UNIVERSITY OF CALOOCAN CITY

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COLLEGE OF BUSINESS AND ACCOUNTANCY

EFFECTIVENESS OF ERP SYSTEM SOFTWARE IN

SKINTIMATES INC.

A Thesis

Presented To

College of Business and Accountancy

University of Caloocan City

In partial fulfilment of the course requirement for the degree

Bachelor of Science in Accounting Technology

Submitted by:

CHUA, CLARICE KAYE

DIMAS, JAMAICA D.
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COLLEGE OF BUSINESS AND ACCOUNTANCY

ESPIRITU, KATRINA NICOLE B.

ILLESCAS, MIA SUZZETTE B.

SIERRA, MARIA LOUELLA G.

Submitted to:

ZENITH C. CAMU, CPA, DPA

March 2019

CHAPTER I

INTRODUCTION AND ITS BACKGROUND

Introduction

In the past three decades, organizations worldwide facing pressure from

changing business environments in most industries which is becoming more

complex and international, which means that managing and utilizing information

effectively is very important for the success of modern companies. Many

businesses, even smaller scale ones, are competing in international markets,

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which makes it necessary for them to work as efficiently as possible because of

that organizations implement advanced technology solutions, such as Enterprise

Resource Planning (ERP) systems, in order to enhance their performance and

efficiency (Hevner et al., 2004) and to achieve competitive advantages over their

competitors.

Enterprise resource planning (ERP) system has been one of the most

popular business management systems, providing benefits of real-time

capabilities and seamless communication for business in large organizations. The

ERP application made it possible to quickly and effortlessly generate different

kinds of reports that presented data in a clearly structured and distinct

way throughout the entire firm. ERP systems are being implemented for at least

last 30 years, yet an implementation of such a system is very complex that it comes

with high costs and high failure rates that’s why not all ERP implementations have

been successful. Since ERP implementation is often accompanied by changes in

business processes and organizational changes that can affect the entire

organizations such as process, people, and culture, so definitely there are number

of challenges that companies may encounter in implementing ERP systems.

Over the whole world, we can see a rapidly increasing number of firms that

adopt an ERP system, such as Skintimates Incorporated, they have understood

the importance of Enterprise Resource Planning system that would improve the

performance of the organization and achieve certain business objectives. Thus,

more and more companies are implementing the software, making it one of the
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fastest growing segments of the application software market. However, due to

complex phenomenon of ERP system, business problems and technical

challenges arise and may fail to implement an ERP system in a proper way.

Background of the Study

Today, most successful companies understand and practice enterprise

application integration through innovative approaches and techniques. This case

study shows how such companies would apply integration models to packaged

software that is provided by Enterprise Resource Planning (ERP) vendors like 8

Box Solutions Incorporated.

The 8 Box Solutions being an ERP System provider has investigated

numerous customer projects and studies with a focus onto the latest developments

in medium-sized businesses. The majority of companies will be working intensively

on putting technologies like cloud, mobility, and the Internet of things (IoT) into

practice this year.

Skintimates Incorporated, a client of 8Box Solutions identifies that the ERP

System is very effective on their daily business transactions. ERP System has all

various processes that are essential to business including inventory management,

accounting, human resource, customer relationship management (CRM), and

beyond. At its most basic level, ERP software integrates these various functions
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into one complete system to streamline processes and information across the

entire organization.

Enterprise Resource Planning software also offers some degree of

synchronized reporting and automation. Instead of forcing employees to maintain

separate databases and spreadsheets that has to be manually merged to generate

reports, some ERP solutions allow staff to pull reports from one system to another.

Other common ERP features include a portal or dashboard to enable employees

to quickly understand the business' performance on key metrics.

Enterprise Resource Planning (ERP), is also designed for Small, Medium,

and Large Enterprises like Skintimates Incorporated. ERP helps small businesses

to move beyond spreadsheets and efficiently manage every aspect of it from sales

and customer relationships to financial operations. However, it is also ideal to

medium-sized businesses with up to 500 employees because ERP can provide

built-in analytics, rapid deployment, and best practices for different business

processes like financial, human resource, supply chain management,

procurement and more. On the other hand, ERP designed for large businesses

that incorporate intelligent technologies such as machine learning, and predictive

analytics and offer flexible deployment in memory computing platform (SAP,

2018).

As cited by Orgad Gratch (2017), Enterprise Resource Planning (ERP) has

been known to be the backbone for many corporate-scale businesses. The

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software is a key tool for managing production, order processing and inventory. It

also monitors business resources between stakeholders, such as; revenue,

materials, orders, staffing and manufacturing capacity.

The consequence of a growing trend to purchase and install ERP Systems is

the organizational financial commitment for implementing and maintaining the

systems. Given the cost of purchasing, implementing and maintaining ERP

Systems, organization leaders must strive to be good stewards of organizational

funds and make wise decisions how to best utilize available and limited financial

and personnel resources.

Statement of the Problem

This study aims to evaluate and assess the effectiveness of ERP system

software of 8box Solutions Inc. in selected cosmetics companies.

Specifically, it seeks and answer the following questions:

1. What is the profile of the respondent employees of Skintimates Inc. in terms

of:

1.1 Age

1.2 Gender

1.3 Civil Status

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1.4 Length of Service

1.5 Positions

1.6 Educational Attainment

2. How do the respondents assess the effectiveness of ERP System Software

of Skintimates Inc. in terms of:

2.1 Inventory Management

2.2 Sales Report

2.3 Financial Report

2.4 Security of Data

3. Is there any significant difference in the assessment of the respondents on

the effectiveness of ERP System Software of Skintimates Inc. when

grouped according to their profile?

4. What are the problems encountered by the respondent on ERP System

Software in Skintimates Inc.?

5. What improvements may be recommended to ERP System Software based

on the findings of the study?

Scope and Delimitations

This study assessed the Effectiveness of Enterprise Resource

Planning (ERP) System in the Skintimates Inc. The respondent shall be the

employees who have been in the Skintimates Inc. for at least six months. The
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research location shall be in 73 Scout Fernandez Sacred Heart Quezon City. It

focused on the variables expressed in the statement of the Problem in order to

understand how efficient it is, as their software system.

However, the study was limited only to the thirty (30) employees who are

currently working in the Skintimates Inc.. The results of the study were limited only

to the data gathered by the researchers from the employees. Also, there may be

other factors relevant to the study which did not explore.

Significance of the Study

This present study would benefit and primarily tend to the following entities:

Business. ERP can enhance your business in many ways. Drastically, it

increase efficiency and productivity that can streamline your entire organization

and put your data all in one place and it also improve your business security and

accessibility while reducing the risk.

Businessmen. The given data would guide the businessmen to be at ease

to grow their businesses. An ERP system can eliminate inefficiencies, wasted time

and resources, empowering your business to thrive and flourish.

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Researchers. As researchers, the outcome of the study is beneficial for

us, as a basis that a new software system like ERP sytem will be useful for our

future work as an Accounting Technology student.

Future Researchers. This study would help them to provide the future

researchers with a basis on how ERP systems help companies to integrate

different business functions to be aware and knowledgeable on how ERP system

works as a whole. This study will also serve as their cross-reference that will give

them a background or an overview about effectiveness of ERP system.

CHAPTER II

REVIEW OF RELATED LITERATURE AND STUDIES

This chapter presents the related literature and studies after the thorough

and in-depth search done by the researchers. This will also present the synthesis

of the theoretical framework to fully understand the research to be done and lastly

the definition of terms for better comprehension of the study.

Related Literature

Related Studies

Synthesis of the Reviewed Studies

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Theoretical Framework

ERP systems are highly standardized systems and many firms view ERP

as beneficial from a business standpoint because of unique employing of single

logical database for the entire enterprise. This study is anchored on organizational

information processing theory (OIPT), which conceptualizes uncertainty as a lack

of information about statuses of tasks, the environment, and so on. It follows the

ERP, being a type of computerized information system, is a coordination

mechanism that is appropriate under many circumstances but less so under others

(T.F. Gattiker). Organizations encountered different factors that can influence the

enterprise resource planning (ERP) performance. There are two organizational

characteristics that may have received insufficient attention in other ERP literature:

interdependence and differentiation.The ability of ERP to integrate and process all

activities is the reason why interdependence among organizational sub-units and

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gives positive ERP-related effects. However, when differentiation among sub-units

is high, organizations may incur ERP-related compromise or design costs.

Thus, depending upon the amount of interdependence and differentiation

among sub-units of an organization, ERP systems may ‘‘fit’’ some organizations

better than others (D.L. Goodhue). Information processing theorists have

suggested that greater interdependence among organizational sub-units is

associated with greater benefits from ERP. On the other hand, differentiation

among organizational sub units can lead to some significant ERP-related costs.

Moreover, there are several study provide evidence that the concepts of

interdependence and, especially, differentiation may be important in predicting the

impact of ERP in the business world.

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Conceptual Framework

This conceptual framework illustrates the cycle of some modules included

in ERP system assessing the effectiveness of this system to Skintimates Inc.

Enterprise Resource Planning System is designed to model and automate basic

processes across the organization over a centralized database and eliminates the

need of disparate systems maintained by various units.

These four variables are the most commonly used by Skintimates Inc. in

monitoring their products and its information. The first variable is the inventory
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management wherein the ERP system is about to count automatically the products

added and released inside the warehouse. Second is the sales report, ERP

system records the sales in every transaction that occurs in the entity. Third

module shows the financial report, which the cash flows and the funds are stated.

ERP helps the Skintimates Inc. to create financial reports in every transaction and

upon it is needed. Lastly, one of the most important in every organization is the

security of data. Every data gathered to and from the company must be secured

and ERP system assures that in every transaction that the company will do, all of

the information is secured.

ERP indeed, is one of the useful tools for an organization like the

Skintimates Inc. to accommodate most of their transactions and keep it safe in

every aspect. However, implementing an ERP system may be expensive and time

consuming but it is used mostly of the organizations today because of its

effectiveness and it improves the performance of the organization.

DEFINITION OF TERMS

This study uses the following definitions of important terms

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Data Security. Refers to the process of protecting data from unauthorized

access and data corruption throughout its lifecycle.

Effectiveness. The degree to which something is successful in producing

a desired result; success.

Enterprise Resource Planning System (ERP). ERP is a packaged

business software system that lets an organisation automate and integrate the

majority of its business processes, share common data and practices across the

enterprise and produce and access information in a real-time environment.

Financial Report. A set of documents that show the financial situation of a

company at the end of a particular period of time, including how much profit or loss

it has made.

Inventory Management. Refers to the process of ordering, storing and

using a company's inventory: raw materials, components and finished products.

Sales Report. Describes the record of all the calls which have been made

and products that have been sold during a particular time frame by a salesperson

or the management.

CHAPTER III

RESEARCH DESIGN AND METHODOLOGY

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This chapter provides some scientific significance to the study or conduct

of research. It usually includes the discussion on the research design, sampling

process and research instrument, and the tools of data analysis. It basically

pertains to the over-all plan to answer the problem and ensure the integrity of the

study from the beginning to the end. (De Belen, 2015)

Research Design

The quantitative descriptive method of research was used for this study. The

purpose of descriptive research is to obtain a precise profile of the people, events

or situations. This study took on the combined quantitative and qualitative approach

of research with the use of survey questionnaires. Quantitative data collection

methods are focused on the degree of relationships between variables.

Measurement, numerical data and statistics are the major significance of

quantitative instruments.

According to Amanda Gendon (2016), it is important to conduct a survey to

know employee feedbacks that may be used to enhance their organization. Surveys

help to assess employee engagement levels employee satisfaction levels, evaluate

the working environment and determine specific areas for

improvement. Sample surveys are an important tool for gathering and analyzing

information from selected participants. Businesses and researchers across all

industries conduct surveys to uncover answers to specific, important questions

(Susan E. DeFranzo, 2012). On the other hand, according to Jean Rhodes (2014),
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qualitative approach is used to gather information that focuses on describing a

phenomenon in deep comprehensive manner. The use of qualitative data gathering

method is advantageous as they are more open to changes and refinement of

research ideas as the study progresses; this implies that qualitative data gathering

tools are highly flexible. For these reasons, the researchers chose a descriptive

research methodology and designed a questionnaire tool to know the effectiveness

of Enterprise Resource Planning on Skintimates Incorporated.

Population and Sample of the Study

According to Ngechu (2004), a population is well defined set of people,

services elements and events, group of things or households that are being

investigated. In line with this, Cohen et al. (2000) state that, population is a group

of people who are subject to a piece of research. The respondents of the study

are selected employees of Skintimates Inc. who have been working in the

company for at least six months, wherein all of the them were regular employees

under supervisory level and rank and file of the firm. These respondents were

single and married with age ranging from 21 years of age and above.

Sample is a number of people chosen from a bigger population with the aim

of giving information about this population as a whole (Ferrer, 2018). It is a small-

scale of the whole group or total from which it has been taken. The total population

of Skintimates Inc. were 60 wherein the researchers selected only 30 employees

to participate in the survey.

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Research Instrument

The instruments used are researcher-made-survey questionnaire to

gather data needed. The researchers used quantitative and qualitative approach

for additional information to collect data and analyze numerical data in

accordance in the result of the survey. It was drawn out based on researcher’s

readings, previous practicummer and also used a combination of book-based

and internet-based. The draft of the survey was presented to the research

adviser, and to the company’s manager for approval.

The questionnaire was composed of four main sections: profile and

survey proper. The profile contains the respondents demographic profile such

as age, gender, civil status, the number of years they had served to the company

as well as job their status and assigned position. In the second part,

the survey questionnaire explored the assessment of the respondent on the

effectiveness of Enterprise Resource Planning System in Skintimates Inc. in

terms of inventory management, sales report and financial report, and security

of data using Likert scale in connection to their responses.

Option Verbal Interpretation Range of Interpretation

4 Strongly Agree 3.51-4.00

3` Agree 2.51-3.50
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2 Disagree 1.51-2.50

1 Strongly Disagree 1.00-1.50

In the Part III of the questionnaire, it is composed of the common problems

encountered in the system by the respondents of Skintimates Inc. Rank method

is used which they will rate it from 1 to 5, 1 is the highest and 5 is lowest. In the

end, the researchers ask for recommendations they may suggest about the

improvements of ERP System Software.

Validation of the Research Instrument

Healy & Perry (2000), explained that validity determines whether the

research truly measures which it was intended to measure or how truthful the

research results are. It estimates how accurately the data obtained in the study

represents a given variable or construct in the study (Mugenda, 2008). The survey

questionnaire was used as the study tool for data collection from the respondents

in Skintimates Inc., which consists of series questions and other prompt that can

be used in gathering information.

In this case, we decided to take personal interview to the System Provider,

who implemented the Enterprise Resource Planning (ERP) System in Skintimates

Inc. to validate the questionnaire as a measuring instrument in order for it to be an

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appropriate tool and to test the quality of the questionnaire. The instrument

measured what it was intended to measure (Mugenda&Mugenda, 2003).

Data Gathering Procedure

The researchers were given an opportunity to create their own topic

depends on the company chosen supervised by their research adviser. Then after

criticizing it, statement of the problem was formulated. Furthermore, they now

asked permission from Skintimates Inc. to conduct the study and prepared a guide

questionnaire. Upon approval has sought, the researchers conducted an interview.

The process of choosing participants is voluntary. Secondary data will be added

from various sources like books, articles, journals, electronic pages and the like.

Finally, data will be interpreted using the statistical tools and kept it with utmost

confidentiality. The researcher follows ethical consideration in the conduct of the

study.
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Statistical Treatment of the Study

The following statistical measures were employed to analyze the data such

as; frequency, percentage, ranking, weighted mean, and Z-test.

Frequency and percentage were used to describe the demographic

profile of the employees of Skintimates Inc. Percent is a ratio that compares a

number to 100.

P = F
N
Where:

P = Percent

F = Frequency

N = Total number of respondents

Weighted mean and rank were used to assess the level of effectiveness of

ERP system software in Skintimates Inc. in terms of; inventory management,

sales report, financial report, and security of data and also, the frequent

problems encountered by the respondents.

WM = (fSA x 4) + (fA x 3) + (fDA x 2) + fSD x 1)

N
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COLLEGE OF BUSINESS AND ACCOUNTANCY

Where:

WM = Weighted Mean

fSA = Frequency of “Strongly Agree” responses

fA = Frequency of “Agree” responses

fDA = Frequency of “Disagree” responses

fSD = Frequency of “Strongly Disagree” responses

N = Total number of respondents

Z-test