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THE RELEVANCE OF INFORMATION TECHNOLOGY TO THE MANAGEMENT OF SMALL AND MEDIUM SCALE ENTERPRISES IN NIGERIA “CASE STUDY DALA BUILDING SOCIETY PLC.”
Information technology had a great impact in all aspects of life and the global economy is currently undergoing fundamental transformation. Information technology has very real impact in most of industries and in all aspects of economy, while businesses and enterprises continue to undergo considerable changes. Usage of these technologies is revolutionizing the rules of business, resulting in structural transformation of enterprises.
Modern businesses are not possible without help of information technology, which is having a significant impact on the operations of Small and Medium Sized Enterprises (SME) and it is claimed to be essential for the survival and growth of economies in general.
SME is drawing attention in developed and developing countries as well as in transition countries. It is generally recognized that SME play a key role in the revitalization and development of national economy in many countries and particular in the context of NIGERIA. It is encouraging the development of SME and the role that SME sector can play in promoting economic and social development by creating opportunities for employment. These components are described and discussed while more research and studies on the adoption of information technology in SME in Nigeria are proposed as necessary.
Small and medium scale enterprises have long believed to be catalysts for economic growth and national development both in developed and developing countries. In Nigeria where private sector is not well developed SME is assumed to play the role of employment generation, facilitator of economic recovery and national development. The paper examined small and medium scale enterprises and Dala Building Society in relation to those challenges which affects SMEs from developing capacity to realizing its full potentials as well the prospect for improvement and development for employment generation, economic growth and national development. The survey suggests that electricity and infrastructural inadequacies are the most prevalent factors for non-utilization of IT amongst SMEs in the region. It is suggested therefore that making information technology gadgets affordable and assessable by the government will strengthened commitment to economic reform and would offer a turning point in facilitating the recovery of Nigerian economy and national development.
1.1 BACKGROUND OF STUDY
The world over, there is a major shift in the mode of product. This shift characterized by a departure from the energy-oriented twentieth century, to one of information and knowledge-oriented twenty first century, based on the high performance of information technology.
Dala Building Society plc (DBS) is a primary mortgage institution (PMI) incorporated in Nigeria and licensed on 30th October 1992 as a limited liability company and licensed on 24th October 1997 to engage in business of mortgage banking with majority ownership help by kano state and its 44 local government councils.
An internet service was introduced in Dala Building Society 10 years after the institution was incorporated. This indicates that the performance and services rendered by staff of Dala Building Society has increased as well as the introduction of IT service.
Computerized systems can now help monitor the work as it is being done, thereby warming workers about obvious or likely errors before those errors surge to create additional problems. Many previously manual processes have been automated completely. In some cases this eliminated jobs, in other cases it allowed people who previously performed manual steps to work more like programmers specifying what machines should do.
In addition to affecting the nature of work and the workplace, use of technology has also led to changes in the way firms compete. Information technology has helped firms improve their internal operations thereby reducing internal costs and accelerating product development. Lower internal costs make profits possible even at lower selling prices. The sooner a product is on the market, the sooner it can generate profits Quicker time to market is especially important for technology products in which prices drop rapidly as soon as many similar products became available information technology also supports sales and marketing processes in many ways. It provides sales people better information about prospective customers; it helps sales people identify and demonstrate the right product choices; it helps companies calculate individualized prices based on the needs and resources specified customers. Information technology applications also make the actual purchase transactions simpler an faster.
The revolution potential of information technology (IT) lies in their capacities to instantaneously connect vast networks of individual and organization across great geographical distance at a little cost. As such, information technology (IT) have been a key enabler of businesses, facility worldwide flows f information capital, ideas, people and products. They have transformed business, markets and organization, revolutionized learning and knowledge sharing, empowered citizens and communities, and created significant economic growth in many aspects of life. Information technologies have amplified brainpower in much the same way that the 19th century industrial revolution amplified muscle power.
Yet, little has been recorded in Nigeria in those respects. Against this backdrop, the investment in information technology in Nigeria as a whole can be considered to be non-existent and at best very and certainly, not measured as, or even part of over GDP. A snapshot of the sector shows that from 1991 the highest investments in IT came from the oil and Gas and the financial sectors.
The oil and Gas sector is not surprising, as firms whose management teams thoroughly understand the value of information technology invest heavily in it and live by it. These firms are wholly dependent and sole to the value of IT for their day-to-day operation and strategic information. The oil, gas, and financial sectors have continued to invest massively in IT to achieve rapid retrieval of data: saving time and accuracy as well as to produce, store, process, distribute and exchange information.
Typically, a business organization is a social system that has a district purpose, goal or objective that is in most cases the reason for its existence. The primary objective of business organizations is to make profit for their owners and can have other secondary objective like operating a user and environmentally friendly production system. Businesses are part of the environment they operate and at the same time, are influenced by it. This is because, the business receives input from the organization that it process and transforms into an output needed by the environment. This beneficial cycle is made possible through information.
However, information technology in small and medium enterprises, serves several roles the primary being facilitating decision making at all levels.
Decision-making is necessary in an organization because there charging environment which they face charging environments which they cannot change and must relate to. Decision therefore must be taken regarding choice and option on how the business responds to its environment and harmonies its internal activities.
Furthermore, in managing small and medium enterprises the information technology stimulates a great deal of advantages in the sense that decisions such as strategic plans; tactical decisions, operational decisions. The importance of information technology are glaringly seen in the areas stimulating wider participation, exchanging experience, communicating ideas, transmitting knowledge, sharing new findings and best practices.
The role of information technology does not end once the customer has purchased product. Information technology can support customer service activities by keeping track of both general information about each customer and information related to specific customer interactions, such as repairs or warranty claims.
1.2 STATEMENT OF THE PROBLEM
There is growing, recognition of the important role Small and Medium enterprises (SMEs) play in economic development. They are often described as efficient and prolific job creators, the seeds of big business and the fuel of national economic engines (Udechukwu 2003; Olorunshola, 2003).
Despite the potential role of small and medium scale enterprises (SMEs) to accelerated growth and job creation in developing countries, their development is hampered by a number of factors, one of these factors among others is access to Information Technology (IT). Small and medium Scale enterprises (SMEs) often have difficulties in gaining access to appropriate technologies and information on available institutions providing training and advisory services, there is still technology-gap in the SME Sector as a whole. This is because most small and medium scale entrepreneurs cannot afford the high cost of computer hardware and software.
The inaccessibility of appropriate information technology places significant constraints on SME development. Even though SMEs tend to attract motivated managers, they can hardly compete with large firms. In most cases, SMEs utilize foreign technology with a scarce technology support.
The lack of support services on their relatively higher cost can hamper SMEs efforts to improve their management because consulting firms are often not equipped with appropriate cost-effective management solutions for Small and Medium Scale enterprises. They usually acquire foreign licenses, because local patents are difficult to obtain.
Despite the growing rate of internal connectivity and telecommunication in Nigeria, telecommunication and internet services remained very low in the small and medium scale enterprises business activities and it is so because it entail a highly expensive cost of running that makes the SMEs left out in the operational based information technology.
The situation of inadequate man power for the IT industry may be buttressed when it is observed that between 1999 and early 2000, nine Nigeria banks bought IT budgets worth millions of dollars, developed by Indians Okigbo (2001). This prompted an influx of Indian software engineers to Nigeria to support the software and perform customization of the product for the respective banks.
The high costs of this software/hardware made it almost impossible for the SMEs to meet the challenges of the high sophisticated world of information technology. Therefore, given the potentials to develop software skills to the level of Indians the Nigerian authorities has a role to play in supporting and protecting the SMEs personals so as to develop the local firms and treat reasonable opportunities.
Government policy thrust on information infrastructure development and legal framework discourages interest on investing in information technology. Audacious vision by the government on IT can create a sense of paranoid to succeed. The audacious vision of India is to make India the number one software global going.
1.3 OBJECTIVES OF THE STUDY
The broad objective of this study is to examine the relevance of information Technology to the Management of small and Medium Scale Enterprises (SMEs) in Nigeria. The specific objectives of the study are as follows:
i. To evaluate the role of information technology in the activities and operations of Small And Medium Scale Enterprises (SMEs)
ii. To appraise the impact of information technology on the managerial practice of SMEs
iii. To investigate the effects of information technology on the performance of SMEs
iv. To recommend ways to fast-forward Nigerian Small And Medium Scale Enterprises (SMEs)
1.4 RESEARCH QUESTION
According to the objective stated above, the research questions that would be examined in the course of study are as follows:
i. What role does information technology play in the activities and operations of Small and Medium Scale Enterprises (SMEs)?
ii. How has information technology impacted on the managerial practice of SMEs?
iii. How has the adoption of information Technology affected the performance of SMEs?
iv. What measure has the Nigerian government taken to fast forward SMEs through the acquisition of information technology?
1.5 RESEARCH HYPOTHESIS
Based on the research questions stated above the hypothesis to be tested in the course of this research are stated below?
H0: That information technology does not play any significant role in the activities and operations in Dala building society.
H1: That information technology plays significant role in the activities and operations in Dala building society.
H0: That information technology has not impacted positively on the management practice in Dala building society.
H1: That information technology has impacted positively on the managerial practices in Dala building societies. Small and Medium Scale Enterprises.
1.6 SCOPE OF THE STUDY
Information Technology is the multi-disciplinary study of the collection, processing and storage of data, of the use of information by individuals and groups, especially within an organizational context, and of the impact, implications and management of artifacts and technologies applied to those activities. It is therefore evident that the scope of the information technology is broad, and encompasses both organizational and technical matters.
This study shall focus on the extent to which Information Technology (IT) is relevant to the management of Small and Medium Scale Enterprises in Nigeria. This study shall not be restricted to the book-keeping and accounting aspects of information technology but shall also cover its relevant to planning and forecasting, marketing, decision making etc.
The study covers only Dala Building Society mortgage bank. The study is gathered from the existing literature and from a survey that is conducted among selected staff of Dala Building Society a primary mortgage Bank (PMB) in Kano State.The period of study covers from 2002 - 2012
1.7 SIGNIFICANCE OF THE STUDY
Besides finance, other critical elements are germane to the survival and competitiveness of Small and Medium Scale Enterprises (SMEs). One of such factors is information technology. This study is significant because it would help to activities and operations of a vital segment of the real sector- Small and Medium Scale Enterprises (SMEs), which have been indentified as having very high potential in promoting economic growth and development.
While several studies had been conducted on the relevance of information Technology to large firm to the best of my knowledge, no study has been conducted on the relevance of same to Small and Medium Scale Enterprises especially in Nigeria.
Therefore this study would strive to bridge this research gap by establishing the link between the adoption of information technology and the managerial efficiency of
1.8 PLAN OF STUDY
This project shall be divided into five chapters the first chapters provides the background of the study /statement of the problem, objectives and questions shall present related literature and theoretical frame work concerning the adoption of information technology and other related issues. The chapter shall discuss the relevant technology theories. The research methodology, which includes the research design, sampling design, technique of data analysis etc, shall be stated in chapter three. While data presentation and analysis would be contained in chapter four. Concluding comments in chapter five shall reflect on the summary, conclusion and recommendations based on the findings of the study.