Addis Ababa University

College of Business and Economics

Department of Accounting and Finance

ENTERPRISE RESOURCE PLANNING (ERP) SYSTEM

IMPLEMENTATION: EVIDENCE FROM ETHIO-
TELECOM
By
Hailemeskel Gazu Mane (Id. No.GSR 3049/07)

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

Arts Degree in Accounting and Finance

Advisor:
Sewale Abate (PhD)

May, 2016
Addis Ababa Ethiopia
 Addis Ababa University

School of Graduate Studies

College of Business and Economics

Department of Accounting and Finance

Enterprise Resource Planning (ERP) System

Implementation: Evidence from Ethio-Telecom

By

Hailemeskel Gazu

Name and Signature of Members of the Examining Board

Name Title Signature Date

____________ Chairperson ____________ _____________

____________ Advisor ____________ _____________

___________ Examiner ____________ _____________

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 ACKNOWLEDGMENT

I would like to thank all who have cooperated and contributed for this work. First, I am very
grateful to my advisor Dr Sewale Abate for his overall guidance, understanding, reviews of the
work and constructive comments. I also extend my gratitude to all the questionnaire participants
for their cooperation and support.

I am also thankful to all my friends and family for their encouragement, and all who have
contributed to this work in one way or the other.

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 Table of Contents

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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 Abstract

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

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

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

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 CHAPTER I

1. INTRODUCTION

1.1. Background of the Study

Enterprise resource planning (ERP) system has been one of the most popular business
management systems, providing benefits of real-time capabilities and seamless
communication for business in large organizations. However, not all ERP implementations
have been successful. Since ERP implementation affects entire organizations such as process,
people, and culture, there are a number of challenges that companies may encounter in
implementing ERP systems. Currently in Ethiopia, not a good deal of business in large
organizations have been implemented the enterprise resource planning system. Ethio-Telecom
,Ethiopia airline Commercial bank of Ethiopia and Miderock Ethiopa are among a few to
implement ERP system in Ethiopia.

Telecommunications services in Ethiopia date back to 1894 and by the time it was named as
Telecommunications Corporation. Since then various re-organizations have been made due to
the change in regime and responsibilities vested to the company. Notably, after the end of the
war with Italy it was re-organized as Telephone, Telegraph and Postal Services but shortly
after it was re-named as The Imperial Board of Telecommunications of Ethiopia (IBTE) by
proclamation no. 131/52.

The Imperial Board of Telecommunications of Ethiopia became the Ethiopian

Telecommunications Authority in 1981. In 1996, the government established a separate
regulatory body, the Ethiopian Telecommunication Agency (ETA) by Proclamation 49/1996,
and during the same year, by regulation 10/1996, the Council of Ministers set up the Ethiopian
Telecommunications Corporation (ETC). In 2010, the Ethiopian Telecommunications
Corporation was replaced by Ethio Telecom by Regulation No.197/2010 of the Council of
Ministers under the Ministry of Communication and Information Technology (MCIT).

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The company, which is the sole telecom provider, is delivering telecommunication services all
over the country with diversified products and services including fixed line telephony,
wireless (mobile) telephone service, data and internet service, rural connectivity service and
General packet radio service (GPRS).Currently, the company is expanding its network
coverage in the capital city and all over the country aiming to provide the latest telecom
services including the Fourth Generation (4G) service.

According to 2014annual report of the company, the number of customer base reached over
30 million, gross revenue in excess of 15 billion and number of permanent employees reached
over 9 thousand dispersed all over the country under the 14 regional offices and over 200
shops, (Ethio Telecom, 2014).

Throughout in most of these changes, the company continued to use the accounting software
known as AS400, which was developed by IBM long time ago to process and store customer,
supplier, employee and financial data. However, the recent increase in product and service
line, revenue, expenditure and customer base due to the mass telecom expansion makes
evident that the legacy system will not be capable enough to process and store such bigger
information. Therefore, due to such changes the company recently replaced AS400 with
modern enterprise software known as Enterprise Resource Planning (ERP),(Ethio Telecom,
2014).

The vision of an integrated information system worldwide started in the 1960s.It was evolving
from the inventory tracking systems to Materials Requirements Planning MRP , and finally
to Enterprise Resource Planning ERP ERP system initially focused on
automating back office functions that didn‟t directly affect customers and the general
public. Front office functions, such as customer relationship management (CRM), e–business
systems and supplier relationship management (SRM) became integrated later, when the
internet simplified communicating with external parties Brady, Monk & Wagner, 2001

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

integrates all necessary business functions into a single system with a common database. The
system basically integrates and streamlines the business processes of an organization across
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departmental and geographical borders. According to Nah and Lau (2001) ERP is a packaged
business software system that enables a company to manage the efficient and effective use of
resources (materials, human resources, finance, etc.) by providing a total integrated solution
for the organization information-processing needs(Nah and Lau,2001).

Specifically, ERP is the process of integrating all the business functions and processes in an
organization to achieve numerous benefits First, a single point of data entry helps to reduce
data redundancy while saving employees time in entering data, thereby reducing labor and
overhead costs. Secondly, the centralization of information, decision-making, and control
leads to increases in efficiencies of operations and productivity, as well as coordination
between departments, divisions, regions, and even countries Thirdly, the sharing of a
centralized database provides business managers with accurate and up-to-date information to
make well-informed business decisions Fourthly, functional integration will consolidate all
sorts of data, such as financial, manufacturing, and sales, competitive
advantage over competitors Jacobs, Whybark, 2000

1.2. Statement of the Problem

Today, many public and private organizations worldwide are implementing ERP systems in
place of the functional legacy systems that aren‟t anymore well-compatible with modern
business environment. ERP system is a modular integrated business software system that
facilitates an organization to use its resources efficiently and effectively. The integration
brought by ERP enables organizations to respond to competitive forces and market
opportunities, to improve product portfolio, to reduce carrying costs and to maintain supply-
chain relations strictly( Mishra et al. 2011)

ERP systems, similar to other management information systems, are often perceived as very
complex and difficult to implement. System implementation success depends on many factors:
the ERP system and academia. The evidence of enterprise implementation failures go back to
the late 1990s. For many organizations, ERP systems are the largest systems they have worked
with in terms of the financial resources invested, the number of people involved and the scale
of implementation. Several cases of ERP system implementation have experienced
3
considerable difficulties. The failure rate of ERP implementation is very high, ( Mishra et al.
2011).

Although the outstanding advantages of ERP systems have led organizations to move towards
adopting them, failures in ERP implementations that invoke attention to the nature of ERP
implementation are commonly reported. On one hand, ERP system implementing causes
massive change that needs to be carefully managed in order to acquire the benefits of its
solution (IBID). On the other hand, typically, ERP systems are expensive, take a longer time to
implement and have a risk of failure during implementation for systems demanding trained and
skilled implementation. Hence, to ensure the successful implementation of ERP system, there
are critical issues that must be carefully considered. Among which are the commonly called
Critical Success Factors (CSF) in the ERP implementation, which are general to almost all
using the system. These factors are organization‟s vision and objectives, organizational change
process, people and the different approaches to implement it. To name, but some of the
challenges common to organizations implementing ERP include implementation is done i

n stages, appropriate training, proper analysis, support from senior management, compatibility
issues with ERP modules, cost overheads, and investment in infrastructure (Holland, C. P., &
Light, B. 1999). So here it is rational posing questions as „are these challenge common to Ethio
Telecom?‟, „are there any new challenges peculiar to Ethio-Telecom in relation to
implementing ERP?‟ and so „what likely solutions could be recommended as a ways
forward?‟. These are pressing issues that need be dealt with so as to make progress as
envisioned by the company.

Therefore, the common challenges faced taken in to account, it is deemed important to assess
and evaluate the overall ERP implementation process in Ethio Telecom.

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 1.3. Objectives of the Study

1.3.1. General Objective

Following the problem statement stated above the general objective of this study is to assess
and evaluate the overall effectiveness of ERP system implementation in Ethio-Telecom.

1.3.2. Specific Objectives

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

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

 To identify ERP system implementation challenges peculiar to Ethio-Telecom other
than the common ones due to the very nature of the company.
 To devise solution for the challenge of ERP implementation in Ethio -Telecom

1.4. Research Questions

The study is dedicated to answer the following leading questions:

- What is the nature of the whole process of the ERP system implementation in Ethio-
Telecom?
- What are ERP system implementation constraints in Ethio-Telecom?
- What peculiar ERP system implementation challenges does the Ethio-Telecom face
from its very nature?

1.5. Significance of the Study

Due to the increase in globalization and competition, it is evident that information is a key
factor on the success of any company. As ERP is an integral system that encompasses
different activities and used by various functions, its successful implementation will provide a
great opportunities for organizations to enhance their services and being customer focused.
This study is dedicated to identify ERP implementation challenges in Ethio Telecom and

5
communicate the organization for further corrective actions. In addition, the study will share
any success stories to other organizations planning to implement ERP system in near future.

1.6. Scope of the Study

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

specifically in the sole telecom company, Ethio Telecom. The study focuses on evaluating
how Ethio Telecom implemented ERP system and sees if there is any post implementation
challenges. Evaluation will be done by comparing the globally accepted Critical Success
Factors (CSF).

1.7. Limitation of the Study

Due to the absence of enough organizations that implemented ERP system with in Ethiopia
and the monopolistic structure of telecommunication service will limit comparability of Ethio
Telecom implementation process with similar organizations. Some important responses may
not be obtained because of bureaucratic procedures and business secrecy.

1.8. Organization of the Report

This report contains a total of three chapters. Chapter one of the study focuses only
introductory aspects including background of the study statement of the problem, objectives
of the study, significance, scope and limitation of the study. Chapter two presents the review
of related literature. Chapter three presents the research design and methodology including
data source and method of data collection, sampling techniques used, and measurement and
analysis parts.

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 CHAPTER II

2. LITERATURE REVIEW

2.1. Theoretical Review

2.1.1. Concepts and Definitions

Enterprise Resource Planning (ERP) systems provide integration and optimization of various
business processes, which can lead to improved planning and decision quality, and a smoother
coordination between business units, resulting in higher efficiency and a quicker response
time to customer demands and inquiries. It is also a software solution that integrates business
functions and data into a single system to be shared within a company. In the past two
decades, companies around the world have implemented ERP Systems. ERP systems are
software packages that enable companies to integrate their business processes and all the
information relevant to their organisation. With ERP systems, firms are able to manage all
their resources (i.e. physical or intangible assets, finances, human resources, production, etc.)
more effectively. The ERP system not only aids in standardizing business processes across an
enterprise but also helps management increase their visibility of the business by providing
real-time financial and production information. (Seddon, Shanks &Sylvia 2013).

An ERP system is a packaged business software system that allows a company to automat
eand integrate the majority of its business processes, and share common data and practices
across the entire Enterprise. ERP also accesses information in a real-time environment. Many
companies use ERP software to integrate the enterprise-wide information and process for
example their financial, human resources, manufacturing, logistics, sales and marketing
functions. ERP is designed mainly to provide a total, integrated company‟s resource to
manage the business process efficiently and effectively (Seddon, Shanks &Sylvia 2013).

7
2.2 Empirical Review
2.2.1 Core ERP components

ERP system is commonly viewed as a back-office support system. But practically it is also
affront office system. Components or modules of ERP system are divided in to two as core
ERP n components and extended ERP components .Core ERP components are the traditional
components which are included in most ERP systems and they primarily focus on internal
(back-office) operations(Aladawani,A.M).

Extended ERP component are extra components that meet the organizational needs not covered
by the core components and primarily focus on external (front-office) operations. Core ERP
components are accounting and finance (FI), human capital management (HCM) and logistics
(LOG) which contains production and materials management. Extended components are
modules such as business intelligence, customer relationship management and porta.These core
and extended ERP modules are themselves comprised of different sub-modules. Finance core module
includes general ledger, receivables, payables, asset management and related sub-modules. Payroll,
personnel planning and time management are some of the sub modules in human resources
core module while materials management and production planning are sub-modulesof logistics
core component(Ibid). Some of the ERP main modules are explained as here below.

Financial Accounting - FI

This module collects all the data relevant to financial accounting into an integrated General
Ledger . It provides comprehensive and consolidated financial reports and integrates the
different sources of financial data including Accounts Payable, Accounts Receivable, Asset
Management and Treasury. It also provides up-to-date or real time information for enterprise-
wide control and planning. The FI module is for external reporting purposes and it is
compatible with the international accounting standards(Ibid).

8
 Controlling – CO

CO module includes a variety of planning and controlling tools for enterprises following a
uniform system of reporting. It provides comprehensive reports to support most common cost-
accounting issues. Controlling module is usually for internal reporting purposes(Ibid).

Human Capital Management – HCM

HCM is the other common ERP module. ERP HCM module is used as the core employee
record with details of personnel actions, benefits administration and payroll, position
management and compliance with government regulations. HCM consists of three sub-
modules namely Organizational Management (OM), Time Management (TM) and Payroll
(PY) (Ibid).

Materials Management – MM

MM module supports the procurement or purchasing process to optimize the logistics chain
within the enterprise. MM enables automated supplier evaluation and can lower procurement
and warehousing costs with accurate inventory and warehouse management. It also integrates
invoice verification. Tools for inventory control and purchasing information help to identify
trends and plan accordingly(Ibid)..

Production Planning – PP

This is a module which supports production planning, manufacturing processes, analysis and
production control. PP covers the production process from the creation of master data to
production planning, material requirement planning and capacity planning up to the production
control and costing(Ibid)..

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 Project System – PS

Project system module coordinates and controls all phases of a project with direct cooperation
with Purchasing and Controlling, from quotation to design and approval, to resource
management and cost settlement(Ibid)..

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

In traditional IT systems, each of the system components are found separated as applications
by their own with one database system for each of them. However, ERP system integrates all
of the components through one central database which is common for all the modules.

Table 2.2.1

ERP system ERP Main Modules Sub-Modules

Financials • GL - General Ledger
• AP - Accounts Payable
• AR - Accounts Receivable
• AM - Asset Management
• Cash Management
• Banking
• Profitability Analysis
• Budgeting and Controlling
Human Resources • PY - Payroll
• OM - Organizational
Management
• Personal planning
• TM - Time management
• Travel expenses
• Training

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Logistics & Operations
Sales & Marketing
• MM - Materials Management
• PP - Production planning
• Materials planning (MRP)
• Inventory management
• Quality management
• PS - Project System management
• Shipping
• Order management
• Sales management
• Sales planning

Unlike the traditional function-oriented departmental systems, ERP systems are enterprise-
wide and oriented towards processes instead of being function-oriented. Corporate computing
with ERP systems allows companies to implement a single integrated system by replacing and

re-engineering their mostly incompatible old traditional information systems

Figure 2.2.1 Non-integrated system versus integrated ERP system

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

11
Table 2.1 below is a typical example of how ERP systems avoid manual processes and data
redundancy which is common with the traditional non-ERP systems.

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

Non-ERP system process ERP system process

1. Salesperson enters customer order 1. Sales person enters customer order on
2. Salesperson notifies CRM of order sales order system (SOS)
3. CRM employee records order 2. SOS:
4. Salesperson notifies accounting 2.1. Notifies CRM
5. Accounting employee records sale 2.2. Notifies Accounting
6. Salesperson notifies warehouse 2.3. Records sale in Accounting System
7. Warehouse employee records order 2.4. Notifies Warehouse
8. Warehouse employee notifies 2.5. Records order on Warehouse
packing & shipping Management System (WMS)
9. Shipping employee records order 3. WMS
10. Shipping employee notifies 3.1. Notifies packing & shipping
procurement 3.2. Records order on Packing and
Shipping System (PSS)

11. Procurement employee records 4. PSS

order for raw materials replacement
12. Procurement employee notifies 4.2. Records order for raw materials
production to make more
13. Production employee records order
4.1. Notifies procurement
with Procurement Management System
(PMS)
5. PMS
5.1. Notifies production to do more
work
5.2. Enters manufacturing order on
Production Planning System (PSS )
12
ERP systems are based on a relational database. Using a relational database and appropriate
process design allows companies to capture data once and then make that data available for use
throughout the firm; by all appropriate users [22]. ERP system mostly runs on a three-tiered
client/server system with three layers of logic as diagramed in figure 1.3

The presentation layer

This is a graphical user interface (GUI) or a web browser which allows users the ability to
access and analyze information and system functions (Rashid et al., 2002).

The Application layer

It consists of business rules, functions, logic, and programs where business processes and end-
users interact with the system (Ibid).

The Database layer

This is the management of the organization‟s operational or transactional data. This is usually
built up on industry standard relational database systems like Oracle or SQL server. There are
three types of data in ERP systems namely master data, transaction data and configuration data.

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

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

o Configuration data is data in tables which contain the settings and configurations of the
system to suit and fit to the business logic of the company.

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

ERP system is used not only as operational or transactional system, but also as controlling and
executive decision support system. According to Chung , the data and information in ERP
systems is divided into three layers as operational system (transactional data entry layer),
tactical system (controlling layer) and strategic or Executive Information Systems (EIS) layer
as in

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

PROS AND CONS OF ERP SYSTEMS

There are different initiatives and reasons for acquiring ERP systems. ERP systems have the
advantage of seamless integration between all parts and processes of a company, and this in
turn gives the possibility of proper control . They are used to control and reduce data
redundancy and accuracy. Redundant tasks will be removed and the efficiency of the company
increases.

The other advantage of ERP systems is that easier and timely reports functionality. Users can
get self-services of data needs and access. They can run their own reports and have better
access to their data and the ability to manipulate and report on this data.

The advantages of ERP systems are summarized as here below.

 Integrate financial information of different sources such as revenues, sales and cost.
 Standardize Human Resources information for simple tracking of employees time and
benefits data.
 Standardize and speed up operating processes
 Reduce inventory and lower costs
 Integrated, on-line, secure, self-service processes for business
 Eliminate costly mainframe / fragmented technologies
15
  Empower and enable employees, partners, customers and suppliers as clearly
demonstrated in figure

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

Management/Enterprise-Resource-Planning.html)

In general, compared to the traditional functional IT systems, ERP systems provide different
benefits to a company and these benefits can be viewed in different dimensions as operational,
managerial, strategic, IT infrastructure and organizational as in table2.f 2.3.

Table 2.3: ERP System benefits in different dimensions

Dimensions Benefits
Operational
o Productivity improvement
o Cost reduction
o Quality improvement
o Customer satisfaction

Managerial
o Decision making
o Resource management
o Performance management

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 Strategic
o Business growth
o Business cooperation
o Business leadership

IT Infrastructure
o Business change flexibility
o IT co

On the other hand, ERP systems have some drawbacks and limitations. These systems are
usually complex. Regardless of their long-term benefits and reduced maintenance costs, initial
one time implementation is expensive. And even if data accuracy and integration is achieved
by ERP systems, it is hard to correct or amend data once it is maintained in the system as it will
affect many modules and processes. While ERP systems have more efficient methods, freedom
and self-creativity practice with the system is minimal(Ibid).

Limitations of ERP systems are discussed and summarized below.

• Cost and length of implementation

Even if ERP systems can save costs in long term, initial implementation is too expensive. This
cost depends on the scope and number of ERP modules which are selected and installed, size
of the company, use of consultants, software license and hardware and length of the
implementation time. As ERP systems are integrative and complex, it takes long time to
implement these systems. ERP implementation costs millions of dollars and takes 1-3 years of
tim(Whyte, D. & Fortune, J. 2002).

17
• Business process re-engineering and customization

ERP systems are developed based on industry best practices. If these best-practice solutions in
the ERP system do not match the business processes, then organizations are required to re-
engineer their business processes to fit these best practices. However, changing all processes
may lead to a loss of competitive advantage. Strategic processes which give competitive
advantage to a company should not be changed. In this case, the ERP system must be
customized and configured properly to fit the business processes (Ibid).

Configuration refers to setting and filling of parameters and tables in the system whereas
customization is changing the code of the system. On the other hand, customization of the ERP
software is limited and major change is not allowed. In addition, customization has problems
related to upgrading. When the ERP software is upgraded by the vendor, all customizations
may have to be re-checked. So, there should be clear and prior decision about the processes to
be preserved and those to be re-engineered(Ibid).

User interface and usage

ERP systems can be difficult to use. They are too restrictive and rigid (highly controlling) and
do not allow much flexibility in implementation and usage. Moreover, users may have to go
through many screens in order to maintain a single data set. This is because screens are
developed based on the program flow and logic. It is when they are used more and more that
ERP systems are appreciated by users(Ibid).

• Interoperability and interface

The system can suffer from the weakest-link problem. Inefficiency in one department or at one
of the partners may affect other participants. So, the integrated links need high accuracy in
other applications to work effectively. There are frequent compatibility problems with the
various legacy systems of the partners(Ibid).

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• Responsiveness

ERP systems have low response time to user actions and information requests. Due to the
complexity and user interface screens, ERP systems usually take long time to respond to data
entry and report generation processes(Ibid).

2.2.2 Critical Success Factors (CSFs) in ERP implementation

One of the first researches about CSF in ERP implementation is accomplished by Holland in
1999 titled “A Critical Success Factors Model for ERP Implementation. He divided CSF in two
dimensions including of strategic and technical then he classified legacy system, business
vision, ERP strategy, top management support and project schedule and plans under strategic
dimension and client consultation, personal, software configuration, client acceptance,
monitoring and feedback, communication and trouble shouting under technical dimension
(Holland & Light, 1999).

After investigating critical success factors in ERP implementation in Malaysia, Jafari, Osman
& Tang concluded that there are 10 critical factors that contributed for successful ERP
implementation. These are top management support, clear goals and objectives,
communication, effective project management, business process reengineering, data accuracy
and integrity, suitability of software and hardware, vendor support, education and training, and
user involvement are critical in Malaysia (Jafari, Osman, & Tang, 2006).

CSFs for ERP projects have been studied from a number of different perspectives. Elisabeth et
al. 2003 emphasized social enablers such as strong commitment by top management, a great
implementation team, extensive education and training, clear understanding of strategic goals
and empowered implementation team as necessary qualifications to a successful
implementation.

Beside the leadership commitment (Majed et al 2003) suggested that a clear vision and
business director is fundamental for the success of ERP system implementation. It also

19
considers IT strategic process a sub-set of the business strategy planning process where it sets
the architecture and requirement for the short, medium and long-term requirements.

The success or failure of ERP implementation is closely related to how the companies handle
the process. The ERP implementation process could differ in every company. The differences
might concern to the implementation goals, the scope, or the available resources. But among
all the differences in every implementation process there are some general points that are
important in the process and would strongly result in the success or failure in the
implementation of ERP. Those important points were identified as critical success factors (Li
& Sylvia 2005).

CSFs are defined as “those few critical areas where things must go right for the business to
flourish” (Li & Sylvia 2005). Understanding the critical success factors in ERP
implementation would give some guidelines on what factors that should be given more
attention in order to bring the implementation process into success. The CSFs could either be
a risk or opportunities, depends on how the organizations handle them.

CSFs are classified in to seven categories; Business plan and vision, Change management,
Communication, ERP team composition, skills and compensation, Project management, Top
management support and championship, Systems analysis, selection und technical
implementation(Fiona & Santiago, 2006)

In this research, (The researcher) will use organization vision and objectives, top management
support, project management, team composition, education and training and post
implementation support will be used as CSFs in ERP system implementation in Ethio
Telecom.

Top management support refers to the extent to which top managers in the organization
provide direction, authority, and resources during and after the acquisitions of IT systems,
including ERP systems (Princely, 2008). The ERP project must receive approval and support
from top management before it can be started. As ERP projects span divisional boundaries
and affect many stakeholders in an organization, senior executives need to mediate between

20
various interest groups to resolve political conflicts when necessary (Ngai et al, 2008). Top
management support in ERP implementation has two main facets: providing leadership; and
providing the necessary resources (Jafari et al, 2006).

ERP systems implementation is a set of complex activities, involving all business functions
and often requiring between one and two years of effort, thus companies should have an
effective project management strategy to control the implementation process, avoiding
overrun of budget and ensuring the implementation within schedule. Having a realistic time
frame is very important. If the target completion time schedule were unrealistically short, the
pressure to rush through would result in the implementation being carried out in a haphazard
manner. On the other hand, if the implementation delayed for too long, people would tend to
lose faith and/or patience, which also will result in low morale and resistance. Conducting
periodic project status meetings in which each team member reports progress and problems is
an invaluable means for evaluating the progress of the ERP implementation. Selecting the
right project leader is also important for the project implementation success. (Zhang et al,
2002). Another decisive element of ERP implementation success or failure is related to the
knowledge, skills, abilities, and experience of the project manager as well as selection of the
right team members, which should not only be technologically competent but also understand
the company and its business requirements (Somers & Nelson, 2001).

ERP implementation teams should be composed of top-notch people who are chosen for their
skills, past accomplishments, reputation, and flexibility. It has also been repeatedly mentioned
throughout the literature that there is a critical need to put in place a solid, core
implementation team that is comprised of the organization‟s best and brightest individuals
(Umble et al, 2003). This factor is about the combination of member and skill in ERP team.
The practitioners that organization should practices are, ensure that in the ERP team includes
people both business and technical knowledge. The selection of the implementation, vendors
and consultant is important to the project. Ensure that team leader possess the authority that is
recognized throughout the organization. Team should be balance and cross functional. The
representative should include both internal staff and consultant (Stephan, et al, 2009).

21
Decision maker in the project team should be empowered to make quick and effective
decisions (Ngai et al, 2008).

The main purpose of ERP training must be the effective understanding of the different
business processes embedded in the ERP system. The training and education program should
commence with the ERP project team, senior management and finish with the end users
Furthermore, the different users and each level in the project group need diverse training. For
instance, the ERP end users need to learn those functions that are associated with their
occupations. The ERP project team should have a comprehensive understanding of the
system‟s functionality. It has been suggested that reserving 10–15% of the total ERP
implementation budget for training will give an organization an 80% chance of
implementation success. (Umble et al, 2003).

2.2.3 Challenges of ERP Implementation in Business

In spite of ERP‟s significant growth from the late 1990s to the present day, there are a number
of challenges that companies may encounter when implementing ERP. Today, most
multinational firms are using ERP and that more small and midsize companies have begun to
adopt ERP. However, despite ERP‟s promises to benefit companies and a substantial capital
investment, not all ERP implementations have successful outcomes. ERP implementations
commonly have delayed an estimated schedule and overrun an initial budget. Furthermore,
ERP implementations have sometimes failed to achieve the organization‟s targets and desired
outcomes. Much of the research reported that the failure of ERP implementations was not
caused by the ERP software itself, but rather by a high degree of complexity from the massive
changes ERP causes in organizations (Scott & Vessey, 2000; Helo et al., 2008). These failures
can be explained by the fact that ERP implementation forced companies to follow the
principle of „best practices‟ in most successful organizations and form appropriate reference
models. According to Helo et al., (2008), “Unlike other information systems, the major
problems of ERP implementation are not technologically related issues such as technological
complexity, compatibility, standardization, etc. but mostly [about] organization and human
related issues like resistance to change, organizational culture, incompatible business

22
processes, project mismanagement, top management commitment, etc”. For instance, Huang,
Chang, Li and Lin (2004) presented the top ten risk factors causing ERP implementations
failure.

Table 2.2.4 Top ten risk factors of ERP risk

Priority Name
1. Lack of senior manager commitment

2. Ineffective communications with users

3. Insufficient training of end-users

4. Failure to get user support

5. Lack of effective project management methodology

6. Attempts to build bridges to legacy applications

7. Conflicts between user departments

8. Composition of project team members

9. Failure to redesign business process

10. Misunderstanding of change requirements

Source: Huang et al., 2004

The risk factors depicted in the table above illustrate various organizational considerations:
organization fit, skill mix, project management and control, software system design, user
involvement and training, and technology planning. Since ERP implementation inevitably
causes organizational changes, it requires the engagement of senior management from across
the organization that is able to resolve conflicts. Without the commitment of senior
23
management, ERP implementation has a high risk of failure. In other words, due to changes
in business processes across an organization, there can be resistance to adopting the ERP
system. ERP connects and integrates all business functions within the organization. Therefore,
it is critical that management staff be committed, and particularly that they equip employees
who are using business functions influenced by ERP with clear channels of communication.

Excellent project management is also needed for successful ERP implementation. Project
teams should have clear guidelines to execute ERP implementation from their project
objectives and work plan to their resource allocation plan. Without good project management,
ERP implementation projects that are large in scale and must take place over longer time
periods may end in failure. Furthermore, the composition of team members plays a crucial
role in ERP implementation. ERP integrates diverse business functions across an organization
into one single system, necessitating a complex and integrated software package. If a project
team does not clearly understand the changes in its organizational structure, strategies, and
processes from ERP implementation, it will not be in a position to benefit from ERP‟s
competitive advantage. In order to best implement ERP, project team members should be
selected with a balance between members with business experience within the organization
and external experts with specialties in ERP.

24
 CHAPTER III

3. RESEARCH DESIGN AND METHODOLOGY

3.1. Research Design

The objective of the study, as put above, is to assess and evaluate the practice and constraints
of implementing ERP in Ethio-telecom, which by nature following describing what is going on
in the company with regard to ERP implementation. Hence, for the study with the
aforementioned objectives Exploratory type of research is worth using. The research design of
this study is Exploratory. Data Source

The researcher would mainly use primary data sources. These sources include Ethio Telecom
management group, ERP users, project team members, and key suppliers and customers. In
addition, secondary data sources such as management reports and ERP project related
documentations would be used.

3.2. Sampling Technique

The population of study includes Ethio-Telecom management group, ERP users, project team
members, and key suppliers and customers. Taking size of population (from which sample was
to be taken) in to consideration, random sampling method would be employed to select
representative sample from the population. Generally representatives of the total population
have been included in the research study. All parties involved in the implementation process of
Enterprise Resources planning System are represented by the sample. As a division human
resources, Finance & Sourcing and Facility divisions are major source of information. The
organization has five hierarchical levels. These are chief Officers, officers; manage
supervisors, and staffs‟; among this hierarchal level chief officer, officer and manger are key
users of ERP .As result of this statement show that the majority of key user taken as for
respondent and the other taken randomly, Therefore out of 38 randomly select sample a 11
them are form key user and the rest of 27 of supervisor and staff member . In determining the

25
actual sample size the researcher taken in to account the minimum required returned sample
size, type of data analysis to be used and the expected rate of missing data. Because of the
geographical, time, cost and transportation constraint, the study was concentrated on Addis
Ababa. Moreover, studying different zones and, regions would not bring significant different
since company follows centralized management system most of the activities are similar. As a
result, almost all ERP user head office of Ethio -telecom were taken as a population for this
study.

3.4 Data Collection

In order to achieve the stated objectives the study was planned to base on both primary and
secondary data. The secondary data would be collected from the company‟s work processes,
policies, procedures, forms and other documents which are linked with the ERP
implementation and also from different literatures on the area; whereas primary data for the
study would be collected from the concerned sources through questionnaire and focused group
discussion. To reach the wider stakeholders, survey method is believed to be efficient data
collection method. The survey questionnaire was be prepared using 5 point Liker scale after
having sufficient and appropriate literature review. Critical Success Factors (CSF) such as
organizational vision and objectives, top management support, vendor selection process,
project management methodology, education, training and support activities would be used as
a framework in questionnaire design. Moreover, focused group discussion would be used to
broaden the discussion in the analysis. Secondary data was collected by accessing the
company‟s archives and databases, and publications.

3.5 Data Presentation and Analysis

The collected data would be presented by using tables and charts that to be expressed in the
form of frequency, percentage and mean. Then, descriptive analysis technique was applied to
manipulate the organized data using SPSS (of appropriate version) as the main tool. The output
obtained from the system will be analyzed quantitatively.

26
3.6. Validity

According to Kothari, (2004), Validity is the most critical criterion and indicates the degree to
which an instrument measures what it is supposed to measure. Validity can also be thought of
as utility. In other words, validity is the extent to which differences found with a measuring
instrument reflect true differences among those being tested. As stated above, questionnaire
was used to collect the primary data (see Appendix).Meanwhile, the questionnaire was adopted
from Adopted from Beadles, Lowery, & Johns,(2005), Batool, Sajid, & Raza (2012), and Shiri
(2012) scientific Standardize questionnaires. Therefore, to assure validity of the instrument the
researcher has given a chance for professionals on the area to review the questionnaire and it
was finally validated by the advisor. Ethical Issues

 The study was in line with the organizations policy in relation to any intellectual
property rights of the organization.
 Regarding privacy of the respondents, their responses are strictly confidential and
only used for academic purposes.

 It could not be ethical to access some confidential documents of the organization. So,
the organization‟s code of ethics taken in to account without significantly
compromising the findings of the study.
 Concerning references, all the materials and sources are properly acknowledged

27
 CHAPTER IV

4. RESULTS AND DISCUSSION

This chapter presents the results of the study and interpretation of the findings. The chapter
comprised of two sections. The first part presents the profile of respondents showing gender,
age group, level of education, work experience, and position of respondents using simple
description. The second part presents analysis of the study variables by using bar chart, tables
and consisting of percentages and mean. And it also contains the discussion of results and
overall responses.

4.1. Demographic Profiles and Characteristics of the Respondents

This section presents the findings from descriptive statistical analysis for demographic
characteristics of the respondents namely gender, educational status and age group. The
description is made using percentages, mean, minimum as well as maximum values and
standard deviations.

Accordingly, based on the collected data from the respondents, among the total respondents
males cover higher number (76.3 per cent) and the remaining is covered by female respondents
(23.7 per cent).

28
Table 4.1 demographic characteristics of respondents

Variables Frequency Percent Valid Percent Cumulative Percent

Male 29 76.3 76.3 76.3
Gender Female 9 23.7 23.7 100.0
Total 38 100.0 100.0
Frequency Percent Valid Percent Cumulative Percent
Diploma 1 2.6 2.6 2.6
BA/BSC 33 86.8 86.8 89.5
Educati
masters and 4 10.5 10.5 100.0
on
above
Total 38 100.0 100.0
Frequency Percent Valid Percent Cumulative Percent
<25 4 10.5 10.5 10.5
25-30 18 47.4 47.4 57.9
Age 31-40 5 13.2 13.2 71.1
>40 11 28.9 28.9 100.0
Total 38 100.0 100.0

Source: Own Survey data, 2016

Regarding educational level of respondents of the company, majority (86 per cent) of the
respondents were found first degree holders; while masters and diploma holders among the
respondents take 10.5 per cent and 2.6 per cent respectively. Therefore, majority of the ERP
users found to have at least a first degree and hence it could be deduced that the human
resources profile of the ERP users in terms of educational background is in a good status. On
the other hand, the result reveals that Enterprise Resource Planning can well be implemented
and managed by a minimum educational status requirement of first degree.

When age group of the respondents is referred majority of the respondents in the group of the
ERP users were found to lie down in the age group range of between 25 and 30 (47.4 per cent).
29
The rest of the ERP users were lied down in the age groups of >40 (28.9 per cent), 31 – 40
(13.2 per cent) and <25 (10.5 per cent). Therefore, youngsters comprise of nearly 60 per cent
of the ERP users in Ethio-telecom head office, which could guarantee the future of enterprise
resource planning in the company.

Table 4.2 job positions of the respondents

Variable Frequency Percent Valid Percent Cumulative Percent

Supervisor 4 10.5 10.5 10.5
Manager officer 7 18.4 18.4 28.9
Job position
Non-managers 27 71.1 71.1 100.0
Total 38 100 100.0

From the point of view of the job positions that the ERP users hold in the company the
respondents were divided in to managerial (supervisory or managerial office position) and non-
managerial positions. Accordingly, majority (71.1 per cent) of the ERP users in Ethio-telecom
were seen to be non-managerial employers. The remaining share (28.9 per cent) of workers
goes to that of managerial (supervisory or managerial office position). Therefore, the results of
descriptive analysis reveal that enterprise resource planning is exercised in non-managerial
positions than managerial or supervisory positions.

4.2. ERP Implementation and Constraints

Challenges and constraints in implementing ERP solutions are quite normal. Though it is not
completely a technical job, a lot of planning and proper communication is very much essential
to implement ERP across the organization. In line with Ethio-telecom was not thought an
exception. The next section is dedicated to analyze matters related to the challenges and
constraints in implementing and exercising enterprise resource planning in Ethio-telecom.

4.2.1. Stepwise ERP Implementation

From the theoretical perspective it is very important, that ERP implementation is done in
stages; because trying to implement everything at once will lead to a lot of confusion and
30
chaos. Therefore, while implementing ERP in a given organization it is worth going through
with in steps so as to avoid any kind of complication and complexity that might come from the
very nature of the solution itself or the context in which it is deployed.

To test or check whether ERP solution is implemented in stepwise manner or not (adapted at
once), respondents were asked to rate the process of implementation of ERP in their
organization as king them as “the current deployed ERP system meets stepwise achieving the
goal of making the working process automat”. The respondents from their experience of ERP
implementation rated as very low, low, neutral, high or very high. Accordingly, majority of
ERP users (78.9 per cent) rated the ERP solution was adapted and done in stages. From this
fact, hence it could be concluded that the priori criteria “stepwise implementation” was not
considered as putting the challenge and constraint in the implementation of ERP in Ethio-
telecom.

Table 4.3 stepwise implementation

Frequency Percent Valid Percent Cumulative Percent

Low 4 10.5 10.5 10.5
Neutral 4 10.5 10.5 21.1
Stepwise 19 50.0 50.0 71.1
implemen High
tation
Very high 11 28.9 28.9 100.0
Total 38 100.0 100.0
Source: own survey data, 2016

4.2.2. Top Management Support

Obviously lack of support from senior or top management in implementing solutions like ERP
will lead to unnecessary frustrations in work place. Also, it will cause delay in operations and
ineffective decisions. So, it is essential to ensure that the senior management supports the
transformation in a company to a higher level of technology. And this issue of management
31
support can be checked through functional and technical support, level of dependency or
training.

This study most preferably used three measures – functional and technical support of
integrators, level of dependency on integrates and user training – to test whether top
management support is available in place and time in the company or not; by asking the
respondents to rate each of the criteria in a Likert scale.

The result of the study showed that from “the functional and technical support of integrators”
point of reference, it was found that 47.4 per cent of the respondents (ERP users) rated that the
functional and technical support of integrators were successful in relation to knowledge
transfer; whereas only 26.3 per cent not successful – rated the knowledge transfer as low and
very low. From this fact hence, the functional and technical support of integrators in relation to
knowledge transfer is not a sever constraint putting problem in implementing ERP for Ethio-
telecom.

However, with respect to level of dependency on integrates, most (57.9 per cent) of the
respondents responded that level of dependency on integrates was high and very high implying
that ERP users aren‟t essentially proficient enough in exercising the solution.

Table 4.4 top management support

Criteria Frequency Percent Valid % Cumulative Percent

Very low 3 7.9 7.9 7.9
Low 7 18.4 18.4 26.3
functional and Neutral 10 26.3 26.3 52.6
technical support High 16 42.1 42.1 94.7
Very high 2 5.3 5.3 100.0
Total 38 100.0 100.0
Frequency Percent Valid % Cumulative Percent
Level of Low 3 7.9 7.9 7.9

32
dependency on Neutral 13 34.2 34.2 42.1
integrates High 17 44.7 44.7 86.8
Very high 5 13.2 13.2 100.0
Total 38 100.0 100.0
Frequency Percent Valid % Cumulative Percent
very low 14 36.8 36.8 36.8
Low 12 31.6 31.6 68.4
Supper users
neutral 3 7.9 7.9 76.3
training
High 9 23.7 23.7 100.0
Total 38 100.0 100.0
Source: own survey data, 2016

Similarly, ERP users‟ responses on “Ethio-telecom super users are trained in a way that can
fully replace the integrators support” were sought. And the result revealed that majority (68.4
per cent) of the respondents responded that Ethio-telecom super users weren‟t well trained in a
way that can fully replace the integrators support.

In sum, hence, with regard to the support of top management in assisting successful
implementation of ERP in Ethio-telecom, an observable gap is evident implying that proper
support is urgent.

4.2.3. The Rate of Training, Documentation and Knowledge Transfer

Appropriate training is very essential during and after the implementation of a new technology
in a company. The staff should be comfortable in using the application or else, it will backfire,
with redundant work and functional inefficiencies. Accordingly, the issue of training could be
addressed by analyzing whether training was given, whether it is exhaustive and adequate
(training availability, training exhaustiveness and training adequacy).

33
Table 4.5 the Rate of Training, Documentation and Knowledge Transfer

Frequency Percent Valid Percent Cumulative %

Very low 9 23.7 23.7 10.5
Training was given Low 12 31.6 31.6 55.3
exhaustively for all Neutral 4 10.5 10.5 65.8
users
High 12 31.6 31.6 97.4
Very high 1 2.6 2.6 100.0
Total 38 100.0 100.0
Frequency Percent Valid Percent Cumulative %
Very low 14 36.8 36.8 36.8
The training given
Low 10 26.3 26.3 63.1
on the system was
Neutral 7 18.4 18.4 81.5
adequate and
High 4 10.5 10.5 92.1
useful to the
Very high 3 7.9 7.9 100.0
functional module
Total 38 100.0 100.0
Frequency Percent Valid Percent Cumulative %

There was a gap Very low 14 36.8 36.8 36.8

between imparted Low 15 39.5 39.5 76.3

training and Ethio High 6 15.8 15.8 92.1
telecom business Very high 3 7.9 7.9 100.0
requirement Total 38 100.0 100.0
Source: own survey data, 2016

For the first question raised to assess if the ERP users had got training on ERP system
implementation exhaustively to all the users, the majority of the respondents (55.3 per cent)
had responded that training wasn‟t given exhaustively for all users. Hence, this indicates that
Ethio- telecom didn‟t deploy an intensive training program in order to equip those employees

34
who are expected to work on the system as main tool. From this the study concludes that lack
of training was observed as one common constraint for ERP implementation in Ethio telecom.

In addition to what has been raised just before, the respondents were asked if the training given
to group of users was adequate and useful for functional module. The result revealed that 63.1
per cent of the respondents responded that the training given on the system wasn‟t adequate
and useful to the functional module. By this, it could be said that the respondents believe on
that on the top of the already imparting training program, additional enhancement training
program is highly required. By this reflection, the research concludes that lack of training is
also another challenge constraining successful ERP implementation.

Moreover, from the responses of the ERP users, it was found that there was a gap between
imparted training and Ethio-telecom business requirements pertaining to the successful
implementation of ERP for the fact that 76.3 per cent of respondents replied the same. In line
with this, Weltin (1999) indicates that training and changing management are the matters that
affect all phases of ERP implementation. Similarly, O‟leary D. (2000) stresses that by saying
the importance of training cannot be neglected and it is not something that could be conducted
only before and after implementation but rather it has to be present in each part of ERP life
cycle; but the company doesn‟t exhaustively exert its effort to enhance the knowledge of its
employees through different means (i.e. class room training, on job training, coaching,
monitoring, and so on) as result the company‟s employing the integrator beyond their state
time frame since employees are not capable handling it with their own way.

4.2.4. Compatibility with ERP Module

Compatibility issues with ERP modules usually lead to issues in integration of modules.
Companies associate different vendors to implement different ERP modules, based on their
competency. Therefore, it is very essential that there is a way to handle compatibility issues in
dealing with implementation of technologies such as ERP solutions. In this study to deal with
the issues of compatibility, user friendliness, ease of understandability and ease of
understandability of the reporting formats were used as yardsticks. Hence, respondents (ERP

35
users) were asked a series of questions in relation to compatibility issues with ERP modules
and rate using the five scales (Likert scale).

Table 4.6 compatibility with ERP module

Frequency Percent Valid % Cumulative %

Very low 8 21.1 21.1 21.1

User interface of the Low 22 57.9 57.9 79.0

system is easily High 5 13.2 13.2 92.1
understandable Very high 3 7.9 7.9 100.0
Total 38 100.0 100.0
Frequency Percent Valid % Cumulative %
Very low 12 31.6 31.6 31.6
Low 11 28.9 28.9 60.5
User can work on the
Neutral 1 2.6 2.6 63.2
system without any
High 13 34.2 34.2 97.4
challenge
Very high 1 2.6 2.6 100.0
Total 38 100.0 100.0
Frequency Percent Valid % Cumulative %
Very low 12 31.6 31.6 31.6
Low 16 42.1 42.1 73.7
The reporting
Neutral 1 2.6 2.6 76.3
formats are easily
High 7 18.4 18.4 94.7
understandable
Very high 1 2.6 2.6 100.0
Total 38 100.0 100.0
Source: own survey data, 2016

The questions rose for the respondents to rate compatibility includes: “user interface of the
system is easily understandable”, “user can work on the system without any challenge” and

36
“the reporting formats are easily understandable”. Accordingly, the result of the study showed
that 79 per cent of the ERP users responded that user interface of the system isn‟t easily
understandable; 60.5 per cent responded that users can‟t work on the system without any
challenge; and 73.7 percent responded that the reporting formats aren‟t easily understandable.
Therefore, in all the three cases the highest rates in the Likert scale were found to be for low or
very low implying that ERP users were dissatisfied concerning the compatibility issues with
ERP module (table 4.5). For example, there are things that need to be done on the reporting
format of the system, because external users or the company decision makers need to
understand what exactly every generated reports saying in order to make sound decision.

Hence, the ERP users of the company aren‟t properly supported through different capacity
building programs so that they can efficiently work on the system for Ethio-telecom realizing
tangible and observable benefits.

In a nutshell, the compatibility issue with ERP module from the above discussion,
compatibility is recognized as one major challenge and constraining successful ERP
implementation in the company.

4.3. Common Challenges

Generally, ERP implementation in a given organization is a function of many factors where the
factors put problematic situation in assuming a desired benefits from the solution. In
developing countries like Ethiopia, where backwardness in business infrastructural setups
prevailing, are constrained by multifaceted problems, which in turn adversely affect the
success that they would likely to achieve from the adopted technologies. Among the problems
constraining healthy running of ERP solutions in Ethio-telecom, according to the focused
group discussion results are summarized as follows:

 Lack of management support,

 Ineffective communications with users,
 Insufficient training of end users,
 Failure to get user support,
37
  Lack of effective project management methodology,
 Attempt to build to the legacy application,
 Conflict between user departments, composition of project team members,
 Failure to re-designing business process and
 Misunderstanding of change requirement.

From literatures and own experiences, for this study some factors were identified as check list
for the ERP users in Ethio-telecom. The analysis results showed that misunderstanding of
change requirements, ineffective communications with users, lack of management support,
lack of effective project management methodology, insufficient training of end users, failure to
get user support, conflict between user departments, failure to re-designing business process,
composition of project team members and attempt to build to the legacy application were
computed to be 1st to 10th major challenges determining the success of the implementation of
ERP.

Table 4.7 summary of common challenges

No. Challenges Relative % Rank

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

2. Composition of project team members, 7.24 9

3. Failure to re-designing business process 8.00 8

4. Conflict between user departments, 9.07 7

5. Failure to get user support, 9.50 6

6. Insufficient training of end users, 10.17 5

7. Lack of effective project management 11.90 4

methodology

38
8. Lack of management support 12.09 3

9. Ineffective communications with users, 12.45 2

10. Misunderstanding of change requirement 13.29 1

Source: own survey data computation, 2016

4.4. Constraints Peculiar to Ethio-telecom

This sub-section is dealing with some constraints which are peculiar to Ethio-telecom from its
very nature. Obviously the business environment in which Ethio-telecom is working is
different from those working in other countries. Business infrastructures like electricity and
internet networking are basic requirements needed for ERP solution implementation, but to
mention only few.

In this study it was tried to conduct focus group discussion so as to identify ERP system
implementation challenges/constraints which distinguishable to Ethio-telecom. Accordingly,
the following were raised in the discussion:

- Newness to the country

- Poor internet network
- Lack of equipment or facilities required for proper functioning of the system
- Inadequate proper training
- Lack of pilot data
- Timetable for the implementation
- Lack of skilled/trained manpower
- Accessibility and poor speed
- Late implementation after training
- Integrators reluctance for knowledge transfer

For the underlying problems constraining ERP system implementation and there by affecting
success, the remedy is in the hands of the company, as the sampled respondents replied. The
39
sole responsible body to alleviate the problems is the company. Hence, the focused group
discussion with different experts of the company indicated that the following remedial
measures are urgent:

- Continuous and sustainable training

- Providing materials and facilities adequately
- Immediate implementation after training
- Upgrading the system continually
- Proper planning
- Clear communication to end users
- Less dependence on integrators.

From all these, it emerges that employees in the side of the implementation of the ERP in the
Ethio telecom need proper training so that they work with it in a friendly manner. Therefore,
employees responsible for technical support and problem-solving for an organization‟s
electronic systems need necessary technical training that includes hardware management and
database input. Likewise, management divisions who are responsible for selecting and
overseeing an ERP system need special training as for instance functional area training.
Finally, end-user training would cover the general staff of an organization who are using the
new system day-to-day. General information, fostering new skills, and evaluation progress
reports are vital components of end-user staff training so that they can plan, communicate and
implement the system as standard required by the organization.

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 CHAPTER V

5. CONCLUSION AND RECOMMENDATION

5.1. Summary and Conclusion

The study is conducted in the Ethio-telecom head office in Addis Ababa. It focused mainly on
the challenges affecting proper implementation of ERP in the company. For the purpose,
primary data were gathered through structured questionnaire and focus group discussion using
structured check list, respectively.

As per the results of the study major challenges to ERP implementation were identified.
Accordingly, lack of top management support, the rate of training, documentation and
knowledge transfer, compatibility issues with ERP module were found major challenges in
ERP implementation in Ethio-telecom. However, the priori criteria “stepwise implementation”
was not considered as putting the challenge and constraint in the implementation of ERP in
Ethio-telecom.

With regard to the support of top management in assisting successful implementation of ERP
in Ethio-telecom, an observable gap is evident implying that proper support is urgent. Again,
the study indicates that Ethio- telecom didn‟t deploy an intensive training program in order to
equip those employees who are expected to work on the system as main tool. From this the
study concludes that lack of training was observed as one common constraint for ERP
implementation in Ethio telecom. Besides, compatibility is recognized as one major challenge
and constraining successful ERP implementation in the company.

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

ineffective communications with users, lack of management support, lack of effective project
management methodology, insufficient training of end users, failure to get user support,
conflict between user departments, failure to re-designing business process, composition of

41
project team members and attempt to build to the legacy application were computed to be 1st
to 10th major challenges determining the success of the implementation of ERP.

In this study it was also tried to conduct focus group discussion so as to identify ERP system
implementation challenges/constraints which are distinguishable to Ethio-telecom.
Accordingly, the following were raised in the discussion: Newness to the country, Poor internet
network, Lack of equipment or facilities required for proper functioning of the system,
Inadequate proper training, Lack of pilot data, Timetable for the implementation, Lack of
skilled/trained manpower, Accessibility and poor speed, Late implementation after training,
Integrators reactance for knowledge transfer. Finally, for the underlying problems constraining
ERP system implementation and there by affecting success, the remedy is in the hands of the
company, as the sampled respondents replied. The sole responsible body to alleviate the
problems is the company. Hence, the focused group discussion with different experts of the
company indicated that the following remedial measures are urgent: Continuous and
sustainable training, Providing materials and facilities adequately, immediate implementation
after training, upgrading the system continually, proper planning, Clear communication to end
users, less dependence on integrators.

5.2. Recommendations

Based on the results and findings of the study, to improve ERP system implementation, some
recommendations are suggested to be addressed by the Ethio-telecom. Those variables which
are most important challenges of ERP implementation as per the analysis result are lack of top
management support, the rate of training, documentation and knowledge transfer, compatibility
issues with ERP module were found major challenges in ERP implementation in Ethio-
telecom.

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

42
- Training – with regard to the support of top management in assisting successful
implementation of ERP in Ethio-telecom, an observable gap is evident implying that
proper support on training is urgent
- Compatibility issues – the compatibility issue with ERP module from the above
discussion, compatibility is recognized as one major challenge and constraining
successful ERP implementation in the company. Therefore, user interface of the system
should easily be understandable, there should be mechanism so that users can work on
the system without any challenge and the reporting formats should be easily
understandable
- In sum, the focused group discussion with different experts of the company indicated that
the following remedial measures are recommended for urgency: Continuous and
sustainable training, Providing materials and facilities adequately, immediate
implementation after training, upgrading the system continually, proper planning, Clear
communication to end users, less dependence on integrators

43
6. Budget and Work plan

Table 6.1 time table

No Activities to be performed March April May June

.
1. Prepare and submit first draft proposal

2. Final commented proposal submission

3. Designing Questionnaires

4. Data collection

5. Data encoding and entry

6. Data analysis

7. Preparation of draft report

8. Final report writing and submission

44
Table 6.2 Cost and budget required for this study

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

1. Writing pad Pad 1 400 400

2. Photocopy paper Pad 2 450 900

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

4. Stapler Pcs 1 30 30

5. Staples Pkt 5 20 100

6. Photocopying Page 1000 0.50 500

7. Binding Pcs 6 30 180

8. . Transportation cost Km 500 4 2,000

9. Internet and telephone Pcs 50 100 5,000

10. Sub total 9,310

11. Contingency (10%) 931

Grand total 10,241.00

45
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47
Questionnaire for ERP implementing survey in Ethio – telecom

ADDIS ABABA UNIVERSITY

College of Business and Economics

Department of Accounting and Finance

Master of Arts Degree in Accounting and finance

Researcher: Hailemeskel Gazu

Dear Respondent

The main purpose of this questionnaire is to gather information about the practice and
challenges of ERP (Enterprise resource planning) implementation Ethno telecom for Master of
Arts Degree in Accounting and finance in Addis Ababa University. The outcome of this study
will be used for academic purpose only.

Therefore, your genuine response to the quest9on is vital for the quality and successful
completion of the study. The accuracy of the information you provide highly determine there
liability of the study. Places feel free the your reopens is confidential.

Contact Addis

Hailemeskel G.

Mobile - + 2051 9 13 07 49 54

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

your unreserved cooperation

Part 1: Demographical information – places circle your choice

1.1. Gender 1. Male 2. Female

48
1.2. Age group 1. <25;2) 26-30 3. 31-40 4. 41 and above
1.3. Educational status 1. Below Diploma 2. Diploma 3. BA/BSC, 4. Master and above
5. Other please specify
1.4. Which Davidson are you working in 1.Fiancé 2.Sourcing and facilities 3. Human
resource
1.5. The position you working in the organization 1. Supervisor 2. Manger officer
3. Other

Part 2. Issues related with ERP implementation in your organization

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

2.1. The currently deployed ERP system meets set up step wise achieving the goal of
making the working process automat?:

1. Very low 3. Neutral 5. Very high

2. Low 4. High

2.22. Top management support and commitment

2.2.1. Functional and technical and technical support of integrators are success full in
relation to knowledge transfer

1. Very low 3. Neutral 5. Very high

2. Low 4. High

2.2.2. Level of dependency on integrates

1. Very low 3. Neutral Very high

2. Low 4. High

49
2.2.3 Ethio-telecom super users are trained in a way can full replace the integrators
support

1. Very low 3. Neutral 5. Very high

2. Low 4. High

2.3. The rate of training documentation and knowledge transfer

2.3.1. Training was given exhaustively for all users

1. Very low 3. Neutral 5. Very high

2. Low 4. High

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

1. Very low 3. Neutral 5. Very high

2. Low 4. High

2.4. Compatibility issues with ERP modules

2.4.1. Users interface of the system is easily understandable

1. Very low 3. Neutral 5. Very high

2. Low 4. High

2.4.2. Users can work on the system without any challenge

1. Very low 3. Neutral 5. Very high

2. Low 4. High

50
 2.4.3. Reporting formats are easily understandable by external users and decions
makers

1. Very low 3. Neutral 5. Very high

2. low 4. High

2. Questions related to challenges constraints in implementation

3. 3.1. the following table ERP implementation constrains so called as risk factors are listed
and please rank them in accordance with the severity of occurrence in your organization.
If in the list not occurring you many ignore or jump it
No Constraints Rank
1. Lack of management (top, middle or lower level mangers
commitment)
2 Ineffective communication with users
3 Insufficient training of end users
4 Failure to get user support
5 Luck of effective project management methodology
6 Attempts between bridges to legacy application
7 Conflicts between user department
8 Composition of project tram members
9 Failure to redesign business process
10 Misunderstanding of (resistance to) change requirement

3.2. What other ERP system implementing challenges/ constraints you think peculiar dose
Ethio- Telecom face form its very nature? Places put them in the order of their severity.
a. _________________________________________________________
b._________________________________________________________
c. _________________________________________________________
d. _________________________________________________________
e._________________________________________________________

51
3.3. Why do you think are these lists of the problems peculiar to Ethio-Telecom.

____________________________________________________________________________
____________________________________________________________________________
___

3.4. What possible solutions (remedial actions) would you recommend to do with the list of
peculiar problems to wards successful implantation of ERP system in the Ethio Telecom?
Please put in their order of importance.

a. _________________________________________________________
b._________________________________________________________
c. _________________________________________________________
d. _________________________________________________________

Thank you so much!

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