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The objective of this paper is to explore the responses of commercial banks sample data on the effect of business process reengineering factors on organizational performance. Consequently, instruments validity, reliability and then, the data normality were examined through panel of expert in both academic and practice. The sample of the data received from the commercial bank departments was analyzed with aid of SPSS software. The results show that the instruments are reliable and the data for preliminary study demonstrate reasonable normality. The research explored and validated the instrument of the various experiences of bank performance as a result of business process reengineering factors implementation most of which factors were previously ignored.
Key words: Factors of business process reengineering, Information technology capability, Organizational performance, Banks, Pilot test, Nigeria.
The progressive globalization of financial markets required market participant to make changes on their operational processes beyond local competition to global competitiveness. The entire banking industry should focus on achieving service competitiveness that would improve their performance enhancement in both domestic and international market. Efforts by the banks on market segmentation resulted to re-direction of the financial services strategy for profit enhancement. Innovative baking service and personalized banking portifolio management are evolving as the market consolidates due to mergers and acquisitions of banks and up-to-date strategy.
Performance improvement efforts are aimed at a complete realignment of internal and inter-department processes. In contrast to the trend in recent years, the focus is no longer on cutting costs alone, but rather on simultaneously improving ser- vices to customers. Not only must processes become more efficient, they must be made more customer-friendly as well. Attempts are being made to transfer approaches that have proven effective in other industries, particularly manufacturing, to the financial sector. Industrialization is the phrase for boosting performance by applying industrial methods. The importance is to stress on the total redesign of multi-functional processes that deliver goods or services to the customer and the system of measurement used to evaluate the performance consistently with the total, socio-technical approach and the human factors approach to re-engineering upon which the concept of empowerment is based (Peppard, 1995). Today's companies operations requires best practices, aimed at evaluating themselves the extent to which they are complying with their corporate objectives. The company must focus its efforts on improved effectiveness, by improving customer service, reducing costs, and improving its business processes (Norris et al. 2001). Performance measurement has become a key tool for ensuring that, the different processes that make up a company's business are kept on track, in order to evaluate both the efficacy and the operational efficiency of the business processes.
The objective of the pilot study is to get a feedback and use to adjust and improve data collection of the larger study as well as to achieve the following specific purposes:
To enable the researcher establish contact with organizations before the real data collection process of the main study
To determine the validity and reliability of the constructs
To foresee any challenges that may arise during the main study data collection.
A pre-test of the questionnaire was conducted in order to enable us to test the wordings; question sequences of which format best suit the respondents and to alert the researcher to potential problems areas that may be caused by the questionnaire. Thus, pre-tests are conducted to answer questions about questionnaire such as the following: 1) Can the questionnaire format be followed by the respondent? 2) Does the questionnaire flow naturally? 3) Can respondent answer the question easily? 4) Which alternative forms of questions work best? Pre-testing also provides the means to test the sampling procedure, whether efficient or not. Therefore the benefit of conducting a pre-test of questionnaire is to improve the validity and reliability of the instrument measures. Zikmund, (2000) highlighted the aim of conducting validity as to ensure that instrument measures what is supposed or intended to measure.
A pilot study is considered to be like small experiment to test the logistics and gathering information prior to the larger study (Gay, Mills and Airasian, 2006). It is conducted in order to improve the quality and efficiency of the larger study. It is done to reveal deficiencies in the design of the proposed larger study procedure that can be addressed before time and resources are expended. Thus this will give the researcher to anticipate and adjust to potential problems during the full scale research. Among the major concern of pilot test is the instrument validity and reliability. Validity of measuring instrument is the extent to which the instrument is measuring what it is suppose to measure while Reliability measures the extent, to which an instrument is error free, consistent and stable (Sekaran & Bougie, 2010). Therefore the paper presents the result of pilot test with regard to the validity, reliability and preliminary investigation on business process reengineering implementation in Nigerian banks.
Given the fact that this is a pilot study of an ongoing research, a few samples of Nigerian banks and financial institution was randomly selected. The sample size of a pilot study is within a range of few respondents (15-30) but can be increased substantially (Malhotra, 2008). Hence, a total of 105 copies of questionnaire were personally distributed and 100 were returned out of which 3 were not properly completed and were not considered for analysis. Prior to the distribution of the questionnaire, the draft copies were initially submitted to experts both academics and professionals for face validity and content validity respectively. Sekaran and Bougie (2010) argued that the most popular test of item consistency reliability is Cronbach's alpha coefficient. Hence, Cronbach's alpha test is employed in this study to measure internal consistency reliability of the instrument. The data was analyzed using SPSS version 14 for windows. The pilot test process was completed within the period of four weeks.
Measurement of Variables and Instrumentation
Questionnaire is considered to be one of the most appropriate data collection instrument for survey research (Askia, 1999). Hence structured questionnaire, which consists of closed-ended questions, would be used. However, in order to ensure the adaptation of the questionnaire is done properly, the researcher had conducted face validity before a pilot test of the instrument. The adapted questionnaire would measure the influence of the research independent variables: BPR factors - change management; I.T infrastructure; processes redesign, with a moderating factor of information technology (I.T) capability and dependent variable - organizational performance (Financial and non financial). The five-point type rating scale was used in measuring responses to the questions. Five-point rating scale indicates that interviewer bias tends to decrease and data quality tends to increase. The midpoint on the scale gives respondent independence and chance of expressing their views (Krosnick & Fabrigar, 1997). Many literatures found that scale between 5 to 7 points were more reliable and valid than shorter or longer scales (Krosnick & Fabrigar, 1997). However, Dawis, (1987); Garland (1991); and Hughes, (1969) suggested that the decision lays largely on the preference of the researcher and there can be no single best method in scale construction, one may be better for one research problem but not be good for another.
The key variables contained in the study are: Change management; Process redesign (Innovation); Use of Information technology (I.T) infrastructure; and organizational performance. All the construct/variables are uni-dimensional except the change management and I.T capability which are multidimensional and were measured according. The questionnaire designed in this study consists of six (4) main sections. Sections 1 are the demographic data having five (5) questions that required the respondent to provide background information and type of BPR implementation in the organization. Sections 2 are the independent variables consisted of thirty one (31) statements about BPR factors. Section 3 are the moderating variable I.T Capability consist of thirty (30) statement about the association of IT capability with superior performance. Section 4 of the questionnaire is the dependent variables consist of twenty (20) questions regarding organizational performance in terms of both financial and non financial.
Results of Validity and Reliability Tests
Reliability test: there are various types of reliability test; the most common method used in many studies is internal consistency reliability (Litwin, 1995). Cronbach's alpha was the common test employed in the previous studies to test the internal consistency reliability. The Cronbach's coefficient alpha test was conducted to measure the internal consistency reliability. It stated that an instrument, that scores 0.60 is considered to have an average reliability standard, while a score of 0.70 and above indicates that the instrument have high reliability standard (Hair, Anderson, Tatham, & Black, 1998; Sekaran, 2003). ). A pilot study was conducted and the result of the study is summarized in the table 1.0 below:
Summary of the reliability analysis of construct
To assess the reliability of the construct, the average correlation (Cronbach's alpha) in the scale was used. The cut off point of 0.70 was applied as the basis of acceptance. The reason is that, in general, reliabilities less than 0.60 was considered to be poor, those in the range of 0.70 are acceptable and those over 0.80 are good (Sekaran, 2000). Cronbach's alpha can be considered as a perfectly adequate indication of the internal consistency, and thus of reliability (Sekaran, 2000). It is the largely generally applied indicator. The generally agreed upon most acceptable value for Cronbach's alpha is 0.70, although it may decrease to 0.60 in exploratory research (Hair et al. 2007). The results of pilot test show that the Cronbach's alpha of the construct ranges from 0.825 to 0.920. Since the result of the reliability was more than 0.70, none of the items was dropped from this pilot study. Furthermore, reliability analysis would be performed during the main study for a larger sample size.
In addition to achieving the reliability, validity normality of the data, the preliminary (pilot) investigation was conducted to ascertain the level of business process reengineering (BPR) implementation in Nigerian banks. Analysis of questionnaire demographic section regarding the question on the efforts of Nigerian banks implementation of various reengineering operational processes in post consolidation period revealed the results shown in the table 2.0
Summary of results on re-engineered operational processes by Nigerian banks
In Percentage as at 2010
TYPES OF BPR Processes
BPR1: Credit Risk operations processes:
BPR2: Domestic operations processes:
BPR3: International operations processes: Valid: YES
BPR4: Branch operations processes:
BPR5: e- Banking processes:
Source: Developed for this research
The result indicated that the sample banks in Nigeria had implemented business process reengineering on the various processes: 78 percent of the banks implemented the related to electronic banking services such operational transactions of cash/cheques received and payment through ATM, POS, cards transaction and others; 67 percent of the banks studied have restructured and improved their operational processes as a result of the synergies of the consolidation of banks operational services streamline for efficient and effective service delivery; 61 percent of the respondent reengineered their credit risk operational processes of loan processes, consumer loan appraisal analysis, disbursement, administration and rendition of periodic returns to the regulatory authority was restructured using information technology software; while, 50.5 percent of the respondent confirmed to have redesign their domestic and international operational processes of transactions respectively. The restructuring of the local and internal operational processes involved some kind of innovations and value added services to the various processes such as cheque clearing and settlement, interbank transfers, remittances for payment of bills, fund transfers both local and international payment through Money Gram, Western Union Money transfer, Wire transfer through SWIFT and opening of letter of credit.
The Central bank of Nigeria audited annual account and report CBN, 2008 revealed that Nigerian banks have successfully reengineered their operational service by deployment of various electronic banking channels including the globally secure chip and pin technology, point-of-sale (POS) and internet banking services. The e-payment horizon grew further in year 2008 as all its service segments recorded significant improvements. The development was traceable to a number of factors, including: 1) the deployment of more ATMs by the banks, 2) the adoption of bulk salary payments by many institutions, 3) an increased usage of debit cards and increased public awareness. POS transactions increased in both volume and value terms by 150.2 per cent, respectively. The growth of this segment of the market was attributable to the increase in the number of institutions and merchants using the POS network for services, such as lottery tickets, airtime vending, bill payments, and funds transfer, among others. In the same vein, the number and value of payments through the mobile telephone in 2008 improved by 630.3 per cent. The development was due to the increase in the number of banks offering the service, as well as the growing public confidence in e-payments. Web based (internet) transactions increased significantly in volume and value terms by 77.3 and 135.8 per cent as a result of the increase in the number of banks offering the service. The number of merchants accepting such payments over time had improved both in efficiency and security as there have been huge investments by banks in their e-business segments. The e-banking segment has witnessed tremendous growth in all payment channels (internet, mobile banking, ATM and telephone banking) currently in use as is evident in the number of ATMs and POS machines deployed over 8,000 and 12,400 machines respectively. The usage and acceptance of these channels of payment will continue to increase across the country. The e-banking platforms have delivered increased profitability, improved customer loyalty, enhanced capacity of existing products and improved visibility to the banks who are investing heavily in them.
Data Distribution: Most of the inferential statistical techniques require the fulfilment of normality assumption (Pallant, 2001; Tabacknich &Fidell, 2007). Normal data is the one that is symmetrically bell-shape with the greatest frequency score in the middle and a smaller distribution on the extreme ends. Normality can be observed by using value of skewness and kurtosis. The data normality can be indicated by the value of skewness and kurtosis. Skewness has to do with regularity of a distribution, symmetrically shape and kurtosis related to level of peakedness of the distribution (Tabacknich & Fidell, 2007). A distribution is said to normal when the values of skewness and kurtosis are equal to zero (Tabacknich & Fidell, 2007). Many authors suggested that absolute values of uni-variate skewness greater than 3.0 seem to describe extremely skewed data (Chou & Bentler, 1995).The value for the skewness of all the construct is between -0.570 to +0.047; kurtosis values range from -0.434 to +0.629 and Statistical range of the construct between +9.20 to +51.0.
The main purpose of pilot test study is to check the reliability and validity of the instrument of an ongoing research before commencement of the full scale study. Therefore, the conclusion of this study is to secure the statistical objectives at this stage. The practical and theoretical contributions of the variables would be reveled after the main study is conducted. The pilot study deal with the content and face validity of the instrument that led to rephrasing of some items and collection of few samples for reliability analysis. The reliability analysis results indicated that the Cronbach's Alpha of all the constructs were above the bench mark of 0.70. Also, the normality test using skewness and kurtosis indicates that the data is reasonably normal.
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