance of the Study...................................................................................................................6

1.6. Scope of the Study............................................................................................................................7

1.7. Limitation of the study......................................................................................................................7

1.8 Organization of the Study..................................................................................................................7

CHAPTER TWO.............................................................................................................................................8

REVIEW OF LITERATURE..............................................................................................................................8

2.1. Introduction......................................................................................................................................8

2.2. Theoretical Literature.......................................................................................................................8

2.2.1. DefinitionofERP..........................................................................................................................8

2.2.2 History of ERP...........................................................................................................................10

2.2.3. ERP system in Ethiopia.............................................................................................................11

2.3 Empirical Literature.........................................................................................................................12

2.3.1 ERP in Ethio-telecom................................................................................................................12

2.3.2 Characteristics and Benefits of ERP system..............................................................................14

2.3.3Training Employees and ERP Implementation Process at Ethio Telecom..................................20

2.3.4 ERP Implementation Process at Ethio Telecom........................................................................22

2.3.5. Factors affecting ERP implementation.....................................................................................25

2.3.7 Conceptual framework.............................................................................................................33

CHAPTER THREE.........................................................................................................................................34

RESEARCH METHODOLOGY.......................................................................................................................34

3.1. Introduction....................................................................................................................................34

3.2 Research design...............................................................................................................................34

3.3. Research Study Area.......................................................................................................................35

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 3.4. Study Population............................................................................................................................35

3.5. Data source and types....................................................................................................................35

3.6. Data collection method..................................................................................................................36

3.7. Method of Data Analysis.................................................................................................................37

3.7.1 Validity of the instruments.......................................................................................................37

3.7.2 Reliability of the instruments....................................................................................................37

3.7.3. Pretest or Pilot study...............................................................................................................38

3.8 Measurement of Variables..............................................................................................................38

3.9. Ethical consideration......................................................................................................................39

4. TIME AND COST BUDGET.......................................................................................................................40

4.1 Work plan........................................................................................................................................40

4.2 Budget plan......................................................................................................................................42

Reference..................................................................................................................................................43

LIST OF FIGURES

Figure2.1: ERP evolution……………………………….…..………………….………11

Figure 2.2: A typical ERP system ……………………………………………………...15

Fige.2.3 Conceptual framework of Dependent and Independent Variables of ERP

implementation….............................................................................................33
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 LIST OF TABLES

Table 2.1 Benefits of ERP Systems………...…………………………………………….….20

Table 3.11 Model Specification of Variables…......................................................................38
Table 4.1 Time schedule…...………………………………………………………….……..39
Table 4.2 Budget plan……………………………………………………………….……….40

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vi
List of Acronyms and Abbreviations

APS: Advanced Planning and Scheduling

APTS: Application Development tools
BI: Business Intelligence
BPR: Business-Processing Reengineering
CFF: Critical Failure Factor
CRM: Customer Relationship Management
CSF: Critical Success Factors
DBMS: Database Management System
ERP: Enterprise Resource Planning
ET: Ethio-telecom
FAN: Fixed access network
IC: Inventory control
MIS: Management Information System
MRP: Material Requirements Planning
OM: Operation and maintenance
OSBS: Oracle Small Business Suit
OSM: Office of Strategic Management
PPM: Project Phase Model
SAP: System Application and Products
SCM: Supply Chain Management
T-24: Temonuse 24/7
UAT: User-Acceptance
CWR: Central West Region

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 CHAPTER ONE

INTRODUCTION

1.1. Background of the Study

In the current era of competition, the use of computers and connected technologies has
become inevitable and it has been well recognized that information systems plays vital roles
in different industries (Rawani et al., 2002). A kind of information system known as
Enterprise Resource Planning (ERP) is becoming more popular and useful in almost all
process industries as the business world moves ever closer to a completely collaborative
model and competitors.

In today’s age of globalization and competition, it is difficult for companies to continue with
the traditional information systems. Any business industry demands companies to be cost
effective. Companies need to analyze costs and profits on a product or consumer basis to be
flexible and face ever changing business requirements (Elisabeth et al., 2003).

Enterprise Resource Planning (ERP) is one of the fastest growing segments of Information
Technology today. It is a software suit that helps organizations to integrate their information
flow and business processes. They typically support the different departments and functions
in the organization by using a single database that collects and stores data in real time. When
ERP systems are fully realized in a business organization, they can yield many benefits:
reduce cycle time, enable faster information transactions, facilitate better financial
management, lay groundwork for e-commerce, and make tacit knowledge explicit
(Davenport, 2011).

Enterprise Resource Planning (ERP) can be conceptualized as a broad set of activities that
are supported by multi-module application software which helps the organization to manage
the important parts of their operations. The operations so managed include product planning,
procurement, maintenance, customer service among others (Lau, 2003).

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Marnewick and Labuschagne (2005) say that an ERP system should not only be regarded as
an information system (IS), but also, in order to be effectively implemented should be
regarded as an integrated business system that surrounds all business functions. The same
scientists define ERP as a software package that combines both business processes and
information technology (IT) features. Information systems today are moving towards ERP
systems where every Process in the organization is integrate all Processes such as
communication, business operations, administration and so on in to ERP systems. To
accomplish these objectives, companies are increasingly turning to enterprise resource
planning (ERP) systems (Loizos, 1998).

ERP is the integrated management of core business processes, often in real-time and
mediated by software and technology. The ERP system integrates varied organizational
systems and facilitates error-free transactions and production, thereby enhancing the
organization's efficiency. An ERP system is an attempt to integrate all functions across a
company to a single computer system that can serve all an organization functions’ specific
needs. The reason ERP is so popular is that it can improve operational efficiency and
business efficacy (Gattiker, et al., 2005).

The implementation of Enterprise Resource Planning (ERP) presents opportunities for

organizations to better manage resources and information flow because if properly
implemented, an enterprise system streamlines data flows and allows personnel to have direct
access real-time operational data. Because an enterprise resource planning system is a new
management technology (Nah and Lau, 2001).

Usually, ERP systems encompass data relevant to human resource management,

procurement, inventory, financials and project management. They are used across
departments and their benefits are great if their implementations are considered as successful.
They encompass organization-wide processes whilst integrating the different modules to
ensure constant updates on the system that can be accessed to make quick and strategic
decisions. An ERP system is one that uses an application where organizational functions and
database are integrated into one system as a user interface Al-Mashari et al. (2003).

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Unlike developing countries, developed ones use ERP systems broadly since 88% of ERP
market share is owned by North America and Europe (AMR, 2008). Such fact drove ERP
vendors to turn towards developing countries - considered as a promising market – to
promote their products. Huang and Palvia (2001) say that the difficulty of ERP
implementation in developing countries cannot be referred mainly to the complexity of the
system ignoring important organizational and environmental factors such as, culture,
economic instability, governmental regulation, human capital, IT infrastructure, etc.
Investigating the above factors is gaining a growing interest particularly with the rise of ERP
technology.

Many developing countries such as Ethiopia are now adopting ERP. Developing countries,
organizations are being faced with a number of obstacles to optimize their business processes
and obtain a competitive advantage through ERP adoption The use of ERP system in
Ethiopia is a new phenomenon and ethio telecom has implemented it since December, 2010
to replace the old legacy system and integrate its functional departments. The system is being
applied in finance, human resource and supply chain functions of the company.

Implementation of ERP systems needs great effort to be successful. If it is so does it can

boost a company’s efficiency ERP systems are implemented according to the implementation
methodology of the respective vendor? So, it is important to undergo such a research to
identify factors affecting the successful implementation of ERP in case of CWR ethio
telecom.

1.2. Statement of the Problem

Many organizations underestimate the effort, cost and damage which an ERP implementation
exacts upon the organization. They are also trying to become more competitive and efficient
by transforming into digital firms where nearly all core business process and relationships
with customers, suppliers and employees are digitally enabled (Armstrong 2005).

Ethio Telecom, the company under study, is a monopoly telecom service Provider Company
and it has been serving the public for long period of time in Ethiopia. However, it was very
challenging to continue with the existing legacy system and technology as a result of the
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dynamic environment of the sector. Therefore, the government planned a reengineering
project which was undertaken from 2008 to 2011 and that was mainly designed to introduce
world class business processes including the implementation of “Enterprise Resource
Planning” system and to bring in latest telecommunication technologies in to the
organization. In the meantime, the company had been working with different international
companies from America, China, India, and France in the form of outsourcing of some
activities, benchmarking and consultation services.

The use of ERP system in Ethiopia is a new phenomenon and ethio-telecom has implemented
it since December, 2011 to replace the old legacy system and integrate its functional
departments. The system is being applied in finance, human resource and supply chain
functions of the company. Based on the evidence found from the company reports and key
representatives it has implemented ERP 8years ago.

However, ERP implementation is a complex and difficult process that can potentially reap
vast benefits for successful companies or be disastrous for those organizations that fail to
manage the implementation process.ERP is the most complex software package offered to
different buyers in several sectors of economy to centralize the data base in real time
working (Abbas, 2015).

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 (Ibrahim, 2010).

Implementation of ERP system in Ethio-Telecom is not about replicating other company’s

product rather it’s about customizing & applying the implement in line with the nature
(demographics and law) of the country, structure of the company, policies and procedures,
internal processes and other vital parameters.

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Various organizations have different working practices that depend on their culture and
nature of business (Kibebework, 2015). Therefore, it is very difficult to say the disaster of
implementation has existed because of the inefficiency of the tool, nature of the country,
nature of the company, policies and procedures or other things unless a detailed
investigation is done. The organizational culture of ethio-telecom Company differs from the
culture of other organizations. In addition, the different ERP systems have their own unique
implementation methodologies and technical requirements. Few researches have been
conducted in Ethiopia following the start of ERP implementation in the country Abiot and
Jorge (2012) have made an assessment on MS-Dynamics ERP implementation in Mesfin
Industrial Engineering. Derese (2013) has conducted a study on Oracle ERP system at
Ethio-Telecom, Sintayehu (2014) reviewed success factors for implementation of Enterprise
Resource Planning system at Ethiopian Airlines and also Kibebework (2015) has conducted
research on the challenges and current status of ERP implementation at Mugher and Derba
Cement industries. Almost all researches in this country are conducted on SAP ERP system
except Derese, who studied Oracle ERP system on Ethio-telecom.

The researcher has many motives to conduct this research, some of these are, level IT
infrastructure of the telecom industry for ERP implementation, level of Enterprise Resource
planning (ERP), level of ethio-telecom employees ‘training on ERP, Performance and
behavior are the major reason; Therefore, to the best of researcher knowledge no research
were conducted on evaluation of ERP implementation in the Ethio-telecom Ambo branch.

1.3. Research Question

This paper tries mention to the following research questions.

 To what extent that ERP system implementation is reliable in the CWR Ambo ethio
telecom?

 What is the degree of employees’ efficiency after the implementation of ERP

system in CWR- Ambo ethio-telecom?

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  What is the level of effectiveness of ERP implementation in CWR- Ambo Ethio-
telecom?

1.4. Objective of the Research

1.4.1. General Objective

The general objective of this study is to assess factors affecting the implementation of
Enterprise Resource Planning in CWR -Ambo Ethio-telecom Company.

1.4.2. Specific Objectives

The specific objectives of the research will be to:

 To evaluate and examining reliability of ERP implementation in the CWR- Ambo-

ethio telecom.

 To assess the use of ERP system on employees’ efficiency in CWR-Ambo-ethio-

telecom.

 To evaluate the effectiveness of ERP implementation in CWR- Ambo ethio-telecom.

1.5. Significance of the Study.

The study will provide information to the management of the company to focus & work on
those ERP implementation factors that has direct effect company performance. The study is
also vital and core for organizations that are proposed to implement ERP system. The general
aim of this research is to provide relevant data that can help both the ethio telecom company
and its employees to know their own weakness and strengths towards the implementation of
the ERP system. Plus, to show the factors that affecting ERP system implementation to both
parties in addition to the above listed aim this paper will be have the following specific aims:

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  To inform important decision makers in the company about the problem the
organization faced concerning ERP.

 Other companies who implemented this system or those companies who have a plan
to implement this can get benefit from this research.

 It will be as an input to other researcher for further investigation.

1.6. Scope of the Study

The study mainly focuses on the assessment of ERP implementation ERP system and have
been conducted in CWR Ambo ethio telecom branch only. Data will be collected from
permanent employees who are using ERP system. The research data will be collected from
supervisors and staffs of all sections found in Ambo branch. This is because they are the day-
to-day users of the system and they are likely to provide the relevant information.

1.7. Limitation of the study

This study has encountered the following limitations and constraints.

 Unavailability of secondary data and related research work on the current topic.
 Limited or no literature and research on ERP in Ethiopian context for reference.
 Time constraint of some interviewees and survey respondents due to busy office
works.
 Limited availability and access to documents related to the ERP implementation
project.

1.8. Organization of the Study

The study is categorized in five chapters. The first chapter shows the general background of
the study, definition of the research problem, objective, significance, and scope of the study.
The second chapter deals with reviews of literature. The third chapter presents the research
methodology used in the study. Data analysis and findings will be presented in chapter four.
Conclusions and possible recommendation will be given in the last chapter.

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 CHAPTER TWO

REVIEW OF LITERATURE

2.1. Introduction

In this review of the related literature the researcher revised the relevant study that matched
with the existed topic. This section focuses on definitions of Enterprise Resource Planning
(ERP) given by different scholars, history or evolution of an ERP system through different
years. This section also contain implementation of ERP system in Central western region
Ambo-ethio-telecom Company with its benefits,

ERP inEthiopia which assesses researches conducted on different companies implemented

it, factors affecting ERP implementation, related works done on the area based on the
objective of the study and also the chapter offers a synthesis of the conceptual frameworks of
the study.

2.2. Theoretical Literature

2.2.1. Definition of ERP

According to Fiona (2002:1), Enterprise Resource Planning (ERP) refers to large commercial
software packages that promise a seamless integration of information flow throughout an
organization by combining various sources of information into single software application
and a single database.

Beheshti (2006) defines Enterprise Resource Planning (ERP) system as “a set of business
applications or modules, which links various business units of an organization such as
financial, accounting, manufacturing, and human resources in to a closely integrated single
system with a common platform for flow of information across the entire business.”

Enterprise Resource Planning systems are very large software programs that control every
aspect of a company from sales to accounting to supply chain to human resources.

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Historically, companies have been divided by functional areas, such as marketing and sales
or accounting and finance. However, in order to react to the demands of customers in a
rapidly changing marketplace, work from must flow quickly and accurately between
functional areas (Monk & Wagner 2006). Functional area legacy systems “represent one of
the heaviest drags on business productivity” (Davenport, 1998) and have been increasingly
replaced by a single ERP system, via a single central database and common reporting tools.
Each functional area within an organization is integrated by the software. This cross-
functionality promotes business integration with the ability to view real-time results
(Ranganathan&Brown2006).

ERP systems affect a company’s business processes, make them more efficient, and in effect,
automate those (Themistocleous, 2006). These large systems change the employees’ jobs and
their way of thinking from a functional approach to one of a business process approach
(Wieder, Booth et al., 2006).

A classic example of a business process is order-to-cash, where a product is ordered, the

product is either manufactured (or located in inventory), then shipped, an invoice sent and a
bill paid. In a case study surveying 49 senior managers involved in ERP, more efficient
business processes were claimed as a benefit (Chang, 2006). There are numerous other
benefits to using ERP systems that are widely touted throughout the literature, such as
integrating all of a company’s systems on one network, with one software package giving the
benefit of reduced duplication of systems and eliminating costly middleware (Chang, 2006,
&Ranganathan, 2006).

Many companies have duplicate systems not only from functional area departmental systems
but also from mergers and acquisitions. By using a common database with a cross-functional
approach, managers have a single view of the data departments no longer own information
and become more successful (McCombs, 2007). Different departments are linked; data is
keyed in only once, avoiding typing errors, thus integrating the entire organization (Chang,
2006). In reality, few large companies have only one enormous ERP system. In addition, the
holistic view of an entire organization provided through an ERP system can give upper
management much-needed control (Monk, 2006).
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Enterprise resource planning systems are software systems for business management,
encompassing modules supporting functional areas such as planning, manufacturing, sales,
marketing, distribution, accounting, financial, human resource management, project
management, inventory management, service and maintenance, transportation and e-business
(Rashid, et al, 2002).

2.2.2. History of ERP

An Enterprise Resource Planning is a term originally shaped in 1990 by the Gartner Group to
describe the next generation of Manufacture Resource Planning (MRP) software Barton
(2001). The evolution of ERP systems closely followed the development in the field of
computer hardware and software systems and the history of ERP systems starts with efforts
of automating inventory control systems in the1960s when most organizations designed
developed and implemented centralized computing systems for their in vendor control
systems (Rashidet al,2002).Duringthe1960s most organizations designed developed and
implemented centralized computing systems, mostly automating their inventory control
systems using in victory control packages(IC). ERP systems first appeared in the late1980s
and the beginning of the1990s with the power of enterprise-wide inter-functional
coordination and integration. Based on the technological foundations of MRP and MRPII,
ERP systems integrate business processes including manufacturing, distribution, accounting,
financial, human resource management, project management, inventory management, service
and maintenance, and transportation, providing accessibility, visibility and consistency
across the enterprise (O’Leary, 2001).

During the1990s ERP vendors added more modules and functions as “add-onto the core
modules giving birth to the “extended ERPs”. These ERP extensions include advanced
planning and scheduling(APS), e-business solutions such as customer relationship
management(CRM)and supply chain management (SCM) (Rashid et al 2002).

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 Figure 2.1 ERP evolution

Source Rashid, et al 2002

2.2.3. ERP system in Ethiopia

Many scholars suggested as ERP system have many advantages for companies. In order to
get these multifunctional advantages many Ethiopian companies implemented the system
into their organizations. ERP plays a vital role in organizations which are in the pursuit of
expansion. The business success after implementation of ERP directly contributes to the
development of the industries in a country and hence contributes to the development of the
nation. However, the literature related to comparison of ERP implementation, in particular
for developing countries, is limited. This limitation gives rise to uncertainties among Small
and medium enterprises in developing countries to implement ERP. Huang.et al (2001) has
done an important study of the implementation issues among developing and developed
nations. The major drawbacks in developing countries are factors like cultural, economic and
infrastructure issues Huang, Z., &Palvia, P. (2001).

The implementation of Enterprise Resource Planning (ERP) presents opportunities for

organizations to better manage resources and information flow because if properly
implemented, an enterprise system streamlines data flows and allows personnel to have direct
access real-time operational data (Nah and Lau, 2001).

Along with this, some researchers have conducted study on ERP system implementation in
Ethiopia. For example, Abiot and Jorge (2012) have made an assessment study on Ms.-
Dynamics ERP implementation in Mesfin Industrial Engineering. Derese (2013) has
conducted a study on ERP system at Ethio-Telecom, Sintayehu (2014) reviewed success
factors for implementation of Enterprise Resource Planning system at Ethiopian Airlines and
also Kibebework (2015) has conducted research on the challenges and current status of ERP
implementation at Mugher and Derba Cement industries.

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2.3. Empirical Literature

2.3.1. ERP in Ethio-telecom

As stated and mentioned in ethio- telecom ERP project charter and reports Currently, Ethio
Telecom is integrated different divisions, departments using the modern enterprise system.
The integrated divisions are Sales and marketing, Finance, Human Resource, Network and
procurement and facility units of the company. Ethio-telecom implements this ERP system
to automate and transform the edge of company culture and also to make its vision of
becoming “World Class Telecom Operator”. Ethio-telecom enterprise software consists of a
set of interdependent software modules that support basic internal business processes like z-
smart, ERP production, NNOC SMS, and others. These enterprise system modules enable
data to be shared by multiple functions and business processes for precise organizational
coordination and control.

For the developing world, a modern telecommunications infrastructure is not only essential
for domestic economic growth, but a prerequisite for participation in increasingly
competitive World markets and for attracting new investments. In the advanced industrial
countries of Europe and North America, universal telecommunications services have
penetrated every sector of society. In many developing countries the limited availability of
service is constraining economic growth. Apart from the telecommunication infrastructure
deployment it is highly important to equip the back office activities through ITC in a manner
that can highly assist the core telecommunication activities, and implementation of modern
information and management technologies guarantees a successful improvement in
competitive ability. The offered solutions are in demand by the companies seeking to
enhance monitoring systems and upgrade their business activities. For companies to improve
transparency of their business, they need to have up-to-date information about all operation
and financial indicators, assets and resources of all departments and divisions. Actuality is
very important: information for the previous quarter or month will not help in making
justified decisions.

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Hence, the requirements for a powerful system that can quickly process large volumes of
information are highly required. ERP is an information system for company management,
designed for the efficient planning and management of all company resources, as well as for
the automation of all or individual key business processes. This solution enables proactive
resources management for the quick adaptation of business processes to changing market
conditions and allows precise evaluations of company’s current state of affairs, which helps
to increase the company’s competitiveness across the board. With the similar reasons
mentioned above ethio-telecom also introduce this system with the vision of obtaining world
class telecom service provider. To be a world class telecom operator there are many
requirements set by ITU that all telecom operators across the world need to fulfill, and some
of the requirements are having a well-defined business process as per the international
standard named e-Tom and PCMM, supporting all this business process by information
system mainly ERP and deploying the best quality of service for the customers in
Assessment of Enterprise Resources Planning (ERP) Implementation – the case of ethio-
telecom all aspects of product and services.

Hence; for the fulfilling the expected requirement and to support the steady growth of the
country’s economic development ethio-telecom implemented an integrated ERP system on
December 01/2011 on a modular manner. And mainly the license for this system
implementation has been procured from the world well known software developer named
Oracle through open tender and integrated by soft pro (i.e. Indian software integrator). And
the major reasons that drive the company to choose for ERP are mainly related to improving
company’s performance and decision making, to reduce labor costs, bureaucracy and other
related errors. And the other reasons are: to enhance the integration among work units, and
establish organizational standardization across different location

2.3.2 Characteristics and Benefits of ERP system

2.3.2.1. Characteristics of ERP system

An ERP system can be defined as an adaptable and evaluative commercial package that
supports, in real time and in an integrated manner, the management of most if not all of a

13
firm’s business processes. One can attempt to better define it by looking at its
characteristics. In this regard, an attentive observer of both the research and professional
literature will denote quite a number of attributes deemed to be possessed by ERP
systems. Enterprise Resource Planning (ERP) is a process of managing all resources of an
enterprise and their use in the entire enterprise in a coordinated manner. An enterprise
resource planning application is an enterprise-wide package that integrates all business
functions into a single system with a common database. Enterprise Resource Planning
systems are software packages composed of different functional modules such as finance
and controlling, human resources, sales, production, materials management and others.
They provide cross-organization integration of data through imbedded business processes.
Integration is the basic objective in ERP implementation. Controlling is the other main
need of ERP systems. For a software system to be called an ERP system, it must have the
following essential characteristics.

Multifunctional in scope and modular design comprising many distinct business modules
such as finance, manufacturing, accounting, distribution, etc, Use centralized common
database management system (DBMS) , Integrated in that when a transaction or piece of
data representing an activity of the business is entered by one of the functions, data
regarding the other related functions is changed at the same time, Flexible and offer best
business practices, Require time-consuming tailoring and configuration setups for
integrating with the company’s business functions, Financial and business information is
often generated automatically by ERP systems based on data previously entered, without
further human instructions and manipulations, ERP provides business intelligence tools
like Decision Support Systems, Executive Information System and reporting for better
decision making.

Figure 2.2A typical ERP system

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Source: http://www.koolgrapsite.com/tag/erp-systems

2.3.2.2. Benefits of ERP system

Many countries, especially the developed ones have benefited the advantages of ERP
systems by highly adopting these systems since early 1990s. Developing countries are now
adopting ERP systems like the developed ones. But, regardless of the ERP systems
advantages and benefits mentioned here, developing countries like Ethiopia have not yet
adopted and benefited much from such integrative information solutions which are usually
suited for organizations with large size businesses or services (Jim Odhiambo Otieno, 2010).

What are some of the perceived benefits that lead corporations to commit to the
implementation of ERP in their organizations? As indicated by Oliver and Romm (2002), “in
common with other types of investment activity the adoption of an ERP system is a
purposive intervention by an organization for bringing about a new state of affairs that is
judged to be superior to the current state”. Botta-Genoulaz, Millet, and Garbot (2005),
indicate that two distinct streams are observed from the literature. The first one focuses on
the fundamental corporate capabilities driving ERP as a strategic concept, and the second, on
the details associated with implementing an information system and their relative successes
and costs. Problems of sociological and cultural factors influencing the implementation
success as well as the implementation steps have been addressed earlier in literature.

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As indicated by Chen (2001), “planning for ERP adoption generally occurs when an
organization realizes that current business processes and procedures are incompetent for their
current and or future strategic needs”. As the result of various external and internal forces,
ethio-telecom operating environment is changing and their working systems are becoming
“incompetent”. They are not able to maximize their efficiency and therefore, profit. Any
tools that would enable these organizations to reverse this trend must be considered. In order
to promote the use of ERP by ethio-telecom, a more comprehensive look of the potential
benefits that could be achieved must be completed.

Ross, (1999:11) articulated that that as a business and strategic perspective implementing
ERP is seen as way to improve corporation’s effectiveness and efficiency, reduce their
operating, personnel, inventory and IT costs, and improve their productivity, business
growth, production scheduling, delivery time, customer service, and overall quality.
Additionally, data visibility and timely information is important to make better business
decisions. It is clear that ERP system investments have been categorized as strategic in
nature. Literature review identifies the common goal to be an increase in company sales,
reduction in production cost, reduction of lead times, and improvements in customer
relationships.

In general, ERP systems enhance inter-organization communication and collaboration

between different functions and locations for the integrated decision making process.
Standardization of the processes across the unit’s works in favor of collaboration as it
reduces the number of conflicts between the processes. The single database system
encourages communication across locations and functional units through sharing the
information. With ERP systems companies are using the same database, which can be
accessed on-line, in real-time and simultaneously by many users. Since, virtually all users
have access to the same information it improves companies planning and control practices.

And according to Engidayehu (2014) defined some of the benefits that could be realized in
ethio- telecom environment as a result of ERP implementation could be as follows: -

16
Improved responsibilities in relation to customers, Stronger supply chain partnerships,
enhanced organizational flexibility, improved decision-making capabilities, a Reduction in
project completion time and cost, Opportunity for the enterprise to re-engineer and upgrade
its business process.

ERP systems give different strategic and competitive advantages to a company. They
provide single point of data entry facility in such a way that when some data is maintained
at a module of one end, it is immediately accessible with the modules at the other ends,
thus reducing data entry efforts and redundancy. ERP system enforces a company to
reengineer its business processes to fit with the ERP solution. According to Roman
(2009), ERP systems have the following benefits.

Easier reporting and controlling facility, Enhanced technology for the institution to help
compete technologically, increased efficiency and success of processes, Integrating and
streamlining information.

Efficiency: refers to the capability of a system to provide performance relative to the amount
of the used resources, under stated conditions. It has also been divided into three sub
characteristics namely time behavior, resource utilization an efficiency compliance (ISO,
2001). The ratio of the prescribed resources expected to be used, ideally, over resources used.
It measures how economically the firm's resources are utilized when providing a given level
of objective, i.e. output requirements (Alsyouf, 2006).
Effectiveness: The ratio of actual output over the expected output. It measures the degree to
which the relevant goals or objectives are achieved (Alsyouf, 2006).
Reliability: is the capability of the software to maintain its level of performance under stated
conditions for a stated period. Reliability has four sub-characteristics consist maturity, fault
tolerance, recoverability, and reliability compliance (Fahmy et al. 2012). In terms of ERP
systems, the reliability refers to the capability of the systems to maintain its service provision
under specific conditions for a specific period. In other words, the probability of the ERP system fails
in a problem within a given period.

17
Many countries, especially the developed ones have benefited the advantages of ERP
systems by highly adopting these systems since early 1990s. Developing countries are
now adopting ERP systems like the developed ones. But, regardless of the ERP systems
advantages and benefits mentioned here, developing countries like Ethiopia have not yet
adopted and benefited much from such integrative information solutions which are
usually suited for organizations with large size businesses or services (Jim
OdhiamboOtieno 2010).

The ERP market is still growing and very profitable, so there are good reasons why
enterprises decide for ERP systems. Koch (2002) lists the main benefits and reasons
for companies which adopt ERP:

Integrating financial information, integrating customer order information,

Standardizing and speed up manufacturing processes, Reducing inventory,
Standardizing HR information

Tambovcevs, A. (2012) stated that through the use of the implemented ERP system the
Company obtains the following results:

Enhanced company operation through streamlining, improving and controlling business

processes of major importance such as procurement, customer offers, customer complaints,
equipment maintenance, marketing campaigns and others. Significant cost-reductions and
time-savings in all the above mentioned business processes.

Ability to manage service related personnel and related costs through the use of the resource
management module of the system. In the past, the company could allocate only the
productive resources’ (workers and construction site related costs) cost to each company
activity. Now by taking advantage of the resource management (timesheets) module of the
system, the enterprise is able to manage the cost of the service personnel (engineering, R&D
departments, etc.) involved.

18
Upgraded use of the company’s already operating quality management system, which was
not supported by an information system. The use of the proposed ERP system enabled the
enterprise to avoid much paperwork, to reduce personnel’s occupation times with quality
management issues and to provide report insight to the management.

Supple and efficient production planning by implementing the manufacturing management

(scheduling) module of the system. Project delivery times and idle times were reduced
significantly, productivity was raised, and more precise delivery time assessment incurred
stock level minimization and customer satisfaction improved.

Facilitated communication and data transfer of critical information for the whole enterprise.
Now employees have instant access to real-time data, documents and reports that concern
their duties. View of information flow is fully customized according to each user position.

Finally, the company exploited the abilities to control sales and promotion activities through
the system, received quantitative data about the results of each promotion technique and
managed to increase sales department efficiency. Here are some areas to look for possible
ROI and cost saving:

Reduce Inventory through better visibility and efficiency.

Savings through the reduction in duplicated efforts.

More efficient operations allowing for increase in ability to process transactions (added
capacity).

Reduction in non-value added activities (lean processing).

Higher utilization of employees (less transactional, more analytical).

Improvement in decision making through more accurate and real-time data

19
Proposed a division of practical benefits into five aspects.ERP benefit from different
perspectives, and tries to explain why ERP systems are very appealing for
enterprises of every size.

Benefits of ERP Systems

Figure 2.1 Benefits of ERP

Benefits of ERP
By automating business processes and enabling process changes, they can
1. Operational benefits offer benefits in terms of cost reduction, cycle term reduction, productivity
improvement, quality improvement, and improved customer service.
With centralized database and built-in data analysis capabilities, they can
2. Managerial benefits help an organization achieve better resource management, improved
decision making and planning, and performance improvement.
With large-scale business involvement and internal/external integration
3. Strategic benefits capabilities, they can assist in business growth, alliance, innovation, cost,
differentiation, and external linkages.
With integrated and standard application architecture, they support
4. IT infrastructure
business flexibility, reduced IT cost and marginal cost of business units’
benefits
IT, and increased capability for quick implementation of new applications.
They affect the growth of organizational capabilities by supporting
5. Organizational
organization structure change, facilitating employee learning, empowering
benefits
workers, and building common visions.
Source: created by author from Shang and Seddon (2000)

2.3.3Training Employees and ERP Implementation Process at Ethio Telecom

2.3.3.1 Training Employees

The objectives of training are to enable users get a better picture of global system’s features,
to enhance the capability and confidence of user in running system, and to enhance the
ability of user to relate the system with daily operation. The training covered finance
modules, HR modules, distribution modules, manufacturing modules, project modules,
20
service modules, and system training Abiot and Jorge (2012).End user training has been
recognized a critical factor for ERP implementation .Due to the complexity of the
integrated ERP system, end user training is essential for a robust understanding of how the
system works and how to use it. Consequently, appropriate end user education and training
will maximize ERP benefits and increase user satisfaction (Bajwa et al., 2004).

Bingi, et al., (2006) Training and updating employees on ERP is a major challenge. People
are one of the hidden costs of ERP implementation. Without proper training, about 30
percent to 40 percent of front-line workers will not be able to handle the demands of the new
system. The people at the keyboard are now making important decisions about buying and
selling important commitments of the company. They need to understand how their data
affects the rest of company. Some of the decisions front-line people make with an ERP
system were the responsibility of a manager earlier. It is important for managers to
understand this change in their job and encourage the front-line people to be able to make
those decisions themselves. Training employees on ERP is not as simple as Excel training in
which you give them a few weeks of training put them on the job and they blunder their way
through. ERP systems are extremely complex and demand rigorous training. It is difficult for
trainers or consultants to pass on the knowledge to the employees in a short period of time.
This "knowledge transfer" gets hard if the employees lack computer literacy or have
computer phobia. In addition to being taught ERP technology, the employees now have to be
taught their new responsibilities. With ERP systems you are continuously being trained.

Companies should provide opportunities to enhance the skills of the employees by providing
training opportunities on a continuous basis to meet the changing needs of the business and
employees.

According to Barton (2001) increasing reports point to poor training as a major cause behind
failed ERP projects. Not just education of the technical staff, but of the user community
who are supposed to actually work with the system. ERP changes the way companies do
business but, instead of training everyone in the company on how to do business differently,
they are trained on new computer software.

21
User training on software should a company give an attention. But when this issue is
ignored, mainly it does not have the largest quantifiable benefit for a company who
implement ERP; expenses are greatly increased in the long run. By treating resource training
with little respect and financial support, it is not hard to realize the reality of delay,
confusion and financial ruin that may result. Some companies preserve on assigning a fixed
cost or percentage to the training effort, regardless of need or variable conditions. This
mistake has surely been the cause of many failed implementation efforts. Fortunately, it has
also been a source for others to learn from such experiences and avoid repeating the mistake
(People must be handled on two levels. First, employees must be trained on the new system
in order to use it to day-to-day processes. The second level is educational experience.
Training, re-skilling and professional development of the IT workforce is serious Gargeya,
(2005).

2.3.4. ERP Implementation Process at Ethio Telecom

The implementation of ERP in ethio-telecom undergone different process, before the

deployment of oracle ERP system there was a system procured from the company called
PTE, but at that time the capability ethio-telecom project team was not as good in assessing
the required level of the system in terms of capacity, flexibility, integration and other
requirements. Hence; a decision has been passed to procure another ERP system from the
world well known software developers and as a result with the help of France telecom
experts Oracle has been selected and deploy the system. Hence; the implementation of the
entire system mainly crosses through the following phases: -

I. Package Evaluation and Selection

At this stage a decision about a perfect package from the best vendor will be done. For Ethio-
telecom ERP implementation two globally known IT developer companies named Oracle and
SAP has been participated, and these companies present their respective business solution
and the benefits that the company will get. And the established steering committee in
collaboration with the respective division and project managers’ asses these two companies

22
as per the screening criteria including the financial offers, considering all the parameters
defined Oracle has been selected in both implementing, configuring and customizing the
system.

II. Project Planning

In this phase the detail Designs the implementation plan has been defined considering the
available resources. During this phase different activities has been undertaken among these
activities: Resources has been identified, Implementation team has been selected and task for
each team has been allocated, detail activities has been identified, project governance
document designed, Special arrangement for contingencies has been framed.

III. Conference Room Pilots (CRPs) Discussion

Most ERP project teams understand the value of functional and integration testing. It’s an
important pre-go-live step to ensure the software works according to design specs and that
data flows accurately through the system. Conference room pilots (CRPs) are also critical to
addressing several non-technical critical success factors. CRP Demos are scheduled during
Analysis, Design and Build Phases of the project. The CRP session should not be scheduled
too early or too late in the project. For a typical project optional timing for the first session
would be middle of the phase. This gives sufficient time for the team to work on the tasks.
The conference room pilots have been done on phase basis:

CRP – 1: - Detailed requirements gathering interviews will be conducted, and the entire
project members from the respective Division has been participates in this requirement
gathering phase. The major activates held at this stage is: analyzing the existing business
process modeling and gap analysis, draft process flows and initial software configuration
completion prior to the CRP2, Prioritization of requirements/processes (based on business
ranking and level of configuration /customization/development required) to be demonstrated
in CRP2 or CRP3, Completion of requirements for “bucket one” for custom development
delivered to technical team.
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CRP – 2: -At this stage review of key business scenarios against predefined scripts has been
undertaken. The scenarios will be driven from the business process and requirements
mapping activities carried out earlier in the project to show how the business processes, are
mapped onto system functionality. Requests for additional functionality (an increase to the
baseline requirements) have been handled as part of the scope management process within
the project.

CRP – 3: - During CRP 3 most converted data has been available by the team for review in

CRP environment. In addition, some detail requirements like reports issue, Interfaces,
Conversions, Enhancements / Extensions components has been reviewed and any gap
identified during CRP 2 has been addressed here. After the completion of this phase the
system beloved that it can be fully integrated with the company work process and after the
final testing process it goes for go-live.

UAT: - User Acceptance Testing (UAT) is the last phase of the software testing process.
During UAT, actual software users test the software to make sure it can handle required tasks
in real world scenarios, according to specifications. Once the CRP sessions has been
completed, the users came together with the consultants and run through a series of routines,
setup according to the methodology utilized by the team in creating the testing scenarios.
Each scenario is run by the user and acceptance test has been signed to move toward go-live.
This way, the team can be able to review the entire project and ensure that someone has
signed off that they have tested their scenarios and verified that the system is functioning as
expected.

IV. Team Training

After completion of the mentioned steps employees who will work on the system has been
trained for their own respective module. This training delivery was handled by grouping the
participants in to two named super user and end users. The super users are those team
members who are highly involved since the requirements gathering and they attend this
training regardless of their work unit since they will have a significant role in assisting the

24
end users from the company side. Whereas, the end users are those employee of the company
who trained focusing on their specific work units in supporting the daily routine.

V. Going Live

The work is complete, data conversion is done, databases are up and running, the
configuration is complete & testing is done. The system is officially proclaimed. Once the
system is live, there was an intention that the old system (manual working system) shall be
totally swapped, but what has been done in reality will be addressed during data analysis and
presentation part.

VI. Post Implementation

At this phase vendor as well as super users assist the end users in any difficulty they face, in
the case of ethio-telecom in addition to the super users a dedicated system expert from the
vendor side has been assigned, the main responsibility of the expert is to support the
functional units assessing the emerged new but very critical requirements.

2.3.5. Factors affecting ERP implementation

Different scholars described factors affecting ERP implementation in different country’s

context. According to Sintayehu(2014)there are twenty critical success factors of ERP
implementation, these are; project planning and strategy, change management and
communication, top management support and commitment, project management and
leadership, clear user requirement and need assessment, capability of consultants and
implementers ,project scope management, training, documentation and knowledge transfer,
team composition, dedication and retention, data preparation and migration, incentives and
celebration of milestones, organizational culture and readiness, users involvement and
system testing, quality control and feedback, business process change and less

25
customization, adequate infrastructure and facilities(internet ,laptops, project rooms,
refreshments),trust and harmony between project teampartners,basicITcapability of users and
team members, appropriate integration and interfaces, and establishing ERP support team.
Implementation factors are defined as areas where things must go right for a business to
flourish (Rockart, 1979).

According to Leidecker and Bruno (1984), implementation factors are “those characteristics,
conditions or variables that, when properly sustained, maintained, or managed, can have a
significant impact on the success of a firm competing in particular industry”.

Different studies are conducted to identify an ERP system implementation factors. Hussien,
(2010) summarized and defined the implementation factors.

Project Plan and Vision: One of the problems faced in ERP projects is justification of the
huge resources required to implement it. Nah (2003), stated that one of the biggest problems
ERP project leaders face comes not from the implementation itself, but from the expectations
of board members, senior staff and other key stakeholders. Thus, a business plan that outlines
proposed strategic and tangible benefits, resources, costs, risks and timeline is critical to
clearly define where the resources are going to be allocated and what are the reasonable
returns from it (Wee, 2000).

An ERP plan should decide in advance what to do, how to do it, when to do it and who is to
do it. These may include the establishment of an intentional structure of roles though
determination of the activities required to achieve goals of an enterprise and each part of it,
the grouping of these activities, the assignment of such groups of activities to a manager, the
delegation of authority to carry them out, and provision for coordination of authority and
informational relationships horizontally and vertically in the organization structure (Koontz,
1980).

Top management Support: The most important factor when adopting and implementing
ERPS is the top-level management’s Commitment to the strategic direction itself. Top
management role in following-up and controlling the ERP system project implementation is
as important as its role in launching and facilitating it. Al-Mashari et al. (2003) stated that top
26
management support does not end with initiation and facilitation, but must extend to the full
implementation of the ERP system. Koontz (1980) defines controlling as a "managerial
function of measuring and correcting performance of activities of subordinates in order to
assure that enterprise objectives and plans are being accomplished". Thus, top management
should be kept updated about the project progress so they can maintain, control and correct
the implementation process if needed.

Project Management: ERP systems are organization-wide projects that deal with many
aspects and often require genuine changes; hence a powerful and qualified management that
is able to manage, steer and control it is essential for the success of implementation. ERP
project managers should enjoy a good technical experience, business knowledge and
interpersonal skills.

Al-Mashari et al., (2003) stated that "the success of projects is related to the knowledge,
skills, abilities and experiences of the project manager as well as the selection of the right
team members". Manager therefore should be able to properly manage the project, set the
required and suitable strategies and continuously follow, direct, control and maintain
implementation process. According to Dennis Lock (1996), "project management has
evolved in order to plan, coordinate and control the complex and diverse activities of modern
industrial and commercial projects". Project management should there for set effective
strategies.

Project champion: Some studies showed that the presence of project champion is found to
have a good impact on ERP implementation. Project Champion refers to the existence of
high level executive sponsor with power to set goals and control changes and continually
strive to resolve conflicts and manage resistance (Nah, Lau and Kuang, 2001).

User Training: Users have to be intensively trained to avoid any error or confusion during
when implementing and using it. Sufficient training can increase success for ERP systems.
Management should focus in training courses and willing to allocate all resources needed.
The quality of training is very important for a good understanding and proper utilization of

27
the system. Consultants play a key role by transferring their knowledge to the end users
either through training program or interaction during implementation (Nah et al., 2003).

Vendor Support: ERP system differs not only from other information systems but also
from one ERP system to another which requires a depth and expert knowledge in the selected
system particularly to implement it. Vendors and their trained consultants are usually the
only parties who have acquired such knowledge. Therefore, vendors play a substantial role
prior, during and after the implementation. Vendor should participate in the implementation
plan architecting; provide well designed training programs for the organization staff and
dedicate specialized consultants with good experience in the system as well as business
process to assist the organization throughout implementation phases (Holland et al., 1999).

Communication: Communicating ERP project with employees is essential to build

awareness about the importance of these projects to the organization. This will enhance them
to cooperate with the implementation team and participate in change. Another important
point that should be communicated with the employees is how the system will impact their
jobs. Managers need to communicate the importance of the project, and the employees
should be informed in advance about the scope, objectives and the changes that will occur
(Sumner, 1999).

IT infrastructure: The IT staff’s quality (i.e., knowledge of technological changes and up-to
date skills) is cited among the important factors required for IT systems success in general
and for ERP implementation success in particular (Essex et al., 1998).

Empirical evidence suggests that IT systems are more likely to succeed in organizations
where general IT skills and relevant in-house IT expertise exist (Igbaria, 1990

In addition to these Prakash and Dixit (2011) identified eight factors affecting the ERP
implementation, discussed below.

I. Data Provided: Adequate and correct data should be provided. It had to be collected from
the distributed Servers that had to be reconciled, mapped into the ERP System in its standard
format and finally the data had to be uploaded into the system.

28
II. Parallel Systems: When issues began arising after implementation of ERP in Finance,
HR, CSM and BI was completely ignored, they shift work with these modules back to the old
system. This is vulnerable the proper integration of organization data and led to data
mismatch in other modules as well. As a result, support system provided by the vendor
became obsolete and difficult to implement. Hence, use of parallel systems should be
avoided.

III. Training and Testing: Training and testing of the system should be done properly by
the ERP consultants, that is, the vendor is provided as part of the implementation procedure
to some group of people from the clients’ side known as the Core Team. This core team in
turn trains the rest of people who are actually responsible for day-to-day transactions called
the End Users. The training which is provided to the end users was not carried out mainly
due to the fact that their lack of computer literacy triggered a strong resistance to change for
the new system being installed and caused reduction of employee’s motivation.

IV. Expectations from the ERP System: Clarity in management objectives and
expectations from the ERP System are clearly stated to the vendors. This led to a belief of the
systems’ power to integrate the company actual functions. According to the vendor,
management expected a quick return on investment which was not practical since it takes few
time to notice any significant returns. Hence, top management should be patient with the new
system and any fear of failure should be done with for a successful running system.

V. Employee Retention: After the completion of ERP training provided to the staff and
within some days of the system going live, many of the trainees from the organization quit
the company causing great losses to organization in the form of shortage of key resource i.e.
trained staff.

VI. Design& Testing: This is a very important part of software testing and should not be
neglected; the computer workstations are set up in a room to represent each of the major
tasks of customer service /order entry, planning, goods-in, stores and finance. A simplified
data set is loaded and the company operations run through. The data is gradually increased as

29
first the project team, then managers and finally users get more familiar with the software.
This is conducted just before the ERP becomes fully functional in the organization.

VII. Customization - Customization Services involves any modifications or extensions that

change how the out-of-the-box ERP system works. Customizing an ERP package can be very
expensive and complicated. Some ERP packages have very generic features, such that
customization occurs in most implementations. Customization work is usually undertaken as
"changes requested beforehand" software development on a time and materials basis. But
ideally, experts in the ERP implementation field have suggested that customization should be
less than 30%. The level of customization in the case of Multiplex exceeded beyond this and
posed a great deal of problems when key applications were run and found to be not working
as they were intended to.

VIII. Stakeholders shall be identified in the initial phase including customers and
vendors:

Stakeholders are all those who are directly or indirectly affected by a company implementing
any new ERP system be it organizations like those of the supplier as well as the vendors.
Failure to identify the stakeholders gives the implementing company a major setback when
the concerned people or organizations work against the new system. So identification of all
stakeholders has to be done in advance.

According to Somers and Nelson (2001), success factors affecting implementation of ERP
are the following; top management support, project team competence, interdepartmental co-
operation, clear goals and objectives, project management, inter-departmental
communication, management of expectations, project champion, vendor support, careful
package selection, data analysis and conversion, dedicated resource, steering committee, user
training, education on new business processes, business process reengineering (BPR),
minimal customization, architecture choices, change management, vendor partnership,
vendor tools, use of consultants.

Success factors affecting implementation of ERP as top management support, project team
competence, project management, user training and education, external consultants, proper
30
package selection, vendor’s staff knowledge and support, clear goals and objectives, user
involvement and participation, project champion, project cost, effective change management,
project composition and leadership, organizational communication, information flow
management and minimum customization Upadhyay et al (2011).

These are; teamwork and composition, top management support, business plan and vision,
effective communication, project management, project champion, appropriate business and
legacy systems, change management program and culture, business process reengineering
(BPR) and minimum customization, software development, testing and troubleshooting,
monitoring and evaluation of performance Nah et al (2001).

Huang et al. (2004), also identified lack of senior manager commitment to project, ineffective
communications with users, insufficient training of end-user, fail to get user support, lack of
effective project management methodology, attempting to build bridges to legacy
applications, conflicts between user departments, the composition of project team member,
fail to redesign business process, unclear/misunderstanding changing requirements. The
major factors of ERP implementation in developing countries are factors like cultural,
economic and infrastructure issues.

Wong et al. (2005) identified factors affecting the implementation of ERP. These failure
factors are; ERP system misfit, high turnover rate of project team members, over-reliance on
heavy customization, poor consultant effectiveness, poor IT infrastructure, poor knowledge
transfer, poor project management effectiveness, poor quality of BPR, poor quality of
testing, poor top management support, too tight project schedule, unclear concept of the
nature and use of ERP system from the users’ perspective, unrealistic expectations from top
management concerning the ERP system, users’ resistance to change.

Asemi et al (2007) categorized the Critical success factors of ERP implementation into 3
main categories. First are Managerial factors consisting of all the CSFs which relate to the
management, its decision making capability and support to the organization. It states clearly
the understanding about project management, managerial ideology, organizational structure
and change management techniques. Second is technical factors, which include ERP

31
implementation time, costs and complexity, and the availability of in-house expertise in
technology. Third is a people factor, which consists of staff and department training, quality
programs, attitude of staff towards the management and vice-versa.

Because of economic, cultural and infrastructure factors there is a difference in the

implementation of ERP in developing and developed countries. In addition to these there are
four key differences, lack of knowledge, cost, integration and culture

2.3.5.1 Factors for poor implementation of ERP system

To implement Enterprise Business Application in an organization is generally quite difficult.
However implementing such system is much complex and expensive. It has been found that
organizations in spite of spending high price on ERP implementation process have not been
able to achieve true benefits out of it. Despite the popularity of ERP the failure rate of its
implementation remains high. As per the reports it has been estimated that Enterprise based
IT solutions failure rate remain in the 67% -90% range (Cologero, 2000)

Poor Quality of BPR: One of the most important factors for successful implementation of
Enterprise Application is proper business process reengineering (BPR). Aligning the
business processes to the Enterprise Application is critical (Holland et al., 1999; Sumner,
1999). Thus it is recommended to avoid insufficient and poor quality of business process
reengineering that leads to the failure of implementation process in Indian organizations.

High Turnover Rate: Such high turnover rate of Enterprise Application team members
should be avoided as such lead to implementation failure one because of the loss of trained
resource. While going through the literature survey and case studies it is found that project
team members suffered from high work stress while coping up with the implementation
phase. This condition lead to insufficient knowledge transfer among the project team
members during the ERP life cycle.

Lack of proper communication: Effective communication is critical to Enterprise

Application implementation (Falkowski et al., 1998). Promotion of project team members
and the advertisement of the project progress to the rest of organizations depend on proper
and effective communication (Wee, 2000). Thus lack of proper communication leads to

32
confusion and misunderstanding for the successful implementation process and thus leads to
failure, hence should be avoided.

Poor consultant effectiveness: Proper and effective role of consultants can be regarded as
one of the most important issues towards successful implementation of Enterprise Business
Application. The responsibility of the consultants is to ensure proper distribution and
handling of data as well as to restructure organizational hierarchies in order to align ERP
systems and International Journal of Managing Value and Supply Chains (IJMVSC) Vol. 4,
No. 1, March 2013 45 corporate requirements. Thus it is sure that poor consultant’s
effectiveness would lead to failure in implementation.

Overreliance for high customization: It is recommended to avoid over realization on heavy

customization. Overreliance on high customization results increase in complexity and cost
and thus leads to implementation failure.

Poor quality of testing: Poor quality of testing not only waste time and money but also
leads to implementation of Enterprise Business Application an unsuccessful one. Thus
organizations of any magnitude are recommended to avoid poor quality of testing

2.3.7. Conceptual framework

A conceptual framework represents the researcher’s synthesis of literature on how to explain

a phenomenon. It maps out the actions required in the course of the study given his previous
knowledge of other researchers’ point of view and his observations on the subject of
research.

In other words, the conceptual framework is the researcher understands of how the
particular variables in his study connect with each other. Thus, it identifies the variables
required in the research investigation. It is the researcher’s “map” in pursuing the
investigation.
As McGaghie et al. (2001) put it: The conceptual framework “sets the stage” for the
presentation of the particular research question that drives the investigation being reported
based on the problem statement.
33
The following conceptual framework illustrates influence of variables on the success of the
ERP projects in ethio-telecom.

Figure 2.3 conceptual framework

Independent Variables Dependent Variables

Reliability
Implementation of ERP
Efficiency

Effective

Source; Author 2018

CHAPTER THREE

RESEARCH METHODOLOGY

3.1. Introduction

This Chapter presents and describes the approaches and techniques the researcher will use to
collect data and investigate the research problem. They include the research design, study
population, and census data collection methods, data collection instruments, data quality
control (validity and reliability),and procedure of data collection, data analysis and
measurement of variables.

34
3.2 Research design

The objective of the research is to evaluate the implementation of ERP in CWR Ambo ethio-
telecom, so for the research which has the above mentioned objective Explanatory type of
research is better. Explanatory studies are valuable when studies are meant to establish
causal relationships between different variables. Examining a situation or a problem to
explain the relationship between variables would be the outcome of an explanatory study
(Saunders et al., 2007).

3.3. Research Study Area

The study is conducted in CWR Ambo ethio-telecom, on all division of the company. Ambo
is a town in western Ethiopia. Ambo is found to Central West of the capital Addis Ababa at
------ Km. The total population of Ambo town is about --------(--------) Central Statistical
Agency of Ethiopia web).

3.4. Study Population

Employees who are working in CWR-Ambo ethio-telecom company employees at each

division is used as target populations .The population under study is 63 comprising of all
members of the ERP users such as Finance division staffs, Business partner (BP), Operation
and maintenance (OM) division, Fixed access network (FAN) division, Legal division,
Indirect channel (IDC) division, Direct channel (DC) division, and security divisions.

In order to get the necessary input for the research, employees and supervisors who are the
primary data sources for the study is included in the study. The total population for this
research is 63. All of the 63 staffs is participated in implementation of ERP project in the
CWR-Ambo ethio telecom branch. The total census for this project is 63 respondents and the
respondents were manageable.

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3.5. Data source and types

Primary and secondary data was used in this study and source of the primary data was from
the users of Oracle ERP system in Ambo ethio telecom. Respondents were contacted
personally to collect the required information via questionnaire. Observations of visual
working place were also made the degree to which ERP is practiced and observe the types
of factors affecting ERP implementation.

The secondary data was collected from official documents of ethio -telecom Company, such
as work processes, procedures, forms and other documents of ethio telecom which are linked
with the ERP implementation and varies relevant literature document were used.

3.6. Data collection method

Gathering necessary data for the study was done by using a structured questionnaire. The
structured questionnaire gives uniformity on the questions and likewise compatibility of the
responses where the respondent indicates views on a scale of 1 to 5 in the form of a Likert.
The research data was collected from fixed access network (FAN) staffs, security staffs,
operation and maintenance (OM) staffs, indirect channel (IDC), direct channel (DC), finance
and legal. This is because they are the day-to-day users of the ERP system and they are likely
to provide the relevant information.

In the study a questionnaire with close ended questionnaires and semi-structured interviews
will be develop for CWR Ambo ethio-telecom employees. Questionnaire was used as data
collection instrument for its appropriate and for its nature of characteristics that allow
informants to express their ideas and opinions freely. A questionnaire is a research
instrument consisting of a series of questions and other prompts for the purpose of gathering
information from respondents. Although they are often designed for statistical analysis of the
responses, this is not always the case. The researcher used the questionnaire survey because it
is practical, large amounts of information can be collected, questionnaires data can easily be

36
quantified, it is also a cheap way of collecting data, a large group of respondents is covered
within a short time, it also allows in-depth research, to gain first hand information and more
experience over a short period of time (Kothari, 2004).

3.7. Method of Data Analysis

Once the data was collected, verification was conducted and complete questionnaires were
identified. Then the data is coded in to SPSS (statistical package for social science) according
to the variables selected and the questions asked.

The data analysis was performed using explanatory and statistics. IBM SPSS statistics
(statistical Package for social scientists) software version 20 was used to process the data.

3.7.1. Validity of the instruments

The researcher tries to make the research valid. The questionnaire was prepared based on the
review of literature on the same study. 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. Therefore, to assure validity of the instrument the researcher is given a
chance for professionals on the area to review the questionnaire and it was finally validated
by the advisor.

3.7.2 Reliability of the instruments

Qualitatively, the reliability of the instruments was established through a pilot test of the
questionnaire to ensure consistency and dependability and its ability to tap data that would
answer the objectives of the study. The results was subjected to a reliability analysis

To make the questionnaire reliable, the question prepared for the respondents are simple and
clear, procedure of test administration will be standardized. In order to clarify the
questionnaire for the respondents the researchers deeply elaborate the instruments.

37
The appropriate test for reliability is inter-item consistency reliability which is popularly
known as the Cronbach's coefficient alpha.

According to Joseph and Rosemary (2003), Cronbach’s alpha reliability coefficient (α)
normally ranges between 0 and 1. According to these authors, there is a greater internal
consistency of the items if the Cronbach’s alpha coefficient closes to 1.0.

Based on the following rule of thumb of (George and Mallery, 2003, p. 231), if “α> 0.9 –
‘Excellent’, α>0.8 – ‘Good’, α>0.7 – ‘Acceptable’, α>0.6 – ‘Questionable’, α>0.5 – ‘Poor’,
and α<0.5 – ‘Unacceptable’.”

Table 3.1 below shows that there is “acceptable” internal consistency of each independent
variable’s parameters used.

Table 3.1 Reliability

Statistics

Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items

.766 .772 30

3.7.3. Pretest or Pilot study

According to Mugenda (1999), piloting refers to pre-testing of the research instrument by

administering it to a selected sample which is similar to the actual sample which the
researcher plans to use in the study. The pilot study was used to identify items in the
questionnaire that are ambiguous or unclear to the respondents and hence changed or modify
them. The pilot study also helped the researcher to familiarize with the administration of the
instrument

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3.8 Measurement of Variables

The independent variable and the dependent variables were measured on a five point Likert
type scale (1- strongly disagree, 2-Disagree, 3-Not sure, 4- Agree and 5-Strongly agree). The
choice of this measurement is that each point on the scale carries a numerical score which is
used to measure the respondents’ attitude and it is the most frequently used summated scale
in the study of social attitude. According to Bill (2011), the Likert scale is able to measure
perception, attitudes, values and behaviors of individuals towards a given phenomenon.

To evaluate the effects of ERP implementation regression analysis was applied to determine
the relationship between variables and forming models. The Model for this study was
developed using the following factors.𝑌= 𝛽0+𝛽1𝑋1+𝛽2𝑋2+𝛽3𝑋3+⋯+𝛽𝑛𝑋𝑛+ 𝜀

Where Y= dependent variable (constant).

Table 3.1Model Specification of Variables.

Independent Variables (X) Beta Coefficient (𝞫) Variables X-Value Assigned

Reliability β1 X1
Efficiency β2 X2
Effectiveness Β3 X3
dependent variable (constant Y

3.9. Ethical consideration

Participants were approached through official written letters from the School of Business and
economics of Ambo Universities. Besides, permission concerning the measures used was
secured. Furthermore, participants were informed that participation is on voluntary basis and
all information they provide were keep with utmost confidentiality. In line with this, they
were informed that their names were not be directly mentioned and rather codes were used in
the reporting of this research. This requires giving the participants adequate information
about what the study was involve and an assurance their consent to participate would be free
and voluntary rather than coerced. Participant’s informed consent may be obtained either
through a letter or form that clearly specifies what the research involves, includes clearly laid
down procedures the participants can expect to follow and explain the ways in which their

39
confidentiality will be assured. In this case, a letter will be obtained for this purpose. It may
also be imperative to describe possible risks and benefits of the research. The signing of the
voluntary informed consent by each individual participant will be confirmation that the
respondents are not coerced to participate in the study but are doing so willingly.

4. TIME AND COST BUDGET

4.1 Work plan

The duration when each activities of the research will be carried out is planned as follows so
as to complete the research on time. The whole activities are supposed to take about 3
months respectively and each of the activity is going to be done in particular time

The activities and duration of each activity is as follows

Table 4.2Time schedule

Months of
No Activities the year(2021)
JUL AUG SEPT
1 Title selection X
2 Proposal writing X
3 Data collection X
4 Data analysis X
5 Report writing X
6 First draft submission X
7 Final report Submission X

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4.2 Budget plan

The rough estimation of monetary budget required to run each of the activities of the research
efficiently is scheduled as follows

Table 4.3 Budget plan

Amount Unit cost Total cost

No Item required needed Birr Cents Birr Cents
1 Paper 2 ream 135 00 270 00
2 Pen 3 15 00 45 00
3 CD Rewritable disc 2 35 00 70 00
4 For secretary & duplications of paper 1 person 800 00 800 00
5 Internet service 8 hours 36 00 288 00
6 Compilation of the report paper 5 250 00 1250 00
Transport 13 9 00 117 00
Total 2840 00

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