Adoption of computer technology and its impact on organizational performance and labour requirements: a case of three organizations in Kenya
Ogolla, Jemmima Wanja Gatumu -
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This study was carried out to examine the nature of adoption of computer technology among Kenyan organisations with different ownership and management practices, and to identify the impact of computerisation on the performance and on labour requirements. Existing literature with observations made in other countries have argued that while there are fundamentally positive aspects on adoption and use of computer technology some of the impact have to be negative, particularly with respect to displacement of labour and centralisation of operations. The principal hypothesis was that organizations with different ownership and management practices will influence the nature of computerization, thrbugh adopted policies and strategies, which in turn will influence the impact on performance and labour requirements. To examine this hypothesis, three organizations were selected, namely the Ministry of Finance, National Social Security Fund, and Barclays Bank on the basis of their computerization initiatives since 1970s and varied ownership and management practices. The impact of performance was examined in terms of duration in processing critical tasks and the extent to which computerization has enhanced realisation of the missions and objectives in these organizations. The impact on labour was examined in terms of changes that have occurred in various staff categories: i.e. senior management, supervisory cadre and operational cadre. The study found that in the Ministry, computerization was in response to expanded public service and the need to process salaries and development expenditure efficiently. In the Fund, the aim was to develop systems for efficient registration of members (employers and their employees) as well as to process and reconcile their contributions. While the Bank had undertaken gradual computerization since 1970s, intensified and expanded computerization was carried-out in 1990s in response to increased competition in the financial sector particularly in terms of efficiency in customer services and to allow management to make prompt decisions. The data indicated that while the Ministry was the first to carryout computerization, both the Bank and the Fund have carried-out more intensive and extensive computerization in the last five years. Between 1990 and 1995, the computing capacity of the Bank increased from a total to 197 Gigabytes (GB) to 6045 (GB), the Fund 2.6 GB to 19.7 GB, and the Ministry remained relatively stagnant form 5.28 GB to 5.34GB. During the same period the Bank increased its expenditure on computerization by a factor of 43.3, the Fund 2.5 and the Ministry 15.11. Further the data indicated that the Bank and the Fund have achieved substantial computerization involving network and real-time processing respectively while the Ministry still carried out substantial batch processing. Furthermore the Bank has computerized and integrated 70% of its functions, the Fund 50% and the Ministry 40%. The computerization efforts were found to have had an impact on the nature and duration of processing critical missions, data entry and reconciliations. In the Ministry, duration of processing accounts data was reduced from 30 to 7 days; at the Fund, registration of members from 120 to 20 days; at the Bank, banking transactions from one day delay to on-line. Furthermore, the computerization efforts had impact on labour structure in the Bank and at the Fund. In the case of the Bank, operational cadre decreased from 83% to 79% and the supervisory cadre increased from 8% to 14%. Interestingly in the case of Fund, operational cadre tended to remain the same at 44% but supervisory cadre increased from22% to 26%. In both organizations the recruitment of operational cadre also decreased as supervisory cadre increased. The decrease of operational cadre and the increase of the supervisory cadre indicated that computerization at least in the two organizations has had an impact on enhancement of administrative capacity. The situation in the Ministry remained the same. Further, computerization in the three firms led to increased training among senior management, middle and supervisory cadres. In the Ministry, the percentage of senior staff trained rose from 24% in 1990 to 27% in 1995, the Fund from 10% to 14% and the Bank from 47% to 54%. While it was not expected in the case of the Ministry, the negative impact in-terms of displacement of staff was found to be negligible in both the Fund and the Bank because of adopted policies and strategies, including retaining, and redeployment. The study concludes that computerization in private sector is substantially intensive and tends to have greater impact as compared to computerization in the public sector. Further, the study concludes that computerization in private sector, and to some extent state corporations, has increased efficiency and also enhanced administrative capacity. In addition, the study concludes further that the anticipated negative impact of computerization was minimised by adopted strategies and policies that encourage retraining and re-deployment of the staff.