ABSTRACT
Relevant literature has considered facilities management, IT-based personnel management, space analysis, inventory management and level of support services management, as a cornerstone of ERP in business organizations. However, the extent to which these variables that constitute professional ERP functions could impact on control of operations and costs, customer satisfaction, information and financial management in hotel establishments in South East Nigeria are quite unclear and is yet to be established and documented in literature. This study determined the impact of ERP on hotel service performance in South East Nigeria. Specifically, the study aimed to pursue the following objectives: to determine the effect of space analysis on employee efficiency in the selected hotels, to ascertain the effect of hotel support services management on hotel service specifications, to ascertain the correlation between business development management and hotel staff disposition, to examine the relationship between inventory management and operational cost effectiveness of the selected hotels, to ascertain the effect of facilities management on hotel customer satisfaction in the study area, to determine the extent to which ICT tools employed enhanced information management by hotels in the study area. The work adopted the survey research method, making use of a structured questionnaire and interview schedule as instruments of data collection. Data were collected from primary sources while population of the study was 576 that included 91 hotels in Awka, 131 hotels in Enugu metropolis and 169 hotels in Owerri, 108 hotels in Umuahia and 77 hotels in Abakiliki; according to the States’ Tourism Development Board. As a result, a census study was conducted. Data were presented with tables and percentages, and were analyzed with Pearson Product Moment Correlation Coefficient. It was found that space analysis on employee efficiency in the selected hotels was significantly positive (r = .87, P<.05), hotel support services management on hotel service specifications was significantly positive (r = .97, P<.05). The study also found that positive correlation existed between business development management and hotel staff disposition in hotels under study (r = .89, P<.05), there was a direct positive relationship between inventory management and operational cost effectiveness (r=.988, p<.05) in the hotels. It was found that facility management had a significant positive effect (r = 0.875; p < 0.05) on hotel customer satisfaction in the study area, ICT tools employed by the hotels under study significantly enhanced their information management (r = 0.889; p < 0.05). It was concluded that impact of Enterprise Resource Planning System on the performance of services of registered hotels in South East, Nigeria was significantly positive. The study thus recommended that Nigerian hotels should be involved in the homogenization and convergence in business strategies and management options relating to the creation of value and increased operational efficiency through professional ERP services. The study advocates the consolidation of seminars on ERP systems and other modern organizational management techniques which would help organizational managers embrace new ways of effective and sustainable corporate management.
1.1 Background to the Study
CHAPTER ONE INTRODUCTION
The unprecedented growth of information and communication technologies (ICT) driven by microelectronics, computer hardware and software systems has influenced all facets of computing applications across organizations globally. Simultaneously, the global business environment is becoming increasingly complex with functional units requiring more and more inter-functional data flow for decision making, timely and efficient procurement of product parts, management of inventory, accounting, human resources and distribution of goods and services. In this context, management of organizations needs efficient information systems to improve competitiveness by cost reduction and better logistics. It is universally recognized across all organization levels, forms or categories that the capability of providing the right service at the right time brings tremendous rewards to organizations in a global competitive world of complex business practices.
The late 1980s and the beginning of the 1990s saw new software systems tagged Enterprise Resource Planning (ERP) systems. The Gartner Group first used the acronym ERP in the 1990s as an extension of Material Requirements Planning (MRP), and the later Manufacturing Resource Planning (MRP II) (Anderegg, 2013). Without replacing these terms, ERP came to represent a larger whole that reflected the evolution of application integration beyond manufacturing. At inception, it evolved in the global market by targeting mainly large complex business organizations. These complex, expensive, powerful, proprietary systems are off the-shelf solutions requiring consultants to tailor and implement them based on the company’s requirements.
In many cases ERP systems force companies to reengineer their business processes to accommodate the logic of the software modules for streamlining data flow throughout the organization. The phenomenal growth of computing power and the internet is bringing ever more challenges for the ERP vendors and the customers to redesign ERP
products, breaking the barrier of proprietorship and customization, and embracing the collaborative business over the intranet, extranet and the internet in a seamless manner. It is a never-ending process of reengineering and development bringing new products and solutions to organizations. Globally, ERP vendors and organizations who are ardent customers of the system have recognized the need for packages that follow open architecture, provide interchangeable modules and allow easy customization and user interfacing, thus enhancing improved services and customer satisfaction. The recent spate of emphasis on organization’s survival amidst the current global economic recession which has continued unabated compels all category of organizations to adopt such systems as a strategy to sustain survival.
In Nigeria also, there exists a symptom of high degree of competition in the hospitality industry today with traditional and non-traditional measures being employed in the competitive process to woo customers. In this competitive economy with increasingly rational customers, hotels can only win by creating and delivering superior value which involves understanding customer value and creating customer value through the provision of core and relevant services tailored towards customer satisfaction. Essentially, creating and delivering customer satisfaction by improving service performance not only ensures customer loyalty, but also long-term profitability. Kim and Cha (2002) reinforce this belief with the assertion that for hotel businesses, loyal customers are more profitable.
Profitability and sustainability of the hospitality industry hinges upon a tandem between services provided and customer requirements and in order to achieve this, organizations must improve their business practices by upgrading their capability to generate and communicate accurate and timely information towards the realization of set goals. This is usually Information Technology (IT) driven (O’Bren, 2008) and one of the proxies for this enterprise is known as Enterprise Resource Planning (ERP) system (Ross and Beath
2002). ERP system is a business process management software which integrates an organization’s operations towards the attainment of its goals. Robinson and Wilson
(2001) observe that the aim of ERP systems is targeted at providing a business advantage by facilitating the management of all organization’s activities as a whole; in addition to replacing legacy systems and resolving inconsistencies and interfacing problems among individual information systems.
Until a few years ago, ERP system was not common in Nigeria. It evolved in the early
1990s from Manufacturing Resource Planning (MRP II) Systems. However, while MRP II focused on manufacturing, ERP systems provide other functions such as integrating all data relating to materials, marketing, finance, human resources, etc.; thereby allowing organizations to price product/services, produce financial statements and manage human, materials and financial resources effectively. Since adoption, ERP system has become a subject of fundamental importance and concerns to all organizations and indeed a prerequisite for local and global competitiveness.
The quest for survival, global relevance, maintenance of existing market share and sustainable development has made exploitation of the many advantages of Information and Communication Technology (ICT) through the adoption of ERP systems imperative in the hospitality industry (Agboola and Salawu, 2008). The impact of this relationship, however, is yet to be fully ascertained in developing nations. The global success of Enterprise Resource Planning (ERP) systems has not only attracted the interest of researchers from the IT discipline, but from all major disciplines in business research including management and accounting. The emergence of ERP systems has moved the topic “Computerized business information systems” increasingly from IT domain to the business domain; from systems design and programming to business configuration, process mapping and re-engineering.
ERP system professionals impose their business ideology on organizations and force a rethink in terms of integrated processes, accounting, management, production planning, customer relationship and control. These innovations brought about by ERP systems make them very attractive research object of many business disciplines, and management is by nature the one from which we expect an answer to the question which ultimately
counts in modern business practices such as whether those systems are worth the investment (Wieder, Booth, Maltolcsy and Ossimitz, 2006) especially with regards to the hospitality industry.
With respect to the hotel industry, the utilization of ERP system as a specific information technology application has increased attention from stakeholders in the hospitality industry. This is partly due to the rapid and significant growth in electronic operations which is becoming common in the banking sector for instance, with mobile banking, Automated Teller Machine (ATM), and other forms of internet banking targeted at attaining the goals of the organization. Also, shopping malls have adopted this medium, partly through the use of Point of Sale (POS) machines and online purchase of products. These form cases of the adoption of ERP systems in business organizations and it is believed that with such practices sound financial management and enhanced customer convenience in patronizing a business are equally attained.
However, the complexity of ERP systems implementations; the drastic organizational, cultural, and human changes; the typical high customization expenses; and implementation problems all contribute to new customers reconsidering their ERP systems implementation plans. Patrick (2002) observes that ERP systems implementations are likely to be the largest change project in cost and time that most organizations have taken on in their history. However, inconclusive findings have been reported on the effect and benefit of ERP systems implementations. It is on this premise that various researchers such as Lang, Furst and Nolle (2000) and Wilson (1993) have been engaged in unending discourse on the prospects emanating from the utilization of ERP systems in various enterprises.
Gattiker and Goodhue (2000) observe that ERP systems offer an extra-ordinary level of business integration and related benefits, however, most IT managers identified ERP systems as the most difficult systems to implement. In the view of Patrick (2002), ERP systems are usually modular in design, utilize a centralized common database management system and have integrated modules so that data flows seamlessly to users
through standard interfaces. They further noted that ERP systems are flexible and present best business practices, and require tailoring and configuration set-up for various business functions. In addition, ERP systems operate in real time, provide online, batch processing capabilities and are increasingly internet-enabled, which are the hallmark of modern business operations.
ERP is turning into the business backbone for organizations that perform online business transactions; again, a feature most modern organizations are conversant with. This is supported by Willcocks and Sykes’ (2000) argument that an ERP system is competitively and technically necessary for many organizations. However, there is contradictory evidence in justifying an ERP economically and there is difficulty in rationalizing the associated costs and implementation complexity for achieving lasting business advantage.
Even though ERP systems have been used by many organizations for over a decade, there remains dearth of research on the impact of ERP on organizational performance in hotels. The empirical research (as opposed to user perception) on the impact of ERP systems on organizational performance includes studies by Poston and Grabski (2001), Reck, Lippincott and Hunton (2003) and Nicolaou (2004). These three studies used the same methodology by sampling public firms that adopted ERP and compared their financial performance with the performance of a matching group of non-adopting firms. Various financial indicators were used to measure organizational performance for the ERP adopting firms and their matching non-adopting firms. The studies resulted in contradictory conclusions, and thus called for more research in the area of performance effects associated with the implementation and use of ERP systems in different industrial sectors and tailoring such study to different economies or countries. Since researches indicate that ERP systems significantly affect various types of organizations, this study however seeks to measure the long term impact of ERP systems on performance of selected registered hotels in the Nigerian hospitality industry.
The Nigerian hospitality industry with special reference to hotels has come of age and has witnessed improvement over the years especially in terms of superstructure and infrastructure but it has not been so in service delivery that meets the satisfaction of the patrons. There are complaints on the levels of services rendered that are not satisfactory and charges that are not commensurate to value of products and services obtained. Poor service delivery is a common phenomenon in our hotels today in Nigeria and this has constituted a great concern for patrons, who daily complain of non-satisfaction from the majority of hotels including those that claimed to be five star hotels (Tijani, Okunola and Orga, 2000). Their complaints stem from incidences of poor services at various service points, poor facilities, untrained and uneducated staff with low staff disposition; others are inadequate hospitable character, low employee efficiency in discharging basic duties etc.
A customer visiting a hotel expects a complete quality service delivery for total satisfaction from all the products and services well delivered by a professional courteous staff at a reasonable rate. This however is found wanting in most hotels in Nigeria. In fairness, given the reality of ERP systems in other sectors of the global economy, it is imperative that a study be carried out to determine the extent of its adoption by Nigerian hotels. Also, where it is adopted, it is essential that the impact of ERP system on performance of registered Hotels in Nigerian be determined especially given the role and state of the hospitality industry in Nigeria. The essence of this research lies in the need that for the Nigerian hospitality industry to live up to its responsibility to the economy as a veritable and dependable source of foreign exchange, the critical role of the hotel sector of the industry cannot be overemphasized.
1.2 Statement of the Problem
The role of ERP in facilitating organizational performance, thereby providing competitive advantage, is widely acknowledged (O’Brien, 2008). Relevant literature have considered facilities management, IT-based personnel management, space analysis, inventory management and level of support services management, as a cornerstone of
ERP in business organizations. However, the extent to which these variables that constitute professional ERP functions could impact on control of operations and costs, customer satisfaction, information and financial management in hotel establishments in South East Nigeria are quite unclear and is yet to be established and documented in literature.
An important fact that emerged from background reading of relevant literature was that previous studies dwelled mainly on the relationship between ERP and public organizations or the banking industry. Its impact on performance of hotels in developing nations (to the best of the researcher’s knowledge) has not gained adequate empirical coverage. Where this has been attained, focus on the relationships between business development management, space analysis, hotel support services management and staff disposition; inventory management and operational cost effectiveness of hotels particularly in South East Nigeria is minimal. Preliminary investigation by the researcher shows that reported poor quality of hospitality services in Nigeria and the customer dissatisfaction therewith cannot be separated from the attitudes and performance of employees of these hotels; thus the need to examine business development and staff disposition has become a matter of particular interest especially to investors seeking to enhance customer satisfaction and maximize value for money.
This lacuna is significant in the sense that Nigeria is at the point of economic diversification and the successful contributions of the hospitality and tourism industries in Dubai, United States, Kenya, Spain etc. serve as lessons (Booty, 2010). Therefore, the essence of this research lies in the need that for the Nigerian tourism industry to live up to its responsibility to the economy as a veritable and dependable source of foreign exchange, the critical role of the hospitality industry cannot be overemphasized. Therefore, the study presents an empirical investigation into the relationship between ERP and performance of registered hotels given that most hotels in Nigeria have been bedeviled by complaints about unsatisfactory services coupled with seemingly
unreasonable service charges which leave a lot of customers looking for better alternatives. This needs to be investigated. Hence, this study.
1.3 Objectives of the Study
The aim of the study is to determine the impact of ERP on performance of registered hotels in South East Nigeria. The specific objectives of the study are to:
i. Determine the effect of space analysis on employee efficiency in the selected hotels.
ii. Assess the effect of hotel support services management on hotel service specifications.
iii. Ascertain the correlation between business development management and hotel staff disposition.
iv. Identify the relationship between inventory management and operational cost effectiveness of the selected hotels.
v. Establish the effect of facilities management on hotel customer satisfaction in the study area.
vi. Verify the extent to which ICT tools employed enhanced information management by hotels in the study area.
1.4 Research Questions
These research questions are formulated in line with the objectives of the study:
i. What is the effect of space analysis on employee efficiency in the selected hotels?
ii. What is the effect of hotel support services management on hotel service specifications?
iii. What is the correlation between business development management and hotel staff disposition?
iv. What is the relationship between inventory management and operational cost effectiveness of the selected hotels?
v. What is the effect of Facilities Management (FM) on hotel customer satisfaction in the study area?
vi. To what extent do ICT tools employed enhance information management by hotels in the study area?
1.5 Research Hypotheses
The research hypotheses seek to answer either in the negative or affirmative of the questions raised by the research questions.
i. Space analysis has a significant positive effect on employee efficiency in the selected hotels.
ii. Effect of hotel support services management on hotel service specifications is significantly positive.
iii. There is a significant positive correlation between business development management and hotel staff disposition.
iv. There is a direct positive relationship between inventory management and operational cost effectiveness of the selected hotels.
v. Facilities Management has a significant positive effect on customer satisfaction in the hotels under study.
vi. ICT tools employed, significantly enhance information management by hotels in the study area.
1.6 Significance of the Study
The study is on the impact of ERP systems on hotel service performance in South East Nigeria. The significance of this study lies in the expectation that it further exposes the concept of Enterprise Resource Planning more especially as an emerging field in developing economies to present and prospective hotel owners, managers, stakeholders and academics. The study will be beneficial to the following:
Nigerian Hospitality Industry: As the hospitality industry is crucial to tourism and economic development, the need for high operational efficiency is imperative and it is only essential to identify the role of ERP in the actualization of this goal. The Nigerian hospitality industry will see the study as a reference material in obtaining and sustaining
customer loyalty which is crucial given the competitive landscape of the industry. Therefore, the study will also serve as a strategy to outwit competitors.
Scholars and Researchers: Researchers and scholars in related field especially those wishing to conduct further research on ERP will find this study as a reference material.
Customers: Customers will also benefit from the study as it is directed towards delighting them.
Stakeholders: Stakeholders of the hospitality industry will find the findings of the work as a feedback tool for further improvement. Professionals in the ERP field, students, public servants, corporate bodies, scholars as well as government at all levels, through the recommendations made from this study, will be able to address their own ERP issues and proffer solutions to their respective problems. This study will from its result and recommendations increase awareness on the effect of ERP on service delivery in the hospitality industry.
1.7 Scope of Study
This study is limited to determining the effect of ERP on hotel service delivery in South East Nigeria. The case study was informed by the reasoning that the critical position of the hospitality industry to tourism and economic development offers the need for high operational efficiency which makes it imperative to identify the role of ERP in hotel service performance. The choice of the South East geopolitical zone of Nigeria was based on the need to examine the interplay between both variables in the region. The scope will cover the conceptual and theoretical constructs as well as models of the variables that make up the study. The study will also focus on prior empirical works as it relates to the discourse. The study will survey all hotels located in Enugu, Imo, Anambra, Eboyi and Abia states as provided by the states’ Tourism Development Board. It is
pertinent to note that periodic scope is not utilized in this study as largely primary data will be collected by the study. However the time scope is 2009-2016.
1.8 Operational Definition of Terms
The following terms are defined as implied in the course of this study.
Customer Loyalty: Customer loyalty is defined as commitment that consumers may exhibit to brands, services, stores, product categories.
Operational Efficiency: The ability to satisfy customer requirements and meet the organizational goals and objectives in a sustainable way.
Service Specifications: This quantifies the acceptable standard of service required by the customer.
This material content is developed to serve as a GUIDE for students to conduct academic research
IMPACT OF ENTERPRISE RESOURCE PLANNING ON THE PERFORMANCE OF REGISTERED HOTELS IN SOUTH EAST NIGERIA
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