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EFFECTS OF ICT ON SMES IN KENYA

BY

DAVID NGUNJIRI TUITHO

04^th April 2018

Abstract

Information technology has a lot of influence on better management in small and medium enterprises in Kenya as covered in this paper. This paper is causal study which aims at finding answers and solutions to the question that whether the use of information technology techniques can affect the management and operation of small and medium enterprises or not or, in other words, this paper tries to find out how best the use of information technology leads to a better management in small and medium enterprises or not. In conclusion, it is that information technology affects the accessibility of new tools of marketing for small and medium enterprises.

Introduction

New technologies have a great impact on all aspects of life and the global society and economy is undergoing a fundamental transformation (Lucey, 2005). The present generation is changing and is becoming a more knowledgeable society (Pollard, 2006). This is more dependent on new technologies, with a new economy or “knowledge economy”, where knowledge and information are essential and the key factor of production. In this scenario, the ideas, processes, knowledge, and information are growing the share of trade in the knowledge economy. In the information society, environment successful enterprises produce high technology goods and services and transform human effort, materials, and other economic resources into a product and services that meet customers need (Beley, 2013). According to European Commission, (Shaghaghi, 2003) small and medium sized enterprises (SMEs) are those companies which have up to 250 number of employees and a maximum annual revenue of Ksh. 5.9 billion. The importance of SMEs today is undeniable both for developed and developing countries (Shaghaghi, 2003).

Some previous studies on the management of small and medium enterprises suggest that even management functions such as planning, organizing, staffing, directing, and controlling are not done properly in many of such industries. In many small and medium enterprises, financial management is poor, decision making is also poor and delayed, retirement facilities are not provided for workers as well as health and life insurance, and there is not definite planning for production. All these factors put obstacles to the path of growth and development of small and medium enterprises.

Other issues include the lack of sufficient knowledge and experiences of managers, failure in selection of the staff on the basis of skills, non-dedication of responsibilities to members, insufficient commitment of managers and lack of access to information, failure in proper processing of information, and so on are the major reasons for these barriers.

Most of the barriers to the management of an organization of SMEs can be evaded by use of Information technology techniques and tools which include. Customer Relationship Management, Common Information Model, Computer Aided Design, Computer Aided Manufacturing, Enterprise Resource Planning, and Business Intelligence are some of the tools which can help the managers in their managerial duties.

Globally, information technology has become a key element in economic development in both developed and developing countries. Various methods have been used for assessing the impact of information technology on small and medium industries. There are some studies conducted on this subject which include:

Montgomery defines information technology as the handling of vocal, pictorial, textual and numerical Information by microelectronic based equipment in computing and telecommunication. This brings about the advantages of information delivery through technological means, since almost all aspects of office work can adequately be taken care of (Khalid, 2002).  The findings of a study entitled “Mapping by using ICT in small and medium industries in Jamaica indicated that the use of IT has improved the delivery service, communications, and sales of goods and services and thereby improved performance of the studied organizations.

Khalid defines Information Technology as the combination of two technologies, computing and the main purpose of which is to transmit representation of information signals between remote locations (Khalid, 2002). Despite numerous research studies on the impact of this technology, there has been a lack of experimental evidence on secretaries working patterns, interactions and communication, and specifically how new office technology has changed working practices in the culture of offices (Kuntz, 2001).

The results of a study entitled “The impact of IT on the business communities; Case study: small and medium industries in Bangladesh” showed that the use of Information Technology by small and medium enterprises of Bangladesh has led to better performance of organizations. Banking services that have been changed via the use of information technology as including opening an account, mandate on customers account, and transaction processing and recording (Bazhenova, 2012).

During the growth of a competitive global environment, there is considerable pressure on most organizations to make their operational, tactical, and strategic processes more efficient and effective. An information system (IS) is a group of components which can increase competitiveness and gain better information for decision making. Therefore various organizations have chosen to apply this group of components to their associations (Khalid, 2002). Consequently, the organizations decide to implement IS in order to improve the effectiveness and efficiency of the organizations. Information systems have become a major function area of business administration. The systems, nowadays, plays a vital role in the e-business and e-commerce operations, enterprise collaboration and management, and strategic success of the business (Yalew, 2015)

In businesses and organizations is the function that coordinates the efforts of people to accomplish goals and objectives using available resources efficiently and effectively. Management includes planning, organizing, staffing, leading or directing, and controlling an organization to accomplish the goal. Resourcing encompasses the deployment and manipulation of human resources, financial resources, technological resources, and natural resources (Love, 2004)

References

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