RELEVANCE OF INFORMATION TECHNOLOGY IN THE EFFECTIVE MANAGEMENT OF SELECTED SMES IN LAGOS STATE NIGERIA.

Author:Me, Agwu
Position:Report - Statistical data
 
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INTRODUCTION

For many years, small and medium scale enterprises in Nigeria have been faced with management challenges and one of the major problems has been grossly attributed to the absence of or inadequate use of Information Technology for effective management. The undoubted factor which indicates the improvement of the competitiveness of most enterprises is the usage of IT, (Bazhenova, Taratukhin & Becker, 2012). In Lagos State and Nigeria at large, the impact of IT on SMEs operation performance has not been greatly explored (Akande & Yinus, 2013) as files and folders are still in use for data storage and record keeping. In the same vein, Agwu & Murray (2015) posit that some business and government transactions are still conducted manually and lots of files and documents are shelved in large cabinets and handed from table to table. In this information age manual compilation of records with files and folders should not be in vogue, such a database system is prone to alterations and manipulations. Retrieval of such records becomes a needle in a haystack when the files and folders become voluminous over a long period of time. A comprehensive use of information technology in small and medium scale enterprises in Nigeria will be a change in the positive direction for the industry as this will reform and improve the efficiency of management of SMEs in Lagos state as well as Nigeria at large. The objectives of this study among others are 1) determine if use of information technology leads to increase in production output, 2) ascertain whether the application of Information technology increases the efficiency of management of SMEs, 3) determine if Information Technology enhances competitiveness of SMEs and 4) clarify the challenges involved in the implementation of Information Technology and how it affects management. As this study is fixated on the relevance of information technology in the effective management of selected SMEs with specific reference to Lagos State, the scope of the study is therefore limited to the activities of selected SMEs within Lagos as a metropolitan city. While there are so many literatures on information technology and SMEs, none to the knowledge of the authors have discussed the relevance of IT on the effective management of SMEs, hence this study closes this gap.

LITERATURE REVIEW

SMEs have been identified by various governments and organizations as a key contributor to the sustainable development of any economy. SMEs drove job growth by the creation of more jobs than large firms and contributed greatly to overall job additions. Agwu & Murray (2015) in their submission identified E-commerce as a vital aspect of information technology which is still a new development in Nigerian SMEs. The study described Ecommerce as a cost effective tool that streamlines the business process and makes use of improved relationship networking to achieve competitive advantage. Adopters of E-commerce are said to be at an advantage as it leads to improvement in the internal and external communication as well as a better use of organizational resources. Agwu & Murray also revealed that some of the reasons why E-commerce is adopted include access to virtual information, online delivery and price comparison amongst others. Agwu & Murray (2015) in conclusion recognized that some SME's in Nigeria have not yet harnessed the full potential benefits electronic commerce offers to the business world and factors such as illiteracy, cost and maintenance, inadequate skills have been identified to be barriers to ecommerce adoption by SMEs in Nigeria. According to Kumar (2014) who researched on the roles, advantages and disadvantages of Information Technology (IT) in India identified IT has as a crucial tool that supports the economy of the nation. One of the advantages of IT discussed in the work is globalization, as the business world is now closer and barriers relating to geographical distance have now been considerably reduced. It is easier for SMEs to focus on customers as market share is now enlarged due to the global phenomenon. However, on the flip side a Kumar also identified the disadvantages of the emergence of IT to include unemployment and lack of job security. A lot of employees are laid off as a result of downsizing or outsourcing caused by IT. The major categories affected in the chain of distribution are the middle men whose services are no longer required as final consumers can be reached from a click of a button. Kumar (2014) concluded that IT has brought about changes in the society and plays a key role in the world. Bazhenova, Taratukhin & Becker (2012) presented in their work some analysis of how information technology impacts business process management with SMEs as the major focus. They posit that SMEs contribute to the sustainability of large industries and are also a means for social diversification in the economy. The major factor for improved competitiveness in SMEs was attributed to the adoption of information technology which leads to increase in efficiency of the enterprise. Bazhenova, Taratukhin & Becker (2012) opine that information technology has not been properly used in business process management in SMEs as it is in their larger counterparts and concluded that more research is required on this study in order to come up with more suitable BPM models for SMEs. In the exploratory study conducted by Khazanchi (2005) to deduce information technology appropriateness, a contingency theory of fit was used to determine conditions and criteria's managers should look out for before adoption and implementation of information technology. Rana (2013) also opined that various researches have been conducted to identify factors that promote the adoption of IT in SMEs but no major light has been shed on the issues of technology "fit" in relation to organizational performance. The technology of focus in his research was Electronic Data Interchange (EDI) because of its continuing importance in e-commerce with a notable presence in B2B commerce. Khazanchi (2005) concluded that their findings showed a substantial indication of a relationship between structural, contextual and organizational factors in the dimensions of IT appropriateness and it was also consistent with that of the contingency theory of "fit".

Information Technology

The continuous growth of innovation and the rise of information technology in the world today have changed the way organizations compete. Amongst other factors, technology has been recognized as one of the agents of change in the world (Ogbomo & Ogbomo, 2008). Business enterprises in order to gain competitive advantage in their respective industries are making use of information technology which requires managers to harness and implement its uses (Beheshti, 2004). Thus, the revolution of information technology has transformed operations of enterprises that aim to achieve the five R's which according to Rana (2013) which is to produce the right product, with the right quality, in the right quantity, at the right price and at the right time. Annan (2002) posits that information society has emerged as human capacity has been expanded, nourished and built up with access to relevant tools and technologies as well as the appropriate training for their effective use. According to Hansson (2015) the word technology is of Greek origin, based on "techne" that means art or skill and "-logy" that means "knowledge of' or "discipline of'. Information technology refers to anything related to computing technology, such as networking, hardware, software, the internet or the people that work with these technologies (Kumar, 2014). According to Anyakoha (1991) cited in Ogbomo & Ogbomo (2008) information technology is the use of man-made tools for the collection, generation, communication, recording, re-management and exploitation of information. It includes those applications and commodities, by which information is transferred, recorded, edited, stored, manipulated or disseminated. Rendulic (2011) affirms that ICT in everyday life comprises of the following: email, e-commerce, online banking, e-government, online shopping, e-learning, etc.

Basic information technologies can be used to store, retrieve, organize, transmit and algorithmically transform any type of information that can be digitized into numbers, text, video, music, speech and programs to name a few (Brynjolfsson & Hitt, 2000). Frenzel (2009) observed that information technology revolution has created innumerable opportunities as well as some challenges for numerous organizations; therefore, managers must learn to adapt to and maximize advantages offered by information technology in this information-based society while guarding against the threats associated with it. Technology has leveled the playing field (Scumaci, 2010), a world without PDAs, mobile phones and internet is unimaginable (Schubert & Leimstoll, 2007) as information technology has brought buyers and sellers closer together, thereby creating intimacy characterized in earlier eras (Levy & Powell, 1998). IT can improve efficiency and increase productivity in different ways leading to lower transaction cost, better resource allocation and technical improvements (Olusola & Oluwaseun, 2013). To succeed in this evolving environment, mangers must be proficient in the adoption of new practices and improved techniques. IT saves money and time spent on repetitive tasks in an organization (Chinomona, 2013). Information technology has altered management practices and the nature of work in industrialized nations (Lohr, 2007). Proper dissemination of information via technology empowers governments, institutions and individuals who sufficiently integrate it into their organizational structure. These days, the flow of information across the globe as little restriction, with access to internet, individuals can interrogate gigantic databases on super-information highways...

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