THE IMPACT OF E-COMMERCE ON THE PROCUREMENT PROCESS IN THE

KENYAN GOVERNMENT: A CASE STUDY OF KENYA ACCOUNTANTS AND

SECRETARIES NATIONAL EXAMINATIONS BOARD

Mountains, Imelda Nabweteme

Registration Number: 092908

A Research Project Submitted in Partial Fulfillment of the Requirements for the

Undergraduate Degree of Bachelors of Commerce Double Major Finance and Accounting
at Strathmore University

School of Management and Commerce

Strathmore University
Nairobi, Kenya

APRIL 2018

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DECLARATION
I declare that this work has not been previously submitted and approved for the award of a
degree by this or any other University. To the best of my knowledge and belief, this project
contains no material previously published or written by another person except where due
reference is made in the proposal itself. This research project is my original work and has not
been presented for a degree in any other University.

No part of this research project may be reproduced without the permission of the author and
Strathmore University.

Mountains, Imelda Nabweteme

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ABSTRACT
The Kenyan e-procurement system majorly known as Integrated Financial Management
Information Systems is an automated procurement system and a major component of the public
reforms in Kenya. Its first implementation was in 2013.

The e-procurement has been implemented in all the 46 county governments, government
parastatals and ministries. It has automated the processes involved in procurement; automated
supplier management, requisition management, quotation and tender management, contract
management, inventory management, receipting management, order management, invoice
management and payables management.

This study sought to evaluate the impact of e-commerce on the procurement process in the
Kenyan government. The evaluation included identification of critical success factors and
challenges that ensure successful implementation of e-procurement in the Kenyan government.

Data was collected by the means of a questionnaire that was distributed to the KASNEB
procurement department. The data was analyzed using descriptive statistics in percentages,
means and frequencies.

The study found that adoption of e-commerce had a significant impact on their procurement
performance. The study concluded that there was a positive impact on the procurement
performance. The study recommended the Kenyan government should undertake more
awareness programs to create a positive impact towards e-commerce use amongst the Kenyan
government operations. The study also recommended that the Kenyan government should
appoint procurement oversight committees that will see implementation of e-commerce on
procurement practices.

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 TABLE OF CONTENTS

DECLARATION..............................................................................................................................i
ABSTRACT....................................................................................................................................ii
LIST OF TABLES...........................................................................................................................v
LIST OF FIGURES........................................................................................................................vi
LIST OF ABBREVIATIONS.......................................................................................................vii
ACKNOWLEDGEMENTS.........................................................................................................viii
DEDICATION................................................................................................................................ix
CHAPTER 1: INTRODUCTION....................................................................................................1
BACKGROUND OF THE STUDY..................................................................................................1
E-COMMERCE.................................................................................................................................1
E-GOVERNMENT PROCUREMENT.............................................................................................2
E-COMMERCE AND THE PROCUREMENT PROCESS.............................................................3
STATEMENT OF THE PROBLEM.................................................................................................4
OBJECTIVES OF THE STUDY.......................................................................................................5
RESEARCH QUESTIONS...............................................................................................................5
SIGNIFICANCE OF THE STUDY..................................................................................................5
Government Institutions....................................................................................................................6
Private Institutions.............................................................................................................................6
The Public..........................................................................................................................................6
CHAPTER TWO: LITERATURE REVIEW..................................................................................8
INTRODUCTION.................................................................................................................8
THEORETICAL FOUNDATION.....................................................................................................8
Disruptive Innovation Model.............................................................................................................8
Technology Acceptance Model.........................................................................................................9
BENEFITS OF E-COMMERCE IN THE PROCUREMENT PROCESS......................................10
CHALLENGES FACED DURING THE USAGE OF E-GOVERNMENT
PROCUREMENT................................................................................................................11
IMPACT OF E-GOVERNMENT PROCUREMENT ON THE PROCUREMENT
PROCESS............................................................................................................................12
2.9 CONCEPTUAL FRAMEWORK............................................................................................15

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 CHAPTER THREE: RESEARCH METHODOLOGY................................................................17
INTRODUCTION......................................................................................................................17
RESEARCH DESIGN.....................................................................................................................17
TARGET POPULATION...............................................................................................................17
SAMPLE..........................................................................................................................................17
DATA COLLECTION....................................................................................................................18
DATA ANALYSIS.........................................................................................................................18
CHAPTER FOUR: PRESENTATIONS OF RESEARCH FINDINGS........................................19
INTRODUCTION............................................................................................................19
DESCRIPTIVE ANALYSIS.........................................................................................................19
DURATION OF TIME SERVED IN THE ORGANIZATION....................................................19
PROCUREMENT PRACTICES EMPLOYED BY THE ORGANIZATION.............................20
IMPACT OF PROCUREMENT PRACTICES IN THE ORGANIZATION...............................21
CHALLENGES FACED IN THE IMPLEMENTATION OF PROCUREMENT PRACTICES IN
THE ORGANIZATION................................................................................................................22
DISCUSSION OF RESEARCH FINDINGS................................................................................22
CHAPTER FIVE: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS...................25
INTRODUCTION...............................................................................................................................25
SUMMARY OF RESEARCH FINDINGS...................................................................................25
CONCLUSIONS...........................................................................................................................26
POLICY IMPLICATIONS AND RECOMMENDATIONS........................................................26
LIMITATIONS OF THE STUDY......................................................................................................26
AREAS FOR FURTHER STUDY................................................................................................27
REFERENCES..............................................................................................................................28
Appendix I: Research Questionnaire.............................................................................................30

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LIST OF TABLES
Table 2.1 Types of variables, their indicators and how they will be measured.............................14
Table 4.1 Procurement Practices Employed by the Organization.................................................20
Table 4.2: Impact of Procurement Practices in KASNEB.............................................................21
Table 4.3: Challenges faced in the implementation of procurement practices in KASNEB.........22

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LIST OF FIGURES
Figure: 2.1: Conceptual Framework..............................................................................................15
Figure 4.1: Duration of Time Served in the Organization.............................................................20

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LIST OF ABBREVIATIONS
EGP – Electronic Government Procurement
ICT – Information Technology and Communication
IFMIS – Integrated Financial Management Information Systems
PPP’s – Public Private Partnerships
KASNEB – Kenya Accountants and Secretaries National Examinations Board
GoK – Government of Kenya

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ACKNOWLEDGEMENTS
I wish to thank the Almighty God for giving me wisdom to conduct this study. I also appreciate
my supervisor Mr. Cosmas Mwalya and moderator Mr. Moses Nyangu for their guidance in
conducting the research.

I also wish to extend my gratitude to my colleagues and Strathmore University for their support
throughout the research process.

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DEDICATION
This research project is dedicated to all those who gave me inspiration of pursuing my education.
A special dedication to my family members, colleagues at work and friends, thanks a lot for your
support and encouragement during my academic journey.

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CHAPTER 1: INTRODUCTION
This chapter discusses the background of the study, overview of E-Commerce and its relevance,
statement of the problem and significance of the study. The research objectives and research
questions are also highlighted.

1.1 BACKGROUND OF THE STUDY

In today’s era of the internet of things, e-business has become a large part of everyday routine in
many businesses as a large number of companies are involved in some form of e-business and in
particular e-commerce. With the rise of Information Communication and Technology (ICT), the
introduction of e-procurement has assisted in increasing transparency, operational improvement
and value for money (Mamta Negi, 2017).

E-commerce provides a vast number of advantages thus every organization should consider
adopting the latter. The internet has widely enabled and provided an essential resource for the
automation of procurement. Procurement practices cannot on their own improve efficiencies
individually since the efficiency can only be achieved through the interaction of various practices
(Ngugi and Mugo, 2012). There should be a comprehensive effort to improvement all of
procurement functions within a firm, then focus on procurement practices by shifting from
functional and independent system to general and integrative system. This implies that the
performance of each process should be evaluated depending on how it has a significant effect on
the efficient integration of entire processes. Thus, the successful achievement of procurement
integration can be possible by the systematic utilization of various process and centralized
organizational structure. (Orina, 2013)

E-COMMERCE
E-Commerce, also known as e-procurement in the business world, is the business to business
requisitioning, ordering and purchase of goods and services using the internet. Most developing
countries are currently migrating from the traditional sourcing of supplies to E-Commerce as a
result of its efficiency and effectiveness in the strategic governance of the public resources. This
has seen Kenya adopt the Integrated Financial Management Information System in 2003. (Orina,
2013)

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The greatest benefits of e-business occur when its application is fully integrated throughout the
procurement process. Following the benefits of E-Commerce to a public organization including
reduced transaction time, availability of electronic catalogues, increased standardization and the
cost efficiency, E-Commerce has greatly impacted the norm of procurement in public
organizations by creating savings from increased preferred supplier purchasing as loyal and
consistent clients get discounts from vendors. E-Commerce greatly focuses on commercial
transactions. (Handfield, Straight & Stirling, 2002)

E-GOVERNMENT PROCUREMENT
Electronic Government Procurement also known as E-Governmental Procurement automates the
publication of government tenders on web sites with search and alert facilities for vendors.
E-procurement is the combined use of electronic information and communications technology,
(ICT) in order to enhance the links between customer and supplier, and with other value chain
partners, and thereby to improve external and internal purchasing and supply management
processes (CIPS, 2012).

According to The World Bank Procurement Policy & Services Group (2003), E-Government
Procurement is defined as the use of ICT by governments in conducting their procurement
relationships with suppliers for the acquisition of goods, works, and consultancy services
required by the public sector. E-Governmental Procurement has led to reduced government costs
which arise from printing of tenders and other documents used in the procurement process. E-GP
increases the reach of government procurement opportunities resulting in additional bids with
various costs and qualities.

While using E-GP, the government, suppliers and the public are assured of transparency as
transactions can be tracked one by one thus reducing fraud and corruption (Ngugi and Mugo,
2012). It also increases the efficiency as prices are reduced by competition and it goes on further
to reduce work load and the number of staff required to perform certain tasks under taken in the
traditional procurement process.

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The availability of online catalogues has increased the number of quotations available to a client
on search of a product or item and has also enabled easy comparison of prices from various
suppliers before placing a purchase order.

There have emerged a large number of suppliers that one could only get a fraction of if they
would still be using the traditional form of procurement. An organization is in a position to get in
touch with suppliers in every corner of the world and get immediate feedback from them
(Rimantas Zylius, 2017).

There has been an increase in the level of productivity of workers as they channel their excess
time towards strategic management tasks in the organization. E-GP has been linked to increase
value for money, improving public service delivery and creating confidence in the public
procurement system (Mamta Negi, 2017).

E-COMMERCE AND THE PROCUREMENT PROCESS

As studied by The International Bank for Reconstruction and Development in collaboration with
The World Bank (2017), many organizations need to continuously evaluate their procurement
process while identifying different types of e-commerce tools that will fully meet their needs.
The procurement process begins with recognizing the need of a service or a product in an
organization. Depending on the goods or services that are being procured and whether the
organization has procured from the supplier before, there may be different steps in the process.

According to the public procurement oversight authority (2010) in a report reviewing the Kenya
Revenue Authority procurement process stated that all purchases need to either be pre-approved
(approved budgets) or approved before purchase. An organization will then request for
quotations from suppliers and potential suppliers who will then submit their bids for a purchase
contract. For a first time purchase with a supplier, negotiation of a contract needs to be done
while in the case of a repetitive purchase, there exists already negotiated terms with the supplier.

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The World Bank Group (2017) asserts that final supplier selection is done after all the activities
involved in evaluation have been done and it is one of the most important activities that will
determine the quality of the final products or quality of the services sourced by an organization.
Errors made at this point may be damaging and long lasting.

STATEMENT OF THE PROBLEM

The procurement function is the largest and busiest function of an organization. It greatly
impacts the level of efficiency and effectiveness achieved within an organization (Ngugi and
Mugo, 2012). The impact of E-commerce on the Kenyan Government Procurement processes
has seen the tendering process becoming less cumbersome to the suppliers through reducing
paper work and tender document delivery time. The Government of Kenya having started to use
E-commerce in the past few years has been able to attest to some of its pros and cons.

Studies conducted by other researchers related to e-procurement focus on the regulation,

challenges faced by the organizations, efficiency and strategies employed by organizations that
use e-commerce. A study carried out to establish the effects of the implementation of Integrated
Financial Management Information Systems (IFMIS) on procurement performance of the
Kenyan Government Ministries by Morgan (2014) showed that there was a moderate level of
implementation of the IFMIS and the difficulties experienced will not achieve the anticipated
functionality.

Orina (2013) carried out a study on the E-procurement readiness factors in Kenya’s Public Sector
and found out that the technology, legal framework and procurement policies implemented
affected the readiness of the public procurement institutions in Kenya. She further highlighted
that the extent of procurement level in public procurement was low as there was no integration
with other systems combined with insignificant electronic commerce usage.

A study conducted by Ngugi and Mugo (2012) focused on the internal factors affecting the
procurement process in the public sector. The study found out that the procurement process was
affected by factors such as accountability, ethics and ICT adoption as the latter enhanced the
process of effective tendering through advertising, sourcing reviews and costs savings.

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Amin (2012) studied on the Electronic procurement and organizational performance among
commercial state organizations found out that E-procurement has improved the procurement
process though most government organizations are hesitant in fully implementing the new
concept of procurement as a result of the existing shortcomings such as lack of electricity in
some regions, poor internet connection, illiteracy, high uncertainty avoidance and high resistance
to change which reduce the impact of e-commerce on the procurement process.

Despite the various studies in E-GP, none of these studies have been able to determine the
impact of the shortcomings of e-commerce, how they are being addressed to create an e-
procurement process with a 99% confidence level. This study hereby seeks to determine the
impact of the limitations of e-commerce, how they affect the efficiency and effectiveness, and
what is being done to address the cons of the E-GP systems currently in use.

OBJECTIVES OF THE STUDY

The general objective of this study is to determine the impact of e-commerce on the procurement
process in the Kenyan government.
The specific objectives are:
1. To establish the benefits of e-commerce in the procurement process in KASNEB.
2. To determine the challenges faced during the usage of the e-government procurement
systems.
3. To establish the level of uptake of e-commerce in KASNEB’s operations.

RESEARCH QUESTIONS
1. What are the benefits of e-commerce in the procurement process used by KASNEB?
2. What are the challenges faced during the usage of the e-commerce in KASNEB?
3. What is the level of e-commerce uptake in KASNEB operations?

SIGNIFICANCE OF THE STUDY

The beneficiaries of this study include the various government institutions, private institutions
and the public including scholars.

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Government Institutions
This study will benefit government institutions like KASNEB to have a better understanding of
the e-governmental procurement and to know what it requires to have an E-GP like IFMIS
effectively and efficiently put into use. This study will also bring out the information required for
the government institutions to mitigate the levels of non-compliance with the IFMIS and assist in
developing appropriate policies that may guide them to maximize the benefits of E-GP.

Private Institutions
The private institutions will benefit from this study as they will strive to understand the Public
Procurement and Disposal Act Chapter 412C for legalized trade with the government
institutions. This will result to increased process efficiency thus more attention will be paid to
adding value to the products and services offered thereby increasing competition.

The Public
Transparency is a major issue in most developing countries, its citizens and interested parties are
set back by the lack of transparency of the government institutions which promote corrupt
government dealings. The Public will benefit from this study as they will learn to know the
loopholes existing in the Kenyan Government Institutions preventing effective and efficient
adoption of the new E-GP and will therefore pose them to further question the existing laws that
govern the procurement processes. This will also give rise to other scholars to investigate into
each grey area with detail putting a spot light on dubious tactics employed by the government.

The understanding of the e-government procurement process will enable the above beneficiaries
appreciate the internet and will help them know what is required of them for the system to work
seamlessly and thus boost the level of confidence in the system.

The study findings will pose to highlight the issues faced during the usage of various e-
government procurement systems and what factors greatly threaten the full adoption of the new
procurement process in government offices and organizations.

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This study will serve as a reference point for various developing country governments that look
forward to gradually and fully adopt e-government procurement systems.
The scope of the study will be within duration of 2 years and the geographical location of the
study will be KASNEB Nairobi offices.

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 CHAPTER TWO: LITERATURE REVIEW
INTRODUCTION
This study investigates the impact of E-Commerce on the procurement process in the Kenyan
Government. This chapter summarizes the information from other researchers who have carried
out their research in the same field of study. In this section, the study explores E-commerce and
Public Procurement, the impact of E-GP on the procurement process, implementation of the E-
Government Procurement, IFMIS, and the conceptual model used.

THEORETICAL FOUNDATION
A theory refers to an established or new abstract principle relating to a specific field of
knowledge. Theories carefully outline the precise definitions in a specific area to explain why
and how the relationships are logically linked so that the theory gives specific predictions.
(Wacker, 1998) This study is based on both the Disruptive Innovation Model and the
Technology Acceptance Models.

Disruptive Innovation Model

Several studies have highlighted the importance of moving beyond existing boundaries and into
the role of market in efforts to understand the difficulties that disruptive innovations imply.
Sustained innovations are those that have constantly improving track record within a typical
level of competition in the market. This are commonly done by companies who continuously
improve their products and services to satisfy their consumer demands. (Elliot, McCann, &
Manley, 2015)

Contrary to the sustained innovations, disruptive innovations do not show an improvement in the
performance of a current product or service. Rather than maintaining an improving track record,
disruptive innovation will tend to create a product or service that is totally different from the
existing ones which drastically changes the way a product or service is offered to the market.

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 The originators of disruptive innovation model argue that disruptive innovations are
characterized by: the customer base is small and production may be costly, there is no
competition, initial profit margins may be small, they address a market which would not have
access to the product or service under certain circumstances. (Christensen, 2000)

On evaluating the extent to which the E-commerce has impacted public procurement, a review of
the findings contrasted with the prepositions of disruptive innovation as mentioned above in this
theory which helps to understand whether the adoption of E-commerce in public procurement is
disruptive. It can further establish the extent to which the disruption occurs and therefore assist in
the understanding of the impact of e-commerce in the public procurement process.

Technology Acceptance Model

The Technology Acceptance Model (TAM) applies the Theory of Reasoned Action (TRA),
which is an extension of the existing theory with technology. This theory shows that the beliefs
of the user influence the attitude towards information technology, these lead to intentions and
subsequently behaviors of actual technology usage. (Davis, 1989) The risk of the intention to use
technology is a significant factor in determining the individual evaluation of acceptance of
technology usage. This theory argues that, Perceived Use (PU) and Perceived Ease of Use
(PEOU) are the factors of the level of user acceptance of technology.

PU is the extent to which an individual believes that adopting a certain system will enhance their
job performance while PEOU is the extent to which an individual believes that using a certain
system will be effort free. TAM connects PEOU and PU with attitude, intention to use and actual
usage. Attitude can be expressly defined as an individual’s feeling towards using a particular
technology. TAM influences the user’s attitude toward using a technology using both PEOU and
PU. The intention to use is the extent to which an individual has created plans to execute or not
execute a specified behavior. (Davis, 1989) If a system users finds it easy to use a system, then
they tend to use the system more often. TAM asserts that both PU and attitude affect the user’s
intention to use a particular technology.

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Further studies on TAM that have been conducted on employees indicate that level of
acceptance depends on the social norms, beliefs and status. (Gilbert & Balestrini, 2004) This
theory was used in this study to assess the TAM among the users of the e-government
procurement.
Following a benefit analysis of implementing the e-government procurement process, it is
possible to bring out the technology acceptance rate and amongst users and establishing the
impact of its usage.

BENEFITS OF E-COMMERCE IN THE PROCUREMENT PROCESS

E-commerce enhances transparency and efficiency, establishing an open marketplace for
procurement needs and supporting procurement reforms (Mutui, 2014). E-commerce facilitates a
visible channel for public procurement, reduces work load and streamlines work processes
involved. Increased transparency creates a positive relationship with the public and other
countries which is advantageous as public funds are not put at waste.

E-Government Procurement in Kenya is fairly new and has seen the implementation of IFMIS to
deliver improved systems for Procure to Pay services. IFMIS was first launched in 2003 with
limited usability and has seen the introduction of various modules including a new Single Chart
of Accounts in 2011 during the IFMIS Re-engineering. (Republic of Kenya, Ministry of Finance,
2013) The progressive developments in the E-Government procurement have favored public
fund management as all public procurement activities are monitored on a real time basis,
encouraged various private business to participate in tendering as there exists transparency in the
procurement systems and it has also improved management information for decision making as
the data obtained from the Integrated Financial Management Information System is easily
retrievable.

According to Corsi, Gumina and Ciriaci (Marcella Corsi, September 2016), E-GP is the process
of transforming public administration’s internal and external relations via network based
activities, communications and information’s in order to increase public participation, optimize
service delivery and enhance government capability.

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Existing E-GP systems in some countries have a high level of maturity. These systems are fully
implemented, advanced and fully integrated end to end e-GP systems. (Asian Development
Bank, 2013). There are various advancements that have arisen since the introduction of the
IFMIS in Kenya which include the implementation of the full cycle end to end integrated
process. These advancements enable plan to budget, where the system links planning, policy
objectives and budget allocation. They also enable procure to pay, where the supply chain
system management system is fully integrated and automated. These improvements also include
an auto- reconciliation of revenue and payments known as Revenue to cash.

CHALLENGES FACED DURING THE USAGE OF E-GOVERNMENT

PROCUREMENT
Irrespective of the various positive remarks on E-GP and the various measures that have been put
in place to ensure its success, there are some challenges faced during its implementation
including high resistance from public service staff, low motivation in the use of the new systems,
lack of full information technology support and lack of up-to-date supporting software, hardware
or internet in some regions.

Despite the fact that a majority of these government institutions do not deal in Information
Technology, they do not have a dedicated department that deals with any sort of support to the
team as a whole. The IT support team should be involved in any query by the users of the system
and guide them to resolving the issue at hand. The absence of a reliable IT support team could
result to the users of E-GP to revert to the previous manual system of procurement as some of the
modules are not fully understood thus not fully utilized (Kaliannan & Awang, 2010). If there
exists no reward for the Employees to fully adopt a new process. This creates a lag as there is no
motivating reason as to why one would use E-GP.

The UN report on E-government’s study brought up the aspect of the Human Index clearly and
how the high rates of illiteracy in the public sector users affects the adoption of e-Government
facilities. (Gregory G. Curtin, 2006) Most Employees are hesitant to adopt to change and thus
retain the old ways of performing their duties as they find the old ways familiar and easy to use
than the new ones.

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Additionally the existence of poor infrastructure, hardware and outdated software possess a huge
difficulty in having up-to-date systems designed and thus affect the level of adoption of the
systems. (United Nations: Department of Economic and Social Affairs, 2016)
IT is a continuously improving and changing which necessitates for gradual upgrade of hardware
and software. The cost of procuring new technology as it is released can be seen as costly as it
will eventually need replacement once deemed obsolete. Most developing governments may
choose to retain old technology and replace them either they are fully depreciated or the systems
can no longer work.

According to Metoh (2012) who in his study, factors affecting implementation of electronic
procurement system in the public sector, found out that there was lack of management support
who could arrange for constant user training and co-ordination for the junior staff to understand
the full capacity of the E-GP’s in place. The study went ahead to establish that user training and
support from management had a good impact on the level of adoption and usage of the e-
procurement system.

Other insignificant yet pose a huge impact on the adoption of the new procurement process
include the lack of electricity in most interior parts of the country, poor internet connectivity and
poor road infrastructures in case of travel for support trainings.

IMPACT OF E-GOVERNMENT PROCUREMENT ON THE PROCUREMENT

PROCESS
E-GP impacts the procurement process in various ways which can be classified under Process
impact, Technology impact and People impact (Orina, 2013). The Government procurement
processes include requisitioning, tendering, contract awarding and payment for the goods and or
services procured (Republic of Kenya, Ministry of Finance, 2013). E-GP has come in place to
reduce delays in these processes, increase transparency and bring timely delivery of public goods
and services.

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The e-GP technology brings upon improved relationships with the suppliers as there is increased
fairness, improved access to the government markets, the transactional costs are lower as a result
of reduced travel, paper and electronic fund transfers (The World Bank Procurement Policy &
Services Group, 2003). There being improved supplier relationships, the suppliers in turn
provide a variety of quality goods and services to the government.
Competition amongst supplier’s increases as there is an equal chance of selection, this thus
reduces the cost of goods and services provided to the government.

According to (Intergrated Financial Management Information System | Procure to Pay (P2P),

2014), the procure to pay component enables the government to manage supplier selection to be
done according to an already set criteria in the system. The automation of the procurement
process in the government also significantly reduces the amount of repetitive tasks done,
improves on the delivery time to choose a tender with less chance of err as opposed to manual
selection which involves a lot of paper work is dependent on working hours, the integrity and
professionalism of an employee.

According to a survey done by the UN (United Nations: Department of Economic and Social
Affairs, 2016), Kenya ranks 10 in the African counties that have a developed E-government
system in place. The automation of the procurement process using IFMIS has led to improved
service delivery by the Government of Kenya and has also increased reliability from the public.
Financial performance reports are easily generated from the system on a real time basis which
helps increases the decision making rate.

SUMMARY OF RESEARCH GAP

The articles analyzed in the literature review do not reflect the operations in Kenya as they do
not address the issues in the 3rd world countries. Several issues have been brought up though the
study integrates all the studies.

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OPERATIONALIZATION OF VARIABLES
Table 2.1 Types of variables, their indicators and how they will be measured
Variable Indicator Measurement Scale Data Tools of
Collection analysis
Dependent Lack of Employees in Ordinal Questionnaires Qualitative
Variable transparency the and
Impact of E- in processes Procurement quantitative
commerce on Department in methods
the KASNEB
procurement
process
Independent Existing Duration Ordinal Questionnaires Qualitative
Variable processes taken in the and
Transparency procurement quantitative
process methods

Independent Duration taken Improved Ordinal Questionnaires Qualitative

Variable in the turnaround and
Efficiency procurement time quantitative
process methods
Independent Impact of the Scalability of Ordinal Questionnaires Qualitative
Variable previous decisions and
Decision decisions made due to quantitative
Making made availability of methods
real time data
Independent KASNEB bid Number of Ratio Newspapers Qualitative
Variable and tender times tenders and the GoK method
Public advertisements are published official
Participation tenders
website

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 Independent Paperless Smooth flow Ordinal Questionnaires Qualitative
Variable transactions of the procure and
Optimized to pay process quantitative
Service methods
Delivery

2.9 CONCEPTUAL FRAMEWORK

This conceptual framework is a graphical representation of the impact of e-commerce on the
procurement process. The independent variables are transparency, efficiency, decision making,
public participation and optimized service delivery while the dependent variable is the impact of
e-commerce on the procurement process.
Figure: 2.1: Conceptual Framework.

Independent Variables Dependent Variable

Transparency
Existing processes

Efficiency
Duration taken in
processes

Decision Making E-GP Adoption in Procurement

Impact of the previous
decisions

Public Participation
Bid and tender
advertisements

Optimized Service Delivery

Paperless transactions

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2.8 CHAPTER SUMMARY
This project aims to recommend ways to increase efficiency through the researcher’s literature
review.

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CHAPTER THREE: RESEARCH METHODOLOGY
INTRODUCTION
This chapter outlines the method that was adopted by the study in obtaining information on the
impact of E-commerce on procurement process in KASNEB. The chapter is structured into;
research design, target population, sampling procedure, and data collection method and data
analysis techniques.

RESEARCH DESIGN
This study used a descriptive survey approach to conduct the study. The procurement department
that uses the e-procurement system in KASNEB was studied. The descriptive research method
included surveys and fact finding enquiries to the population under study and allowed the
researcher to study the elements of the population without altering their natural form.

This design also enabled the researcher to create descriptive statistics that assisted in explaining
the relationship amongst the variables.

TARGET POPULATION
Population is the total collection of elements from which the researcher makes inferences.
(Cooper & Schindler, 2006) The study targeted all the KASNEB procurement department
employees who use IFMIS. The population of the study was those who directly use the e-
government procurement in the Supply Chain department who are currently 15 employees.

SAMPLE
The researcher collected data from the whole population as it is small in size and the population
was well defined.

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DATA COLLECTION
The researcher gathered primary data. This was mainly obtained by the use of questionnaires.
The questionnaire contained four sections mainly, bio data of the respondents, the benefits of e-
Commerce in the procurement process in KASNEB, the challenges faced during the usage of e-
Government Procurement and lastly the extent to which the KASNEB has embraced e-
Government Procurement. The questionnaires were administered using a drop and pick method.

DATA ANALYSIS
Data analysis is the process of obtaining first-hand information from the data collected and
presenting it. The data collected was sorted and entered into statistical software for social
sciences for analysis purposes. The open ended questions were analyzed using content analysis
as the researcher was focused on the interpretation of the results rather their quantification. The
quantitative data was interpreted by use of statistical package for social sciences (SPSS) and was
analyzed through the use of descriptive statistics which included percentages, standard deviation
and arithmetic mean. The analyzed data was then presented in bar graphs and tables.

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CHAPTER FOUR: PRESENTATIONS OF RESEARCH FINDINGS

INTRODUCTION
This chapter presents the data analysis, results and the discussion. The findings are presented in
percentages, mean and standard deviations. The research objective was to determine the impact
of e-commerce on the procurement process in the Kenyan government. A total of 15
questionnaires were issued and 14 were returned for completion of this research project. This
represented a response rate of 93.33%.

The demographic information which was considered in this study included the respondents’
current level in the organization and the duration of continuous service that the respondents had
worked in the KASNEB. This information was necessary as the respondents’ competence of
answering the questions properly was dependent on their level of education and also the duration
at which they have worked in the organization.

DESCRIPTIVE ANALYSIS
This research was based on descriptive research that describes what exists and may help to
obtain new facts and meanings. A descriptive research design is a research design that attempts
to show the status quo of the study items. (Cooper & Schindler, 2006) Its main importance is to
bring out an accurate representation of the study items. The reason for using the descriptive
analysis was to provide a clear image of the opinions on the impact of e-commerce on the
procurement process in KASNEB.

DURATION OF TIME SERVED IN THE ORGANIZATION

This is the duration of time that the respondents had worked at the KASNEB. The results are
represented in Figure 4.1.

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 Duration of Time Served in KASNEB

Over 10 years 57%

Duration of

5 - 10 years 29%

0 - 5 years 14%

0% 10% 20% 30% 40% 50% 60%

Percent (%)

Figure 4.1: Duration of Time Served in the Organization

It was revealed that the majority of the respondents (57%) had been working at KASNEB for a
duration of more than 10 years while 29% had been at KASNEB for a duration between 5 years
and 10 years and 14% of the respondents had been at KASNEB for less than 5 years. 86% of the
respondents were in employment when the IFMIS system was implemented in 2013 thus they
have the relevant work experience relating to the usage of the system which therefore was
valuable to the realization of the research objective.

PROCUREMENT PRACTICES EMPLOYED BY THE ORGANIZATION

This section of the questionnaire sought to establish the various forms of procurement practices
that are being employed by KASNEB. Findings were presented in Table 4.1

Table 4.1 Procurement Practices Employed by the Organization

Mean Std Deviation
Procurement function has adopted Information Technology
3.6667 2.5298
hence procurement activities are done electronically.
There are strategic supplier partnerships in place. 4.0000 2.2804
There is less of paper requisitions 4.6667 3.2863
There is a smooth flow of the procure to pay process 4.3333 2.4495
Overall Mean 4.1667

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The range was ‘very low extent (1)’ to ‘very great extent’ (5). The researcher sought to establish
the extent to which different practices are employed at KASNEB. The results show that there
was less usage of paper requisitions among the respondents (mean=4.6667) indicating that most
of their processes where done via the e-procurement platform. This finding is also consistent
with the presence of a smooth flow of the procure to pay process which according to the
respondents scored a mean of 4.3333 which indicates that the systems and practices in place are
being utilized.

IMPACT OF PROCUREMENT PRACTICES IN THE ORGANIZATION

This section of the questionnaire sought to establish the impact of procurement practices that are
being employed by KASNEB to the overall performance of the organization.
Findings were presented in Table 4.2

Std
Mean Deviation
Adoption of Information Technology has improved the
4.6667 2.6077
performance of KASNEB through shorter turnaround time.
Management has assisted in improving the quality of goods,
3.3333 2.0976
works and services offered to the organization.
The level of public participation in has increased efficiency
3.6667 2.5298
in the procurement operations
Decision Making has improved due to the availability of
4.3333 2.4495
real time information.
Overall Mean 4.0000

Table 4.2: Impact of Procurement Practices in KASNEB

The respondents answered positively which affirms that e-procurement practices are being
employed in KASNEB. This finding assisted the researcher to determine the effect that the
adoption of the e-procurement has had on KASNEB’s performance as presented in Table 4.2.

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KASNEB has recognized the importance of using IT solutions to deliver a higher efficiency and
operational organizational benefit. Decision making has also improved based on the above
results as the usage of information technology assists managers to manage uncertainty.

CHALLENGES FACED IN THE IMPLEMENTATION OF PROCUREMENT

PRACTICES IN THE ORGANIZATION
This section of the questionnaire sought to establish the challenges faced during the
implementation of procurement practices employed by KASNEB.
Findings were presented in Table 4.3

Standard
Mean Deviation
Procurement systems such as ERP are
4.3333 3.1875
expensive to buy, install and maintain
Procurement systems are not locally available 3.6667 2.2271
The management does not recognize the
benefits associated with procurement function 2.6667 0.9798
and does not provide adequate training

There is inadequate support from the ICT

1.3333 1.9391
department relating to the usage of the system
2.9167
Table 4.3: Challenges faced in the implementation of procurement practices in KASNEB

The respondents answered negatively with a mean of 1.3333 as to whether there was adequate
support from the ICT department which affirms there are existing challenges with the adoption
and implementation of e-procurement practices in KASNEB and consequently require
continuous support to fully utilize e-procurement.

DISCUSSION OF RESEARCH FINDINGS

The general objective of this study was to establish the impact of e-commerce on procurement
processes in the Kenyan Government. To a moderate extent, the study found that KASNEB had
adopted various functionalities of e-procurement. The first specific objective was to establish the
benefits of e-commerce in the procurement process in KASNEB.

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The findings show that KASNEB had implemented e-procurement processes that were in use in
the procurement department. This is shown by the fact that the government of Kenya had issued
a directive to ensure that IFMIS was implemented in all public sectors which is to enable them to
conduct efficient procurement.

The respondents were further required to rate the extent to which various e-procurement
practices had been adopted at the KASNEB procurement department. The findings were positive
which affirms that e-procurement practices were being employed in KASNEB.

It was established that the e-procurement practices have been adopted to a high extent having a
mean of 4.1667. This indicates high adoption of e-procurement as a confirmation to the
government commitment to adopt e-procurement to address various public sector procurement
challenges. The findings can be compared with those of Kamotho (2014) who found out that
most state corporations are in progress of adopting e-procurement to alleviate their procurement
performance.

The second specific objective was to determine the challenges faced during the usage of the e-
government procurement systems. It was observed that there were a few challenges that affected
the e-government procurement systems. They included lack of IT support thus delays in the
adoption process in some e-procurement modules and understaff computer literate staff in both
the organization and the procurement department. These findings are in-line with the findings of
Diamond and Khemani (2005) which show that lack of staff has been blamed for the slow
implementation of IFMIS (Diamond & Khemani, 2005).

The third specific objective was to establish the level of uptake of e-commerce in KASNEB’s
operations. To a large extent, there was a high level of uptake as shown by a mean of 4.6667
which is indicated by the turnaround time taken in the procurement department that has been
improved. This also meant that the higher the commitment of the management, the higher the
procurement performance. While staff training has a positive significant effect on procurement
performance, it was noted that the management did not fully recognize the need associated as it
has a mean response of 2.6667. The management should ensure that there are clear guidebooks
and manuals on every module in the system.

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These findings compared with those of Mutui (2014) who found out that the performance of e-
government procurement was improving since employees had sufficient knowledge to not only
be in a position to use the system but to also to maximize the output and efficiency of the
information systems.

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CHAPTER FIVE: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
INTRODUCTION
This chapter presents summary of the conclusions and recommendations of the study based on
the objective of the study. It relates the background, research problem, findings and suggestions
for further research.

SUMMARY OF RESEARCH FINDINGS

This study sought to determine the impact of e-commerce on the procurement process in the
Kenyan Government. A population size of all KASNEB procurement department employees was
used. The primary data was obtained by the use of questionnaires administered to the
procurement department employees. The findings of the study found out that KASNEB
procurement function had adopted Information Technology thus procurement activities were
done electronically though the extent of implementation of e-procurement varied.

This study sought to establish the extent to which different practices are employed at KASNEB.
The results show that there was huge movement from the paper requisition methods to the e-
requisitions (mean=4.6667) indicating that most of the processes where done via the e-
procurement platform. This finding is also consistent with the presence of a smooth flow of the
procure to pay process which according to the respondents scored a mean of 4.3333 which
indicates that the systems and practices in place are being utilized.

This study sought to establish the impact of IT on the procurement practices used by KASNEB.
As KASNEB has recognized the importance of using IT solutions to deliver a higher efficiency
and operational organizational benefit, decision making has also improved based on the above
results as the usage of information technology assists managers to manage uncertainty.

The study also aimed at establishing the factors which influenced how e-procurement was
adopted in KASNEB. Various factors were established to influence the adoption of e-
procurement to a great extent such as improved turnaround time in the procurement process,
improved decision making and increased level of public participation. These factors if properly
integrated influenced successful adoption of the e-procurement systems.

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CONCLUSIONS
This research has attempted to investigate the impact of e-government procurement in the
Kenyan Government, its adoption and the benefits derived from its implementation. The results
gathered from the analysis give an impression that e-procurement practices being used by the
Kenyan Government institutions are conclusive as the Government of Kenya had issued a
directive to the adoption of e-government procurement.

The results from this study are important for the on-going adoption of e-procurement within
public sector institutions in Kenya as this would assist emerging Government Institutions to
know what to expect in terms of barriers and the requirements on the adoption and
implementation for them to greatly benefit from their adoption and usage of e-procurement
technologies. Also, this study should assist inform and shape public policies so that it is becomes
efficient and effective to deal with and support the current electronic purchasing technologies.

This study will also have important implications for researchers during their own studies.

POLICY IMPLICATIONS AND RECOMMENDATIONS

This study shows that e-procurement usage has had a positive impact on organizational
performance and therefore, there is need to facilitate the development of operational tasks in the
procurement area. The management should consider full adoption to assist in data collection and
management which will further improve on strategic decision making. The Government of
Kenya needs to also decentralize its procurement functions to reduce workload in the
procurement departments and also simplify the procurement process.

LIMITATIONS OF THE STUDY

The study majorly focused on the level of adoption and thus did not take into consideration other
factors like Staffing (Human Resource departments), organizational policies and culture which
are also important factors to the success of e-procurement implementation.

Data was collected in a professional examining body, KASNEB, which is under the education
industry thus other industries with a different nature were not captured by this study. However,
the findings may have similarities in other public sector organizations.

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AREAS FOR FURTHER STUDY
Future research can expand this area of study by replicating the same in private companies and
their e-procurement adoption. This would give a complete cycle of the understanding of both the
public and private sectors and the scaled benefits derived from the adoption of e-procurement
processes.

Future studies can also put focus on other e-procurement technologies that are either in use or
can be in use for the Government of Kenya departments and analyze their impact on the nation
as a whole. This study would provide a whole-sum understanding of the level at which the
Government of Kenya is moving toward the electronic systems as compared to other African
countries.

Further studies could also extend on measuring and analyzing the impact of e-procurement at
strategic level. This could entail an in-depth analysis of the strategic management and the
benefits derived from the e-procurement systems in use and further continue to study as to
whether the systems capabilities are being fully utilized by the strategic management.

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REFERENCES

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Philippines: Asian Development Bank.

Brown, K. (2015). eCommerce Strategy; A digital future for procurement:Scottish - Public

Procurement.

Christensen, M. &. (2000). Meeting the Challenge of Disruptive Change. Havard Business
Review.

Cooper, D., & Schindler, P. (2006). Business Research Methods (9th edition). New Delhi.

Cudjoe, D. (2014). Electronic Commerce: State-of-the-Art. American Journal of Intelligent

Systems, Vol. 4 No. 4, 2014, pp. 135-141.

Davis, F. B. (1989). User acceptance of computer technology: a comparison of two theoretical

models. Management Science, Vol. 35 No. 8, 982-1003.

Diamond, J., & Khemani, P. (2005). Introducing financial management information systems in
developing countries. Retrieved from https://doi.org/10.1787/budget-v5-art20-en

Elliot, S., McCann, M., & Manley, K. (2015). Strategic Networks to Improve Business Value.
Australasian Conference on Information Systems. Adelaide.

Gilbert, D., & Balestrini, P. P. (2004). Barriers and benefits in the adoption of egovernment.
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Gregory G. Curtin, P. J. (2006). Issues and Challenges: Global E-Government/E-Participation

Models, Measurement and Methodology. Budapest, Hungary.

Handfield, R. S. (2012). Reverse auctions: how do supply managers really feel about them?
Inside Supply Management, 56-61.

Intergrated Financial Management Information System | Procure to Pay (P2P). (2014).

Retrieved from IFMIS: http://www.ifmis.go.ke/?page_id=2403

Kaliannan, M., & Awang, H. (2010). Adoption and Use of E-government Services: A Case Study
on E-Procurement in Malaysia.

Kamotho, D. K. (2014). E-procurement and procurement performance among state corporations

in Kenya.

Lin, N., Li, D., Dong, T., & Qin, Z. (2010). A New Framework for Designing E-Government
Procurement in China Based on Ontology and Business Component.

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Marcella Corsi, A. G. (September 2016). How E-Government May Enhance Public Procurement.
International Public Procurement Conference Proceedings, 375-400.

Metoh, I. K. (2012). Factors affecting implementation of electronic procurement system in the

public sector: a case of National Aids Control Council.

Mugo, J. K. (2012). Internal Factors affecting procurement process of supplies in the public
sector; A survey of Kenya Government Ministries.

Mutui, M. F. (2014). Integrated Financial Management Information System and Procurement

Performance of the Public Sector in Kenya .

Negi, M. (2017). Framework for successful implementation of E procurement in Indian

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world.

Orina, D. (2013). E-Procurement readiness factors in Kenya’s Public Sector.

Public Procurement Oversight Authority. (2010). Kenya Revenue Authority Procurement Review.

Republic of Kenya, Ministry of Finance. (2013). IRMIS Re-engineering Information. Nairobi.

The Public Procurement and Disposal Act. (2010). The Public Procurement and Disposal Act.

The World Bank Procurement Policy & Services Group. (2003). Electronic Government
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Zylius, R. (2017). First things first for Public Procurement Reforms in Emerging Markets.

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Appendix I: Research Questionnaire
Introduction
This questionnaire has been designed for the sole purpose of collecting data on the impact of e-
commerce on the procurement process in KASNEB. The data collected will be treated with a
high degree of confidentiality and it is meant for academic purpose only.

PART A: GENERAL INFORMATION (Please circle one appropriate response)

1. What is your level in the Supply Chain department?
a. Entry Level
b. Middle Level
c. Senior Level

2. Gender
a. Male
b. Female

3. How long have you worked in KASNEB?

a. Less than 5 years
b. Less than 10 years
c. More than 10 years

PART B: Procurement Practices employed by your organization

Please indicate the extent to which you agree with the following statements concerning
procurement practices at KASNEB. Use the scale of: (1 – No extent 2 – Little extent 3 -
Moderate 4 – Great extent 5 – Very great extent)
1 2 3 4 5
Procurement function has adopted Information Technology
hence procurement activities are done electronically.
There are strategic supplier partnerships in place.
There is less of paper requisitions
There is a smooth flow of the procure to pay process

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PART C: Impact of Procurement Practices in your organization performance
Please indicate the level to which you agree with the following statements concerning the impact
of procurement practices in your organization performance
(1 – No extent 2 – Little extent 3 - Moderate 4 – Great extent 5 – Very great extent)
1 2 3 4 5
Adoption of Information Technology has improved the
performance of KASNEB through shorter turnaround time.
Management has assisted in improving the quality of goods,
works and services offered to the organization.
The level of public participation in has increased efficiency in
the procurement operations
Decision Making has improved due to the availability of real
time information.

PART D: Challenges faced in the implementation of Procurement Practices in your

organization
Kindly indicate the extent to which you agree with the following statements concerning the
challenges faced in the implementation of procurement practices in your organization
performance (1 – No extent 2 – Little extent 3 - Moderate 4 – Great extent 5 – Very great extent)
1 2 3 4 5
Procurement systems such as ERP are expensive to buy, install
and maintain
Procurement systems are not locally available
The management does not recognize the benefits associated with
procurement function and does not provide adequate training
There is inadequate support from the ICT department relating to
the usage of the system

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