Article Type : Research Article
Authors : Acharya SH, Khanal K and Kadariya MI
Keywords : IT Implementation; CSF; ICT factors; ICT barriers; SME; ICT; PCA
Based on a survey conducted among 221
participants representing medium sized enterprises in Kathmandu this study
reveals important findings, about the challenges and opportunities faced by
these businesses. The analysis, which was supported by reliability tests
highlights "Internal Readiness/Trainings" as the factor for
successful implementation of information and communication technology (ICT)
while "External Barriers" are identified as significant obstacles. To
identify the components Principal Component Analysis (PCA) was utilized. These
components serve as the foundation for a framework aimed at improving ICT
implementation in SMEs. The main factors contributing to success include
support, from top level management incentives for team members training for IT
workforce effective change management practices and thorough software testing.
On the hand barriers include awareness of ICT benefits and concerns related to
data security.
Enterprises are often categorized based on factors
such as the number of employees, annual sales, assets, or a combination of
these criteria [1]. Within this categorization, Small and Medium-sized
Enterprises (SMEs) hold a significant role and are widely recognized as vital
contributors to a nation's economic growth and stability [2]. Unfortunately,
many SMEs face the risk of failure, often attributed to a lack of timely and
accurate data and information [3]. However, the adoption of Information and
Communication Technology (ICT) can play a pivotal role in increasing the
success rate of these enterprises [4]. SMEs play a crucial role in generating
employment opportunities, thereby contributing to the overall economic growth
of a nation [5]. They also foster a more competitive market environment [6]. To
ensure the success of SMEs, it is essential to identify and prioritize Critical
Success Factors (CSFs), which can vary depending on the type of enterprise and
the specific regulations and policies of each country [7]. These CSFs encompass
a wide range of factors, including those related to the enterprise itself, its
business operations, and the entrepreneurial spirit behind it [8]. The presence
and utilization of accurate and comprehensive data and information are
fundamental to the survival and prosperity of organizations [9]. The rapid
evolution of ICT has had a profound impact on organizations, catalyzing their
growth [10]. However, even the most well-designed and rigorously tested IT
tools may fall short of meeting an organization's actual requirements [11].
Therefore, the successful implementation of IT systems within an organization
necessitates careful consideration of all factors and conditions that may
influence both the implementation process and the system's effectiveness during
its operational phase [12]. It is noteworthy that the success rate of IT system
implementation, particularly in terms of executing a well- devised plan, tends
to be low [13]. This can be attributed to a multitude of factors, encompassing
technical, economic, organizational, behavioural, and psychological aspects.
The complexity of IT system implementation arises from the collaboration
between two distinct entities: the service provider and the service recipient
[14]. Consequently, it becomes imperative to identify and understand the
various factors that impact the effectiveness of IT system implementation.
Enterprises are often classified based on factors such as number of employees,
annual sales, assets, or a combination of these criteria. In this
classification, small and medium enterprises (SMEs) play a significant role and
are widely recognized as significant contributors to the economic growth and
stability of the country. Unfortunately, many SMEs face the risk of failure, which
is often attributed to a lack of timely and accurate information and
information. However, the adoption of Information and Communication Technology
(ICT) plays an important role in increasing the success of these projects.
SMEs play an important role in creating employment
opportunities, thus contributing to the overall economic development of the
country. They also create a more competitive market environment. In order for
SMEs to succeed, it is important to identify and prioritize critical success
factors (CSFs), which may vary depending on the type of company and the
specific laws and regulations of each country. These CSFs include a wide range
of factors related to the firm itself, its business activities and the
entrepreneurial spirit behind it Sun. The availability and use of accurate and
comprehensive information and information is fundamental to the survival and
success of organizations. The rapidly developing information technology has had
a tremendous impact on organizations and has acted as a catalyst for their
growth. However, even well-designed and well-tested IT tools may not meet the
real needs of an organization. Hence the perfect implementation. While Nepal’s
small and medium enterprises (SMEs) sector has grown tremendously in recent
years, the challenge of organizing these projects and ensuring their long-term
success remains daunting [15]. The high failure rate of Nepali SMEs may be
partly due to the struggle to adapt to the local business environment and
effectively implement Information Technology (ICT) systems, the challenges and
opportunities have not been adequately explored. There is a crucial need to
identify and understand the key success factors that can lead to sustainable
development of Nepali SMEs through ICT implementation. Furthermore, it is
important to highlight the key barriers that hinder the effective use of ICT in
these sectors. This study aims to address this gap by exploring the complex
contextual and emotional interactions that affect ICT use in Nepalese SMEs. The
overall objective is to develop a customized framework that can guide these
companies towards better adoption of ICT, enabling them to overcome their
challenges and understand the opportunities in the dynamic business environment
of Nepal.
Research pertaining to the adoption of Information and
Communication Technology (ICT) has consistently demonstrated that Small and
Medium-sized Enterprises (SMEs) in developing countries face challenges in
fully leveraging technological advancements to expand their business operations
[16-19]. Consequently, there exists a compelling need for a deeper
comprehension of the determinants influencing ICT adoption and the factors that
propel or inhibit its implementation and utilization [20]. As early as 1996,
scholars acknowledged that ICT integration within organizations had evolved
from being optional to becoming an imperative for survival, underscoring the
urgency and significance of adopting novel technologies [21]. Information and
Communication Technology (ICT) stands as a key catalyst for business
performance and directly shapes the success of enterprises [22]. It exerts a
positive influence on economic growth and development by enhancing operational
efficiency and productivity. ICT is instrumental in optimizing resource
allocation, mitigating transaction costs, and fostering technological
advancements [23]. SMEs in developing countries face unique challenges in ICT
integration, ranging from suboptimal management practices and limited
technology access to constrained credit facilities, educational gaps,
unemployment, and obstacles like ICT infrastructure limitations and slow
internet connectivity [24]. Encouraging SMEs to integrate ICT into their
operations for more sophisticated applications presents intricate challenges,
including the imperative for technical prowess, substantial investments, and
organizational adjustments, which can pose financial burdens for these
enterprises [25]. The adoption of ICT unfolds in three distinct stages:
pre-adoption, adoption, and post-adoption [26]. During the pre-adoption phase,
novel technologies are evaluated, with a focus on immediate benefits. The
adoption phase involves meticulous planning for technology acquisition and
utilization. In the post- adoption phase, the continuous utilization or
potential abandonment of the technology is considered. Various ICT tools,
including email, websites, e-commerce platforms, e-business models, and
innovative organizational structures, come into play across these stages.
The main objective of this study is to explore the key
success factors and barriers to ICT adoption in SMEs through a quantitative
descriptive research approach. The research design is organized, starting from
the identification and formulation of research problems hypothesis through an
extensive review of existing literature, by organizations such as government
agencies, NGOs, software companies, insurers, and academic institutions, by
employees, managers, owners, and debtors’ involvement. Next, data analysis is
an important process in which various statistical tools are used to summarize
and organize the data. The descriptive analysis includes such factors as the
mean and standard deviation, while the chi-square tests examine the
relationship between the independent variables and the dependent variable,
"Use of ICT in SMEs" They walk Cronbach alpha analysis so ensured
reliability and validity. Factor analysis is performed to find patterns and
underlying relationships in data, with Kaiser-Meyer-Olkin (KMO) and Bartlett
tests assessing the suitability of data for factor analysis. Principal
Component Analysis (PCA) is used for dimension reduction with data exploration,
and Rotated Component Matrix Variance (RCMV) describe relationships among
variables.
The data collected from the questionnaire survey were
analyzed using Excel and IBM SPSS Statistics version 25.0. Descriptive
statistics were employed to gain insights from the responses. In terms of
respondent gender distribution, the majority (82.8%) were male, with female
respondents accounting for 17.2%. Regarding the distribution of respondents
based on their organizations, the largest group (39.4%) represented academic
institutions, while the smallest group (1.4%) was associated with the automobile
sector. These descriptive statistics provide a clear picture of the gender and
organizational diversity among the survey participants.
Variables and components
codes
All the variables and their components considered are
coded for the computational easiness. The codes and its meaning are as per the following
(Table 1).
Reliability analysis
For the reliability analysis, the Cranach’s alpha value is calculated. The overall Cronbach’s alpha value is summarized in table below (Table 2). Factors are acceptable if the value of alpha is greater than 0.7. Here, in the above table, we see that the Cronbach’s alpha calculated is 0.864. It means, all the factors are acceptable. The result shows that the internal uniformity of questionnaire is good and strength of association is also good. The reliability test is done for each variable also. The Cronbach’s alpha value for each variable is summarized in below table. From the above table, the alpha value of each variable is greater than 0.7 which means that all the factors are acceptable. Similarly, the alpha value for all items is 0.921 (greater than 0.7), hence all the items considered are consistent and acceptable (Table 3).
Kaiser-Meyer-Olkin
measure of sampling adequacy for acceptance of parameters
This measure varies between 0 and 1, and values closer
to 1 are better. A value of 0.6 is suggested minimum. For this research value
obtained is 0.909 as shown in table below (see table 9) which is closer to 1
i.e. the research accepts entire success factors and barriers for the study
(Table 4).
Bartlett’s test of
sphericity
This tests the null hypothesis that the correlation
matrix is an identity matrix. An identity matrix is matrix in which all of the
diagonal elements are 1 and all off diagonal elements are 0. Small values less
than 0.05 of the significance level indicate factor analysis is useful for the
collected data. From the table 9, the significance level has low value than
0.005 and the factor analysis is useful for the collected data. The p-value is
0.000 (less than 0.05) which indicates that the factor loading is justified.
Principal component
analysis for categorization of factors
PCA is used as a data analysis tool for making
predictive models. It visualizes genetic distance and relatedness between
populations. PCA can be done by eigen value decomposition of a data covariance
(or correlation) matrix. Principal Component Analysis (PCA) is the process of
data reduction or dimension reduction. For this research PCA is done through
SPSS. From the factor analysis the data is converted into six principal
components as shown in below (Table 5). The different factors are categorized
in same components (factor loading) for those factors having significant factor
loading value greater than 0.3 (Table 6).
Total variance explained
(TVE)
The % of Variance column gives the ratio, expressed as
a percentage, of the variance accounted for each component to the total
variance in all of the variables. The first component will always have the
highest variance (and hence have the highest eigenvalue), and the next
component will have as much of the left over variance as it can, and so on.
Hence, each successive component will account for less and less variance. The
result obtained for this study can be seen in table 6 below:
Varimax rotation
A varimax rotation simplifies the expression of a
particular sub-space in terms of few major items. The actual coordinate system
is unchanged. The alignment is on the basis of orthogonally. Varimax maximizes
the sum of the variances of the squared loadings (squared correlations between
variables and factors). All the coefficient will be either large or near zero,
with few intermediate values.
Naming of components
Looking for similarity between items that load on a
factor, the first component is named as “Component Related to Management and
Leadership” that contributes about 33.52 % of the total variance explained. The
second component is named as “Component Related to Internal Barriers” that
contributes about 9.39% of the total variance explained. The third component is
“Component Related to Security Concern” that contributes about 4.33% of TVE.
The fourth component is “Component Related to External Barrier” that
contributes about 3.93% of TVE. The fifth component is “Component Related to
Cost” which contributes about 3.81% of TVE. Lastly, the sixth component is
“Component Related to Policy” which contributes about 3.57% (Table 7) of TVE.
The Eigen value of the six different components categorized using PCA and
Varimax are seen to be greater than 1 (Table 8). It describes that all these
components or factors are highly reliable. Moreover, the different factors are
categorized in same components (factor loading) for those factors having
significant factor loading value greater than 0.3.
Reliability test for the six grouped components is
performed using SPSS. Cronbach’s alpha test value is presented in (Table 9)
below. The Cronbach’s alpha value of all the components concludes the
acceptance and reliability of components. Reliability of the four components is
seen to be accepted (greater than 0.7) and for two components, the alpha value
is greater than 0.6 which is questionable but can be used. Now, the
implementation model that can be used to judge the success of ICT
Implementation in SMEs can be developed on the basis of results obtained from
the above analysis.
Findings
The findings of this research, based on the analysis
of responses from 221 participants representing various SMEs in Kathmandu,
reveal several key insights. It is noteworthy that a majority of the
respondents (82.8%) were male, and the most represented sectors among
respondents were academic institutions (39.4%) and software and hardware
industries (22.6%). The reliability test, assessed using Cronbach's Alpha,
indicated good internal consistency among the survey questions. Standardized
values pointed to "Internal Readiness/Trainings" as the most critical
success factor for ICT implementation, while "External Barriers"
emerged as the most formidable obstacle. Further statistical tests, such as the
Kaiser-Meyer-Olkin (KMO) and Bartlett's tests, affirmed the suitability of the
data for factor analysis. Principal Component Analysis (PCA) was employed to
extract six components, with the Total Variance Explained (TVE) computed for
each. The reliability of these items, as measured by Cronbach's alpha, was
found to be acceptable. Ultimately, these factors form the basis for developing
models to enhance the effective use of IT in SMEs. Key success factors
identified included top management support, team member motivation, IT staff
training, change management, and software testing, while barriers included lack
of IT benefits and data lack of security concerns (Figure 1).
The conceptual model developed according to the
factors identified and using the new collection of factors is as follows:
Through rigorous research, this study has identified several key success factors and barriers for ICT adoption in SMEs. Importantly, success factors include top management support, motivating team members, IT staff training, re-engineering departments, thorough software testing these factors is key to successful adoption of IT and contributes significantly to SME success in this regard.
Figure
1: Conceptual
model developed by researchers.
In contrast, lack of staff supports in markings, lack
of knowledge, infrastructure constraints, low staffing, safety concerns,
inadequate product/vendor support, information insufficient inclusion and
penetration of information technology. They can fail. In addition, factors
classified through principal component analysis (PCA) include management and
leadership dimensions, internal barriers, security concerns, external barriers,
cost considerations, and process factors.