Ghana has a tropical climate and commonly endures droughts due to its dry weather. In addition, according to CIA Factbook (2014), the country deals with ecological problems which affect its environment i.e. issues of deforestation, destruction of habitat, water pollution, soil erosion, and inadequate supply of fresh drinking water.
In terms of square kilometres, Ghana is ranked twenty-fourth out of fifty-three countries, ninth from a population perspective, then seventh from a population density point of view. Although richly blessed with natural resources, Ghana remains very dependent on international financial and technical assistance, with its domestic economy continuing to be anchored around agriculture, which contributes 43 per cent of the gross domestic product (GDP) and employing 55 per cent of the country’s work force (Ghana, 2012). However, its microeconomic growth and socioeconomic development have produced impressive results as the GDP has been estimated at approximately 6 per cent plus since 2005.
4.2.2 GHANAIAN CONSTRUCTION INDUSTRY
Ghana is renowned as an emerging market, which is growing rapidly in sub-Saharan Africa, particularly because of contributions from the building construction industry (Laryea, 2010; Ofori,
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2012). Songwe (2014) states that the construction is dominated by physical infrastructure and asset-based lending as a means for growth and development. It also contributes about five to ten per cent of the gross domestic product (GDP) and employs about ten per cent of the working population (Ofori, 2012). According to the World Bank (2003), an estimated annual value of public procurement for goods, works and consultant services amounts to about US$600 million. Ofori (2012) regards the construction industry’s development across the local areas as a method of poverty alleviation in Ghana.
Ghana’s construction industry represents clients, professional consultants, and contractors as key stakeholders (Dadzie et al., 2012). With regard to contractors, the Ghanaian Ministry of Water Resources, Works and Housing, which is responsible for infrastructure development across Ghana, classified them into four financial classes. According to Frimpong and Kwasi (2013), contractors who have the capacity to execute projects which range from a small figure to US$75 000 are classified as D4K4; those who can execute projects ranging from US$75 000 to US$250 000 are classified as D3K3; those who execute projects ranging from US$250 000 to US$500 000 are classified as D2K2; and those who can execute projects greater than US$500 000 are classified as D1K1. The Chartered Institute of Building in Ghana estimates that there are over 1 600 registered contractors in Ghana. However, the majority of Ghanaian contractors fall within the margins which define classes D4K4 and D3K3 (Oxford Business Group, 2014).
The Ghanaian construction industry is one of the economic sectors which are regarded as the main engines supporting the national economy (Dadzie et al., 2012). Although the building construction industry supports the economy of Ghana, Asamoah and Decardi-Nelson (2014) state that the industry suffers from unprofessionalism, which is characterised largely by the inability of adequate planning, resulting in the failure to meet the clients’ requirement within the specified time and allocated budget, as well as stakeholder cooperation which is disjointed (Twumasi-Ampofo et al., 2013). These shortcomings form part of an industry in decline as a result of corruption without processes which are transparent in terms of procuring services provided by consultants and contractors (Asamoah & Decardi-Nelson, 2014). Djokolo et al. (2014) states that Ghana’s development is further strained through the adaptation of construction processes which are not sustainable.
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According to Twamasi-Amofo et al. (2014), the problem-ridden industry is expected to deliver 70 000 house units annually and accumulate the 250 000 deficit to meet the national housing demand in order to get back on track in delivering two million housing units by 2020 in order to meet the housing demand (Ilamura, 2013). Therefore the need of a more efficient and effective performing construction industry is paramount. It is against this backdrop that investigating measures to eradicate inefficiencies assume tremendous importance (Fugar & Agyakwah-Baah, 2010).
4.2.3 ERP SYSTEMS ADOPTION IN GHANA
ERP systems’ implementation and adoption are growing rapidly in Ghana. However, similar to other developing nations, there are challenges that face the implementation of such systems in Ghana as well. These include poor business ethics, organisational data culture, and functional divisions which are poorly set out in most Ghanaian businesses (Otiene, 2005; Laudon & Laudon, 2007; Heek, 2007).
According to Agboli and Ukaegbu (2006) and Mc Dade and Spring (2005), top management of businesses across Ghana are perceived to be short-sighted, with little to no interest in facilitating investments which are long term. The owners or managers whom the owners appoint tend to be reluctant to open the company to other potential stakeholders; they are often unwilling to be governed by systems such as ERP systems or organisational rules, and they also often tend to desire an autonomous operating style in order to run the business in the way that best suits them.
Beagre and Offodile (2001) and McDade and Spring (2005) state that it is often found that most organisations who are headed by top management of an autonomous nature do not have a clear organisational goal nor business plan. Under such management, business process outcomes in most case are non-existent (Asamoah, 2014). Koh et al. (2006) concur that the attitudes displayed by top management of a range of companies in Ghana towards the implementation and adoption of IT solutions such as ERP systems contrast sharply with the attitudes which are observed in multinational firms. The ethics of business demonstrated by such companies often encompasses transparency and the pursuit of excellence in a healthy and positive manner.
The success of an ERP system depends largely on the attitude and behaviour demonstrated by the end-users of the system in a particular firm (Freeman, 1984). ERP systems are systems
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programmed to streamline organisational activities and support improvement in coordination and collaboration among various organisational functional areas. However, according to Transparency International (2012), the cancerous nature of corruption across the public and private sector of Ghana continues to prevail and seems to be in the ascendancy. This, according to Abdelghaffar and Abdelazim (2010), often means that many companies in Ghana do not have fully operational functional areas, which results in top management across various organisations perceiving the implementation of ERP systems as an unnecessary activity and unreal to their operations (Lusby, 2009; Soh et al., 2000). This, along with issues of lack of infrastructure, environmental mismatch, and economic setting between foreign ERP developers and local end-users, results in the failure to really appreciate the ERP systems (Asamoah, 2014).
Corruption within organisations not only has the ability to compromise the success of an ERP system implementation attempt, but can often result in huge losses to affected companies, which on a broader scale disrupts the developments efforts and gains of Ghana (Transparency International, 2012).
McAfee and Brynjolfsson (2012) state that being data driven is critical in the enhancement of organisational performance. However, the data usage culture is still regarded as poor in Ghana, which also serves as a challenge with regard to the implementation of an ERP system (Asamoah, 2014). Ghanaian organisations i.e. the owners, managers, and employees, and even government institutions, do not perceive data collection and usage as a strategic element in the decision-making process (Baldwin, 2009). Erat et al. (2006) and McDade and Spring (2005) state that some companies do not analyse past data trends in order to forecast future growth patterns or make informed decisions; top management in most companies in Ghana tend to make decisions based on intuition, with minimal data to support the decision. The culture of decision making which is data-driven is just not as developed in developing countries as compared to developed ones. This data usage culture which is underdeveloped in Ghana serves as a barrier to the successful implementation and adaptation of ERP systems in the country.
According to Seethamraju (2008), there is general consensus that ERP systems are complicated in nature, which creates reluctance among various organisations with regard to adopting these integrated systems. However, Davis et al. (1989) and McDade and Spring (2005) both attribute
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this attitude of reluctance to low levels of awareness, education, and understanding. The perceived complication of ERP systems fuels the resistance to change in Ghana, which on its own serves as a challenge confronting ERP implementation and adoption, and also the full realisation of the systems’ benefits as well as the full functionality of its modules (Asamoah, 2014).
Karimi et al. (2007) state that most managers tend to implement and use a selected few of specific ERP modules, as opposed to the full adoption of the entire system, as an attempt to try and avoid re-engineering of the business process of their organisations. However, this also prevents the organisation from fully experiencing the ERP system’s benefits (McDade & Spring, 2005). This lack of commitment from top management in terms of committing themselves to the implementation often leads to a failure to realise certain project management requirements such as teamwork, the training of end-users, system maintenance, business process re-engineering, and monitoring and control (Lewis et al., 2003; Huang & Palvia, 2001). Abdelghaffar and Abdelazim (2010) and Wickramasinghe and Gunawarderna (2010) state that the lack of commitment from top management compromises the success of the ERP implementation in Ghana.
The wide-spread adoption and use of ERP systems in the country are also limited based on the lack of support from the government. The government can initiate policies which promote ERP usage by requiring mandatory data and information standards and protocol for specific industries, thereby in the long run improving the data culture in Ghana, which could result in industry standardisation on best practices which are built into the ERP system. This would lead to the greater efficiency and higher performance of local businesses.
All these factors mentioned above negatively influence the success of ERP systems in Ghana, leading to the failure of ERP system implementation.
4.2.4 LESSONS LEARNT
Literature reviewed regarding ERP systems implementation and adoption in Ghana has revealed the following:
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The impact of an ERP system implementation is dependent on the extent to which the system is implemented i.e. the number of organisational functional areas integrated and how the end-users have embraced the system;
Institutional forces such as the quest for competitive edge, government regulation, or industry benching can motivate the implementation of ERP systems irrespective of the condition of the cultural and economic environments;
Partial implementation of ERP systems denies the company from an experience which carries full ERP benefits;
An organisation’s data culture and ethical considerations were among the factors which heavily influence the degree to which an ERP system is implemented;
The extent to which ERP implementation are related to both higher business process management capabilities and higher organisational performance is significant;
Corruption negatively impacts the benefits which can possibly arise from an ERP system implementation;
ERP systems can enforce company-wide organisational control. The information visibility that ERP systems enable would compel employees to act ethically and in ways compliant with the organisational norms, even when they are not being monitored; and
Regulatory bodies, government agencies, professional associations, and other control institutions are significant influencers of ERP implementation in Ghana.
4.3 CONCLUSION
This chapter presented a review of literature relating to the Kenyan and Ghanaian construction industries. The chapter further provided an in-depth review of ERP adoption and adaptation through case studies in both countries, the findings revealing the challenges and rewards of a successful implementation of an ERP system in multi-national organisations. The following chapter will review the literature relating to South Africa, its construction industry, the ERP system experiences and market, as well as lessons which can be learnt from it.
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CHAPTER FIVE
ENTERPRISE RESOURCE PLANNING SYSTEMS IN SOUTH AFRICA
5.0 INTRODUCTION
This chapter gives a theoretical review of enterprise resource planning systems in South Africa. This chapter firstly reviews literature which examines the overall state of the South African construction industry. Secondly, the chapter focuses on the general overview of the adaptation and usage of enterprise resource planning systems in the country. Lastly, lessons learnt from the ERP landscape which can be applied in the construction industry to facilitate successful ERP implementation and adoption to will be indicated and examined.
5.1 SOUTH AFRICA 5.1.1 BACKGROUND
South Africa is the southernmost country in Africa, bounded in the south by a 2 798 kilometre coastline stretching from the South Atlantic Ocean to the Indian Ocean (CIA World Factbook, 2008). South Africa shares borders with Namibia, Botswana and Zimbabwe in the north, and with Mozambique and Swaziland in the east and north-eastern side of the country. Internally, South Africa surrounds the kingdom of Lesotho.
5Map 5.1: Map of the Republic of South Africa