ABSTRACT

Software as a service is a model that has recently been used to offer software systems in the world. The purpose of this research was to investigate the factors influencing implementation of ERP system as a SAAS among Small and Medium enterprises within the Manufacturing Industry in Nairobi County. Specifically, the study sought to establish the organizational, environmental and technological factors influencing the implementation of ERP system as a SaaS among SMEs within the manufacturing industry in Nairobi County. This research used a descriptive survey design. The study population consisted of all the 134 SMEs registered with Kenya Association of Manufacturing (KAM) within the manufacturing sector in Nairobi, Kenya. The study sampled all the SMEs registered with KAM and then selected one respondent who was to be selected randomly to represent each SME. Hence, the sample size was 134 respondents. This study used primary data obtained from the original sources using questionnaires. The questionnaires were self-administered using the drop and pick later method and email. Data collected from the questionnaires was prepared, converted from responses to quantitative format for ease in analysis using statistical package for social sciences (SPSS). The statistics generated were descriptive statistics which included frequencies and percentages and inferential statistics which included correlation matrix and multiple linear regression. A multiple linear regression model was used to show the relationship between the independent and dependent variables. A pilot study was conducted in order to establish the validity and reliability of the questionnaire. In this study, the questionnaire was tested on 10% of the sample to ensure that it is relevant and effective. The subjects participating in the pilot study were not included in the final study to avoid survey fatigue. The study results revealed that environmental factors and implementation of ERP system were positively and significantly related. The results revealed that organization factors and implementation of ERP system were positively and significantly related. The study concluded that technological factors and implementation of ERP system were positively and significantly related. The study concluded that SMEs within the manufacturing industry in Nairobi were faced by financial constraints. The study recommended that the ministry of industrialization and enterprises development must strive to improve employees’ knowledge and skills to ensure successful ERP implementation. This can be done through user training before the system goes live and continuous training post implementation to fill the knowledge gaps. Top management should also provide leadership during the implementation process and provide support to the project team.