Role of Information Technology in Financial Management : A Survey of Small and Medium Enterprises in Pakistan

Abstract

The SMEs, comprise of 89% of all the total enterprises present in Pakistan and contribute approximately 40% towards the economy in terms of Gross Domestic Products (GDP). SMEs are considered to make special contribution to economic growth of Pakistan and thus play a vital role in improving the economy of this developing country in the south Asian sub-continent. In view of the established norms that SMEs, are a viable source of grass-root employment and a significant source of small scale industrial and commercial growth, this study investigated the role of IT tools and techniques in financial management in this sector of the economy. A sample of 70 SMEs entrepreneurs and managers representing 63% male and 29% female, was selected and required data was gathered by distributing a detailed questionnaire. The data was analyzed using SPSS for Window version 13 for obtaining the numerous statistics. Little over 58% of the respondents are computer literate. In different areas the SME’s proprietors/managers are willing to adopt information technology in their enterprise, as reflected by over 63% of the respondents. There are several difficulties in adopting information system such as the price of the information system as over 43% of the respondents stated that computers are expensive to use. Experienced personnel is a key to any successful business, in this particular case the highest percentage of respondent’s experience falls between 6-10 years. Major percentage of respondents claimed to have investment levels prevailing from 0.5-1.0 million (Pak Rupee), which seems to be a substantial amount of capital to invest in an SME operating in Pakistan. Over 46% of the respondents have acquired loans from SME Banks for their business operations. Over 35% of the SMEs acquire services of professionals based in the private information technology sector/market while over 35% tend to seek advice and assistance from their family and friends. Over 55% of the respondents claimed to have local area networks (LANs) established to undertake their day to day operations, which implies that they have more than one PC to cater various III aspects of their business while over 64% claim they are restricted to basic software packages. Over 30% claim that information technology tools assist in mainly ‘inventory control management’. Generally, there is a reasonable reliance on IT in financial management and controlling financial transactions with the existing levels of knowledge and skills of the investors. A good sign which emerges and vouches the ultimate intensions of investors in SMEs that future use of IT related tools will definitely help them in comparatively better financial controls and financial management than without it.