EFFECT OF DIGITAL BUDGETING SYSTEMS ON COST EFFECTIVENESS IN PUBLIC SECTOR

Abstract

This study sought ti examine the effect of digital budgeting systems on cost effectiveness in Tanzania focusing on TANESCO Dar es Salaam. Specific objectives of this study wer to determine the effect of financial planning systems, expense management systems and activity-based budgeting systems on cost-effectiveness. Systems theory was adopted in this study. This study utilized a quantitative research approach with a causal research design to examine the effect of digital budgeting systems on cost-effectiveness at TANESCO in Dar es Salaam. The target population included 420 employees, and a sample size of 204 respondents was selected using simple random sampling. Data collection involved primary data through structured questionnaires and secondary data through a documentary review. Data analysis was conducted using SPSS version 26, employing descriptive statistics to summarize the data and inferential statistics to explore relationships among the variables. The study unveiled that the financial planning system accurately predicts budget variances, frequent budget revisions improve financial decision-making, while budget allocations made by the financial planning system were reported to align well with organizational goals. The results of this study indicated that the expense management system ensures timely reporting, effectively controls unnecessary expenditures, enhances tracking transparency for decision-making, and provides reliable data, reinforcing trust in financial planning. The study found that the activity-based budgeting system ensures accurate allocation and effectively aligns budget allocations with strategic objectives for coherent financial planning hence reliably calculates a satisfactory cost per unit of activity and effectively identifies cost drivers. The study revealed strong positive correlations between financial planning systems (0.785) and expense management systems (0.698) with cost-effectiveness, while activity-based budgeting systems showed a moderate correlation (0.534); all relationships were statistically significant (p = 0.000). The study recommends that TANESCO enhance its financial planning systems for improved accuracy, strengthen expense management through stricter compliance, and provide more training on activity-based budgeting. Future research should focus on user satisfaction and the usability of financial management systems to boost budgeting effectiveness.