factors that influence the performance of...

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FACTORS THAT INFLUENCE THE PERFORMANCE OF

INFORMATION COMMUNICATION TECHNOLOGY PROJECTS IN KENYA

Fredrick W. OWINO

1, Dr. Victor N. KERARO

2 and Beth R. WANJIKU

3

All Affiliated to Jomo Kenyatta University of Agriculture and Technology

Box 62000, 00200, Nairobi, Kenya Author’s contacts [email protected]; Phone: +254 739 686 746 [email protected]; Phone: +254 712 124 470 [email protected]; Phone: +254721999170

ABSTRACT This study sought to investigate factors that influence performance of ICT Projects in Kenya carried out in Nairobi County. The general objective of this study was to investigate the factors that influence performance of ICT projects in Kenya. Significantly the study sought to investigate how innovation, human resource management practices, systems adopted and government policies influence performance of ICT Projects in Kenya. The study adopted a descriptive survey design. The study population consisted of 344 ICT firms from Nairobi County and a sample size of 103 firms constituting 30 per cent of the total population was selected through stratified sampling method. The study collected data from those who initiate, appraise, plan and manage ICT projects. Structured questionnaires with largely closed ended questions were used for data collection. Data collected was analyzed using the social package for social sciences (SPSS) version 21 and Microsoft Excel. Analysis included descriptive, regression and analysis of variance (ANOVA). The findings were presented using bar charts, pie charts and frequency tables. The study found out that innovation, human resource management practices, systems adopted and government policies significantly influence performance of ICT projects in Kenya. Further the study found that all the four independent variables had a positive influence on performance of ICT projects in Kenya. The findings of the study revealed that government policies, to a great extent influence performance of ICT projects in Kenya followed by human resource management practices, then innovation and finally systems adopted. The study therefore concluded that innovation, human resource management practices, systems adopted and government policies positively influence performance of ICT projects in Kenya. Keywords : Performance of ICT Projects, Innovation, Human Resource Management Practices,

INTRODUCTION Expectation of Information Communication Technology (ICT) projects performance is as old as the invention of the internet in the 1960s, in the United States during the cold war period. According to Asaolu (2006), the US Department of Defense established the Advanced Research Projects Agency to promote research that would ensure that the USA compete with and excel over the Union of Soviet Socialist Republic (USSR) in any technological race. Advanced Research Projects Agency’s (ARPA) mission was to produce innovative research ideas, to provide meaningful technological impact that went far beyond the conventional evolutionary development (Cohen-Almagor, 2011). Today the world has turned into a global village (Gholami, Emrouznejad, & Schmidt, 2008) as a result of numerous ICT projects that have since been implemented. According to a 2014 annual report by International Telecommunications Union (ITU), about 3 billion people (40% of the world’s population) are using the internet and the number of mobile-broadband subscriptions have reached 2.3 billion with 55% of them in developing countries.

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Top in the list of countries in the global competitiveness are; Switzerland, US, Singapore, Germany, Netherlands, United Kingdom which are homes to companies that spend heavily on research and development (R&D), highly sophisticated innovation, excellent university systems that work in partnerships with the business sector in R&D (World Economic Forum, 2014). Among these companies include; global ICT companies such as Apple, Google, Microsoft, HP, Samsung that have managed to deliver some of the most successful ICT projects. Most African countries today recognize ICT sector as a critical component and a contributor to the national economy. As such a number of these countries have come up with policies and strategies to help align ICT initiatives and projects with national strategic priorities and economic growth (IST-Africa Consortium, 2014). A global survey conducted by Price Waterhouse Coopers (2012) , where 22.4% of the respondents were from ICT industries agreed that the main drivers for establishing a project is for business imperatives (40.2%) and to generate revenue (30.1%) confirming that globally ICT projects are implemented with returns in mind. Researches (Dalcher & Genus, 2003; Flyvbjerg & Budzier, 2011; Nasir & Sahibuddin, 2011) however confirm that a good number of ICT projects do not deliver the expected returns and value, instead they fail. Project success is a prerequisite to competitive advantage of ICT projects. Shenhar, Levy, and Dvir (1997) in an attempt to define project success identified four distinct success factors: project efficiency, customer satisfaction, business success, and future potential. In Kenya, the ICT sector is considered a key driver of economic growth and great efforts have been made over the last five years to ensure this is achieved (Gichoya, 2005). According to a 2014 annual joint report by Africa Development Bank, Organization for Economic Co-operation Development and United Nations Development Programme, Kenya’s economic growth is expected to accelerate from around 5% in 2013 to a little under 6% in 2014 and 2015, driven by ICT as one of the key sectors. Statistics from Communication Authority of Kenya (2014) indicate that currently the total mobile telephony subscription in Kenya has reached 32.2 million, 26.6 million mobile money subscriptions, 14.0 million Internet subscriptions with Mobile internet subscriptions reaching 13.9 million accounting for 99 per cent (United Nations, 2014) of internet uses. Kenya has been home to key innovative projects in the ICT sector with a case in point being Safaricom’s M-PESA widely viewed as a success story globally (Jack, Suri, & Sloan, 2010). M-Kesho is another popular mobile banking product in Kenya developed and promoted by Safaricom and Equity bank (Lule, Omwansa, & Waema, 2012). Other initiatives include ICT incubation, nurturing ICT innovation and creating an entrepreneurial mindset, which resulted in establishment of incubators like iHub, Strathmore University s̀ iLabAfrica, Nailab, and mlab. (International Data Corporation, 2014). There are also a wide range of ICT Initiatives and projects ongoing in Kenya including the schools laptop programme; an initiative of the Jubilee Government (Mue, 2013), digital inclusion projects (Hallberg, Kulecho, Kulecho, Okoth 2011), development of Konza technology city (IST-Africa Consortium, 2014) and digital migration, a project to migrate from the current analogue broadcast to digital platform. The national fiber optic infrastructure is being rolled out and is currently work in progress (ICT Authority, 2014). The government of Kenya is also working on automation of Government services through e-Government to provide Government shared services such as the citizen portal and the national single window (Kenya Trade Network Agency, 2014). Other than the government, private developers have also embarked on projects to lay out fiber-optic networks terrestrially across the country that has seen the number of business and houses who can access fiber optic internet links rise. All these initiatives and projects by the government and private sector are aimed at returns on investment be it financial of in terms of meeting requirements of the intended beneficiaries.

Statement of the Problem ICT projects have been noted by a number of researchers to be facing several performance challenges including failure in US, Europe, Australia and other parts of the globe. Previous studies from the year 2000 capture ICT project failures to be between 70% to 86% resulting in massive wastage of resources (British Computer Society, 2004; Mueller-Jacobs & Tuckwell, 2012). Dalcher and Genus (2003) reported estimates of wastage due to IT project failures at $150 billion per annum in the US and $140 billion in

Owino et al. …Int. J. Innovative Soc. Sc. & Hum. Res. 3(2): 127-135, 2015

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Europe. In Australia, 30-40 percent of ICT projects experience some form of escalation, with cost overruns averaging 43-189 per cent; 30-40 per cent of projects resulting in no perceptible benefits; and 80-90 per cent of ICT investments failing to meet their performance objectives Public Accounts Committee (2014). In 2011, a report released by Oxford University in the UK found that large ICT projects were twenty times more likely to run out of control than other large infrastructure projects. According to Flyvbjerg and Budzier (2011), one in six projects reported an average cost overrun of 200% and a schedule overrun of almost 70%. Notably some of the biggest challenges of ICT projects are cost overruns and schedule overruns placing ICT projects failure rate at 70% (Mueller-Jacobs & Tuckwell, 2012; Kyunguti & Makau, 2014). Kenya faces similar performance challenges, despite the remarkable growth of ICT sector coupled by opportunities created by government strategies on ICT. Performance of ICT projects has still remained a challenge experienced with projects being run by both private and public sector. According to Kabutu (2013) software development and implementation is a major challenge in Kenya due to high failure rate in public sector. The laptop project’s (a flagship project of the Jubilee government) chances of success appears to be in jeopardy after it failed to kick off two years later (Moses, 2014). Previous studies in Kenya (Sewe, 2010; Ngugi & Mutai, 2014; Ikua & Namusonge, 2013) however, mainly concentrated on factors for growth of ICT in Kenya. This has left a knowledge gap in the key area of performance of ICT projects. The study therefore sought to bridge this knowledge gap. Objectives of Study

The study sought to investigate factors that influence performance of ICT projects in Kenya. The specific objectives of the study were:

1) To establish the influence of innovation on performance of ICT Projects in Kenya. 2) To ascertain the influence of human resource management practices on performance of ICT Projects in

Kenya.

3) To determine the influence of systems adopted on performance of ICT Projects in Kenya. 4) To investigate the influence of government policies on performance of ICT Projects in Kenya.

Theoretical Review Resource-Based Theory of Competitive Advantage

The resource-based theory, originally coined by Werner felt in 1984, has emerged in recent years as a popular theory of competitive advantage (Kiragu, 2014). Barney (1991) who contributed greatly to the development of resource based theory argued that a resource comprises all assets, capabilities, organizational processes, firm attributes, information, knowledge and others controlled by a form that enable the firm to conceive and implement strategies that improve its efficiency and effectiveness. The resource-based theory draws attention to the firm’s internal environment as a driver for competitive advantage and emphasizes the resources that firms have developed to compete in the environment (Wang, 2014). Researchers who believe in resource based theory put more emphasis on strategically important useful resources and competencies arguing that they should be viewed as sources of competitive advantage. They (Barney, 1991; Prahalad & Hamel, 1994; Papp & Luftman, 1995; Amit & Shoemaker 1993; Markides & Williamson, 1994; Rugman & Verbeke, 2002) used terms such as core competencies, distinctive competencies, strategic assets, to refer to strategically important resources and competencies, which provide a firm with a potential competitive advantage. According to Rugman and Verbeke (2002), a resource must be valuable, in the sense that it should be able to exploit opportunities and/or neutralizes threats in a firm’s environment; it must be rare among a firm’s current and potential competition; it must be imperfectly imitable; and there should not exist strategically equivalent substitutes for this resource. According to Lado, Augustine , Wilson and Mary (1994) the resource-based view is of the opinion that human resource systems can contribute to sustained competitive advantage by aiding the development of competencies that are firm specific. The sustained excellent performance of many companies has been


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linked to unique capabilities for managing human resources to gain competitive advantage (Çalişkan, 2010). Human Capital Theory

Human capital theorists insist on the importance of investment in education and the imparting of value to the future worker (Livingstone, 1999). Grant (1991) argued that capabilities are the source of competitive advantage while resources are the source of capabilities. Amit and Shoemaker (1993) adopted a similar position and suggested that resources do not contribute to sustained competitive advantages for a firm, but its capabilities do. Human capital theory helps to explain how those investing in human capital are rewarded with higher life-time earnings (Preston, 1997). The human capital theory proposes that sustainable competitive advantage is attained when the firm has a human resource pool that cannot be imitated or substituted by its rivals (Barney, 1991). According to Ngugi (2013) human capital theory emphasizes the value addition that people contribute to an organization. Ngugi also added that the theory regards people as assets and stresses that investments in people generate worthwhile returns for gaining competitive advantage key among them improvements in performance, productivity, flexibility and the capacity to innovate

Empirical Review Human Resource Management Practices

Imtiaz, Al-Mudhar, Mirhashemi and Ibrahim, (2013) carried out a study on critical success factors of information technology projects. The goal of this study was to review past critical success factors research relevant to IT project. This was done by searching the full-text of articles within Google Scholar, Science Direct, IEEE Explorer, ACM and Emerald databases published within 1999 to 2012. The study enlisted 15 factors that were believed to be critical for the success of IT projects based on strong evidence given in their corresponding studies. In the list was team capability, selecting the right team and training. The findings of the study pointed out that team capability strongly affects the success of IT projects, selecting right team has a medium effect in determining the success of IT projects and that training has a medium effect in determining the success of IT projects. Government Policies

A case study by Sewe (2010) to determine the factors affecting ICT growth and expansion in Kenya concentrated on policies and strategies put in place, economic factors and Industry factors on Growth of ICT. With regards to economic factors Sewe (2010) identified tax incentives, incentives for investment in the ICT sector and access to current information on ICT to be affecting the expansion and growth of ICT. Other factors identified include; regulatory requirements by the government which were found to constrain investment in ICT, license fees and license requirements and political risks. (Sewe, 2010) argued that the enactment of the government regulatory policy in Kenya facilitated the liberalization and privatization of the telecommunication industry in Kenya adding that proper government policy creates an enabling environment to the development and growth of the ICT industry.

METHODOLOGY The study employed a descriptive survey research design. A sample of 103 ICT firms was selected from the target population of the 344 in Nairobi County, a sampling frame acquired from the CAK 2014 and Computer Society of Kenya. This represented 30% of the total population in line with Mugenda and Mugenda (2003) who recommended that a sample of 30% is favorable and adequately representative of the entire population. The study adopted stratified random sampling method in line with recommendations of Orodho (2009) who stated that stratified sampling is applicable if a population from which a sample is to be drawn does not constitute a homogenous group. Closed ended questionnaires were used in data collection and a pilot study was undertaken on seven ICT firms to test the reliability and validity of the questionnaire. Data collected was analyzed with the help of computer statistical package for social science (SPSS) version 21 and Microsoft excel to generate quantitative reports. Analysis included descriptive and inferential statistics with the findings presented using bar charts, pie charts and frequency tables.


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RESULTS

Regression Analysis The study applied a linear regression model to determine the contribution of independent variable which is performance of ICT projects in Kenya and independent variables namely innovation, human resource management practices, systems adopted and government policies. The coefficient of determination R

2 and

correlation coefficient (r) shows the degree of association between variables and competitive advantage of ICT projects in Kenya. The results of the linear regression indicate that R

2=.879 and R= .938 this is an

indication that there is a strong relationship between innovation, human resource management practices, systems adopted, government policies and performance of ICT projects in Kenya.

Table 1: Model Summary

Model R R Square

1 0.938 0.879

From Table 1 above R value = 0.938 confirming that the overall model is significant. It further implies that innovation, human resource management practices, systems adopted and government policies significantly influence performance of ICT projects in Kenya.

Table 2: Analysis of Variance ANOVA ANOVA

a

Model Sum of Squares df Mean Square F Sig.

1 Regression 50.593

4

12.648

123.431 .000

Residual 6.968

68

0.102

Total 57.562 72

a. Dependent Variable: performance of ICT projects

b. Predictors: (Constant), innovation, human resource management practices, systems adopted and government

policies.

Table 2 presents the results of ANOVA test which reveal that all the independent variables innovation, human resource management practices, systems adopted and government policies have a significant influence on performance of ICT projects in Kenya. This is drawn from the p value (.000), which is less than 5% level of significance. Further the F value calculated is 123.431 which is much greater than the F critical (2.53) to conclude that all the independent variables significantly influence performance of ICT projects in Kenya.

Table 3: Coefficients

Model Unstandardized Coefficients t Sig. 1 Constant -0.455 Innovation 0.397 1.847 0.029 HRM Practices 0.401 1.864 0.027 Systems adopted 0.185 1.725 0.031 Government policies 0.603 2.783 0.007 Dependent Variable: performance of ICT Projects

Table 3 presents the results of the test of beta coefficients which indicates that the significant relationship between independent variables notably


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As presented in Table 3, innovation with a coefficient of 0.397 was found to be positive at significant level of 0.029 and this indicates that innovation has a positive influence on performance of ICT projects. HRM Practices coefficient of 0.401 was found to be positive at significant level of 0.027 and this indicates that HRM Practices has a positive influence on performance of ICT projects. Systems adopted has a coefficient of 0.185 was found to be positive at significant level of 0.031 and this indicates that Systems adopted has a positive influence on performance of ICT projects. Government Policies coefficient of 0.603 was found to be positive at significant level of 0.007 and this indicates that Government policies have a positive influence on performance of ICT projects. This clearly demonstrates that all the independent variables significantly influence performance of ICT projects but the relative importance of each independent variable was different. However, since the significance values were less than 0.005, all the coefficients were significant an thus the regression equation was; Y = -0.455 +0.397X1 +0.401X2 +0.185X3 +0.603X4

From the above regression model, holding innovation, human resource management practices, systems adopted and government policies to constant zero, performance of ICT projects in Kenya would be at -0.455. From the results, government policies is the greatest determinant of performance of ICT projects in Kenya, which has the greatest unstandardised beta coefficient (β=0.603) followed by human resource management practices (β=0.401), then innovation (β=0.397). The variable that contributes the least is systems adopted (β=0.185).

SUMMARY OF THE FINDINGS The main objective of this study was to establish the factors that influence performance of ICT projects in Kenya. The results of the study revealed a strong positive relationship between innovation, human resource management practices, systems adopted, government policies and performance of ICT projects in Kenya. The study established that innovation, human resource management practices, systems adopted and government policies to significantly and positively influence performance of ICT projects in Kenya. The findings of the study showed a great influence of all the four variables to performance of ICT projects in Kenya. The study found out that there was 87.9 % of corresponding change in determining performance of ICT projects in Kenya for every change in all the four predictor variables jointly. Test of overall significance of all the four variables jointly, innovation, human resource management practices, systems adopted and government policies using ANOVA, at .05 level of significance found the model to be significant.

CONCLUSION The study drew conclusion that innovation, human resource management practices, systems adopted and government policies significantly influence performance of ICT projects in Kenya. The study findings established that there is a significant positive relationship between innovation, human resource management practices systems adopted, government policies and performance of ICT projects. The study also established that government policies followed by human resource practices, innovation and systems adopted influence performance of ICT projects in that order.

RECOMMENDATIONS The players in the industry who engage in ICT projects for revenue generation should embrace innovation. This they can achieved by engaging in projects geared towards creation of new products, coming up with new technologies, introducing new and more efficient ways of carrying out ICT projects and investing in research and development. The players and potential investors in the ICT industry should align their human resource management practices and policies to ensure they acquire project team in the right quantities and quality. They should also invest in constant training and development of the teams as well as working on a proper reward system to ensure motivation and retention necessary for research and development.


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The players in the ICT sector who engage in ICT projects should consider adopting efficient systems where appropriate to help improve project efficiency so as to be able to deliver projects within budget, quality and time. ICT policy makers and government should formulate and enact effective ICT policies that create a favorable environment for all players. Again the government could consider coming up with policies that encourage the use of ICT products in government institutions to help solve national challenges like insecurity, corruption, poaching thereby creating demand for ICT products.

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