THE EFFECT OF COMPUTER AND INFORMATION SYSTEM ON BUSINESS PERFORMANCE IN BUEA
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This study looks at the effect of Computer and Information System on Business Performance in Buea. Especially, the study was aimed to determine the effect of cloud computing on business performance and to examine the effect of computerized accounting on business performance. The study adopted a descriptive research design with primary data collected from a group of 25 businesses versed with the use of technological innovations such as cloud computing and computerized accounting in their businesses. Using a two point’s likert scale questionnaire design and interview for data collection, the data collected via questionnaire were analyzed using descriptive statistics (frequency, percentages, charts and tables) and inferential statistics (correlation analysis) with the help of statistical package for social sciences (SPSS). The findings or the results show that cloud computing and computerized accounting all have a significant effect on business performance in Buea as shown by the correlation coefficients of 0.113 and .087 respectively. This study recommends that Institutions should continue to utilize and upgrade their information technology for efficient service delivery and profitability because; relationships with stake holders have to be developed and maintained at all costs, irrespective of the service delivery channel.
Keyword: Information System, Cloud Computing, Computerized Accounting and Business Performance
This chapter provides an overview of the research background, statement of the problem, objectives of the research, research questions followed by the significance of the research and justification of the study.
In our fast moving and continuously changing world, when the needs and preferences of customers change very fast, only the companies that are able to keep up with innovations and adapt to the situation by making the adjustments in its business processes, can expect to keep their performance on the required level and stay competitive. In recent years, the success of any enterprise is directly related to the level and quality of information technologies that are being used in the company and ability to use that information correctly.
Technological innovations refer to new or improved products or processes whose technological characteristics are significantly different from before (Brian. 2017). According to Brian (2017) the following technological innovations can be seen in the business profession which includes: Big data, cloud computing, computerized accounting, accounting software’s and many more. Due to these technological innovations in the accounting profession, the accounting industry has been under pressure according to numerous authors, media and prognoses (Frey and Osborne, 2017; Lovaas et al., 2018; Chukwudi et al., 2018).
In the accounting procedure, computerized accounting has become inevitable for recording of business events and transactions and for the formulation of financial statements since the invention of computers. Some of the features that makes it so important is the fact that it requires little accounting knowledge, it is accurate, it is fast, availability of auto report generation, reduces fraud possibility, it is secured, availability of back up just to name a few (Bahati, 2014). Some of the examples of these accounting systems are sage, quick books, Peachtree, Excel pro, Tompro, Odoo, sun system, flesh accounting just to name the few. The most common accounting software in America is Peachtree, that of Asia quick books and the CEMAC zone sage.
During the last years, several authors have discussed the impact of Technological innovations on business performance (Frey and Osborne, 2017; Chukwudi et al., 2018). One of the most significant changes in the industry is the shift from manual to automated accounting systems (Arcega et al., 2015). So according to Arcega (2015), this change has expanded accountants’ capabilities.
According to Ankomah et al., (2012) Pen and papers has been used in the past to identify business transaction, summarize and classy them, record them in the respective journals, post them to the ledger accounts, draw the trial balance, do the end of year adjustments and prepare the financial statements (comprehensive income statement, statement of financial position, cash flow statements, and statement of equity and notes of managers). It achieved the goal for which it was used for but had so many disadvantages. Some of these disadvantages of manual accounting were, high possibility of numerous errors, time consuming, lack of security, lack of backups, space consuming, storage of hard could easily be damaged just to name a few (Bekele, 2017). Because of its numerous disadvantages there was a need to integrate technology into accounting in other to eradicate or reduce these demerits.
Accounting was discovered many years before computers. In the 1880s American William invented the adding machine, which enabled accountants to carry out arithmetic calculations more efficiently and accurately. At the end of the 18th century Herman Hollerith had developed a punch-card machine and it was used by accountants to speed up data handing, in 1986 Peachtree, one of the first accounting was created, it kept on evolving till today when we have hundreds of computerized accounting that keep on updating its features (Fraser, 2019).
In the early years of computers, mostly scientists and the military had access, as years passed ICT has gradually been applied in other fields such as travel, business, accounting, communication, entertainment just to name a few. For easy understanding, ICT could be broken into two parts; hardware and software. Hardware refer to the physical devices that perform given tasks such as an ATM, whereas software could be seen as those instructions that guide the physical components (hardware) in accomplishing specific tasks for example an operating system such as Microsoft windows that is used in running a computer (Regina, 2015).
The importance of information systems (IS) has dramatically increased during the past decade as an increasing number of businesses have implemented them (Davidavičienė 2008; Paliulis et al. 2012). A modern organisation could not be imagined without an efficient information system. Subsequent to numerous researches, no doubts were left that implementation of an information system in an organisation could bring a lot of benefits in dealing with internal and external tasks that a company might face in day-to-day operations and long-term decision making. Continuous technologic development not only resulted in increased performance of hardware and software, lowered the prices and offered a greater choice of information systems for most businesses, but also became yet another factor that promoted the spread of computerized systems all over the globe (Pabedinskaitė, 2010).
The purpose of accounting through computers is to obtain better records, to eradicate misstatements, efficient data management and most importantly improving the overall management of businesses. The use of computerized accounting systems makes the production of relevant, reliable and accurate records more effective and effective and efficient. Computerized accounting systems helps amalgamate and simply all financial transactions of business procedures and also reduces the operation cost of recording financial transactions (Ahmed, 2006 as cited by Saleh 2011).
The accountants need to develop new skills to work efficiently with emerging technologies such as cloud platforms, Big Data, data analytics and mobile technologies (Kang 2020). As the academic environment represents the connection between the aspiring accountants and the profession, researchers emphasize that the universities should provide their students with a proper support to gain at least theoretical knowledge in the IT area (Stanciu & Bran, 2015).
Chukwudi (2018) emphasis that some technological changes have made many current accounting practices not relevant. An example is the ledger account previously; this account was very important as a historical record of transactions and was used to expedite (facilitate) the preparation of the financial statements. With today’s timely information the computer have taken over as the record keeper of this type of information.
The use of computerized accounting system by business started in the 1950s after World War 2 but it gained grounds in Cameroon around 2000 and since then it has been rapidly evolving (Laurel, 2013). Computerized accounting packages are mostly used by commercial, manufacturing and tertiary businesses in Cameroon. The computerized accounting software’s mostly used in Cameroon are sage sari, Peachtree, excel, Tompro, Zero accounting just to name a few.
Before the beginning of the use of computerized accounting systems in businesses, accounting was done with the use of pen and papers. They would manually record transactions, generate books and ledgers and prepare financial statements. With the growing complexity of accounting practices, there was a need for the integration of technology in accounting. It started from the use of simple arithmetic calculators and today we have sophisticated systems for accounting.
Nevertheless, some of these technologies are gradually being applied in the less developed world such as ATMs, e-commerce, mobile money and other related software, examples of business related software commonly used in Cameroon are sage accounting 100 used primarily in dealing with the accounting aspects of a business, sage trading 100 used to manage inventory and trading and also QuickBooks which basically manages a business as a whole.
Performance can be seen as the measurement of the overall organization results however economical a company has used the assets from its primary mode of business to get revenue. It represents the accomplishment of a given task that’s measured using predetermined standards of accuracy, completeness, efficiency and effectiveness (Hicks & Niehans, 1998). Performance is measured using key financial ratios such as Return on Sales (ROS) which is profit from the average sales income, Operating Expenses/Operating Incomes (OE/OI) in total refer to those expenses that are resulted from the company operations and operating incomes are also those incomes that are obtained through company’s operations, either capital operation or non-capital, Return on Assets (ROA) to measure the productivity of an asset and Return on Equity (ROE)to measure the profit secured for the owners of a business unit.
These performance ratios are inbuilt functions in most of business managing software. A proper performance provides a full range of accurate and reliable information to compare the actual performance of the company’s activities through specific indicators which are to be obtained from the actual performance and compared either in specific percentages or specific targets and thus determine if there are any deviations (Aldalayeen et al, 2013).
Presently, transactions are recorded into application software’s with the use of ICT and with the use of intranet or extranet and the business transactions are instantly processed and accounting statements are produced with little or no additional work. GAAP (Generally Accepted Accounting Principles) is used produced these computerized accounting soft wares in other to be able to permit them produce accounting statements according to with an acceptable accounting framework (Adomako, 2013). According to Raymond et al., (1995), the use of this book keeping technique is gaining more grounds with the fall in the acquisition cost of computers and accounting soft wares.
According to Baaba et al., (2016), computerized accounting packages serves as a media to make sure there is an effective and efficient movement of financial transaction through the recording, processing and communication process of accounting. This well-organized movement of information promotes better business decision making and henceforth increasing the business’s capability to reach their goals. And it has led to the mass usage computerized accounting soft wares in recent years. Therefore, it is relevant for new researchers to add clarity on how technological innovations have affected business performance in Buea.
Competition has forced firms to invest in technology to realize increased efficiency and quality service delivery. The advantage of investing computerized systems in firms is not only limited to cost reduction but also innovation. Investment in modern technologies for example ICT, accounting softwares enhances convenience by extending access to customers residing outside the branch network and creating opportunities for effective cross-selling. This in turn increases sales and profitability of the firm (San-Jose, Ituralde & Maseda, 2019).
According to Ankomah et al., (2012), Pen and papers has been used in the past to identify business transaction, summarize and classy them, record them in the respective journals, post them to the ledger accounts, draw the trial balance, do the end of year adjustments and prepare the financial statements (comprehensive income statement, statement of financial position, cash flow statements, and statement of equity and notes of managers). It achieved the goal for which it was used for but had so many disadvantages. Some of these disadvantages of manual accounting were, high possibility of numerous errors, time consuming, lack of security, lack of backups, space consuming, storage of hard could easily be damaged just to name a few (Bekele, 2017). Because of its numerous disadvantages there was a need to integrate technology into accounting in other to eradicate or reduce these demerits. Hence, the purpose of this research paper is to analyze the use of Computer and information systems (cloud computing, and computerized accounting) in businesses in Buea municipality.
Main Research Question
The main research question for this study is; “What is the effect of computer and information system on business performance in the municipality of Buea”?
Specific Research Questions
The specific research questions include;
What is the effect of cloud computing on business performance in Buea?
To what extent does computerized accounting affects business performance in Buea?
The main objective of this study is to examine the effect of computer and information system on business performance within Buea municipality-Cameroon.
The specific objectives include;
To assess the effect of cloud computing on business performance in Buea.
To examine the extent to which computerized accounting affects business performance in Buea.
- H01: Cloud computing has no significant effect on business performance in Buea
- H02: Computerized accounting has no significant effect on business performance in Buea