Customer value creation - The ultimate goal of requirements engineering 29.1.2018 CS-E4940 Requirements engineering Marjo Kauppinen and Juuso Tervo

Customer value creation - The ultimate goal of requirements engineering 29.1.2018 CS-E4940 Requirements engineering Marjo Kauppinen and Juuso Tervo

Customer value creation - The ultimate goal of requirements engineering 29.1.2018 CS-E4940 Requirements engineering Marjo Kauppinen and Juuso Tervo

29.1.2018 CS-E4940 Requirements engineering Marjo Kauppinen and Juuso Tervo Customer value creation Theultimategoalofrequirementsengineering

Customer value creation - The ultimate goal of requirements engineering 29.1.2018 CS-E4940 Requirements engineering Marjo Kauppinen and Juuso Tervo

Outline of the session • Learning goals and critical thinking • Assignment 1: RE process and activities • Assignment 2: Customer value creation • From feature development to customer value creation • Summary of the session 2 Today, you will participate in two stories • Juuso’s view to critical thinking, RE, and value • Marjo’s view to critical thinking, RE, and value

Customer value creation - The ultimate goal of requirements engineering 29.1.2018 CS-E4940 Requirements engineering Marjo Kauppinen and Juuso Tervo

3 Requirements engineering SOFTWARE ENGINEERING Why to invest in RE? What is the role of RE? What are the main RE activities? What kind of good RE practices are there? What kind of approaches are there to RE? • Engineering • Agile • Customer value creation • Creativity How does RE link to other processes? • Solution planning • Testing and value evaluation SOLUTION PLANNING AND DEVELOPMENT Learning goals of the course: Today

Customer value creation - The ultimate goal of requirements engineering 29.1.2018 CS-E4940 Requirements engineering Marjo Kauppinen and Juuso Tervo

4 Focus of the today’s study session. Memorizing Relating Comparing Applying Deep learning Explaining After the course, students are able to • explain why RE is important • explain what the main RE activities are • relate good RE practices with RE activities and approaches • compare different RE approaches • combine RE with solution planning and customer value • apply RE practices in solution planning • critically evaluate RE approaches, practices and solution concepts Learning goals of the course Surface learning Critical thinking Critiquing

Customer value creation - The ultimate goal of requirements engineering 29.1.2018 CS-E4940 Requirements engineering Marjo Kauppinen and Juuso Tervo

Deep and continuous learning 5 Critical thinking ?

Deep and continuous learning 6 Critical thinking ? Asking questions Reflecting on earlier experiences Comparing material from different sources Analysing and challenging Marjo’s view before reading the article of Paul and Elder (2012) Critical Thinking… (see below) Summary from the article of Paul and Elder (2012) Critical Thinking: Competency Standards, Esseential to the Cultivation of Intellectual Skills, Part 5, Journal of Development Education 36(1)30-31.

Deep and continuous learning 7 Critical thinking ? Asking questions Reflecting on earlier experiences Comparing material from different sources Analysing and challenging Writing an important tool for learning deeply Analysing and evaluating ideas in texts and own thinking Understanding important concepts and interrelations between concepts Reading texts closely Creating an inner dialog with the text Questioning, summarizing, and connecting important ideas with other important ideas Expanding the worldview Marjo’s view before reading the article of Paul and Elder (2012) Critical Thinking… (see below) Summary from the article of Paul and Elder (2012) Critical Thinking: Competency Standards, Esseential to the Cultivation of Intellectual Skills, Part 5, Journal of Development Education 36(1)30-31.

Deep and continuous learning 8 University knowledge = declarative knowledge • is about concepts, models, methods and theories • results from research • forms a solid foundation for professional knowledge Based on Biggs J. and Tang C. (2007) Teaching for Quality Learning at University, third edition,McGraw Professional knowledge = functioning knowledge • is pragmatic • results from the experience of the learner who can apply declarative knowledge to work in practice Reflect on

Assignment 1: RE process and activities 9 • Read and analyse the article written by Nuseibeh and Easterbrook (2000).

According to the article, “Whether viewed at the systems level or the software level, RE is a multi-disciplinary, human-centred process. The tools and techniques used in RE draw upon a variety of disciplines, and the requirements engineer may be expected to master skills from a number of different disciplines.” • Based on the article, explain – how do the authors mean by a multi-disciplinary, human-centered RE process and – what kind of activities does the RE process consist of. • Based on your present understanding of problem-solving process, choose three topics from the article that you find useful, interesting or challenging to understand and reflect on them.

Nuseibeh B and Easterbrook S (2000) Requirements Engineering: A Roadmap. Proceedings of the Conference on the Future of Software Engineering, ACM Press, pp. 35-46.

10 Requirements engineering [Nuseibeh and Easterbrook 2000] is the process of discovering the purpose of the system by identifying stakeholders and their needs, and documenting those in a form that is amenable to analysis, communication, and subsequent implementation. Requirements engineering [Qure, CORE & Reflex projects*] means that requirements for a system are defined, managed and tested systematically. The purpose of RE is to ensure that the system satisfies customer and user needs i.e. the usage of the system provides value for customers and users. What are commonalities and differences of these definitions? Role of RE in problem solving * These research projects were done in collaboration with Finnish companies during 1999-2009.

11 Role of RE: Why to invest in RE Requirements engineering [Qure, CORE & Reflex research projects] means that requirements for a system are defined, managed and tested systematically. The purpose of RE is to ensure that the system satisfies customer and user needs i.e. the usage of the system provides value for customers and users. Customer and user needs Customer value ? RE can have a significant role when discovering customer and user needs and supporting customer value creation.

12 Main RE activities What are commonalities and differences of these activities? Elicitation Analysis Representation Validation Requirements change management Requirements definition Acceptance testing Customer value evaluation Testing Nuseibeh and Easterbrook (2000) • Elicitating • Modeling and analyzing • Communicating • Agreeing • Evolving

13 Basics of RE: A simple process model Communication and collaboration is essential part of all RE activities. Elicitation Analysis Representation Validation Discovering customer and user needs actively Representing requirements as use cases and user stories Business requirements User requirements Technical requirements Using multidisciplinary teams to review requirements Prioritizing needs and identifying critical requirements Prototyping Problem Customer & user needs

Assignment 2 – Customer value creation • Explain how requirements engineering (RE) relates to customer value creation • Compare traditional (Hofmann & Lehner 2001) and agile RE practices (Cao & Ramesh 2008) from the perspective of customer value creation • Identify four good RE practices that can support customer value creation and explain why you selected these ones Material • Material of the study sessions • Kauppinen M, Savolainen J, Lehtola L, Komssi M, Töhönen H, and Davis A (2009) From feature development to customer value creation, Proceedings of 17th IEEE International Requirements Engineering Conference, pp.

275-280 • Cao L and Ramesh B (2008) Agile Requirements Engineering Practices: An Empirical Study IEEE Software 25(1)60-67.

• Hofmann H. and Lehner F. (2001) Requirements Engineering as a Success Factor in Software Projects. IEEE Software 18(4), pp. 58-66. • Almquist E, Senior J and Bloch N (2016) The Elements of Value: Measuring and delivering what consumers really want Harvard Business Review, 94(9) 47-53 14

From feature development to customer value creation Critical questions: Where is customer value created? What does customer value mean?

16 Customer value creation Value is created in customers’ processes when individual consumers or industrial users make use of the solution.

This conclusion has been made by Christian Grönroos (2007) and it is based on the article written by Normann and Ramirez (1993), Grönroos C. (2007) Service Management and Marketing – Customer Management in Service Competition, third edition, John Wiley & Sons, Ltd. Normann R. and Ramirez R. (1993) From Value Chain to Value Constellation, Harvard Business Review, 71(4) 65-77.

Customer value creation Where is customer value created? • Value for customers is not embedded in products and systems. • Products and systems are only facilitators of customer value. The focus is not on the products but on the customers’ processes, where value emerges for customers and is perceived by customers. Grönroos C. (2007) Service Management and Marketing – Customer Management in Service Competition, third edition, John Wiley & Sons, Ltd. Page 27

A simple formula for customer value is • either summative i.e. benefits minus sacrifices • or ratio i.e.

benefits divided by sacrifices (Smith & Colgate 2007) Customer value Customer value = Benefits Sacrifices - Benefits and sacrifices can be both tangible and intangible. Quality Time Money Frustration Fear Fun Satisfaction 18 Smith J and Colgate M (2007) Customer Value Creation: A Practical Framework, Journal of Marketing Theory and Practice 15(1) 7-23.

Elements of customer value 19 Almquist E, Senior J and Bloch N (2016) The Elements of Value: Measuring and delivering what consumers really want Harvard Business Review, 94(9) 47-53 Value Pyramid • 30 elements • 4 categories • extends Maslow’s “hierarchy of needs”

Customer value Customer value = Benefits Sacrifices - Benefits and sacrifices can be both tangible and intangible. Quality Time Money Frustration Fear Fun Satisfaction 20 Value is created in the customers’ processes and it is perceived by customers. Customer value of the MyCourses system?

Current state: Inside-out Approach Key finding 1 Product features are seen as the core of value creation.

Pitfall 1 Adding too many features to the product. Pitfall 2 Improving individual features too much. Pitfall 3 Launching stripped version of features fast. 21 Kauppinen M., Savolainen J., Lehtola L., Komssi M., Töhönen H., and Davis A. (2009) From feature development to customer value creation, Proceedings of 17th IEEE International Requirements Engineering Conference, pp. 275-280

Current state: Inside-out Approach 22 Kauppinen M., Savolainen J., Lehtola L., Komssi M., Töhönen H., and Davis A. (2009) From feature development to customer value creation, Proceedings of 17th IEEE International Requirements Engineering Conference, pp. 275-280

Current state: Inside-out Approach Key finding 2 The customers’ processes are NOT deeply understood. Pitfall 4 Treating customers and users as one big group. Pitfall 5 Developing products that do not support the customers’ processes well. Pitfall 6 Having no big picture. 23 Kauppinen M., Savolainen J., Lehtola L., Komssi M., Töhönen H., and Davis A.

(2009) From feature development to customer value creation, Proceedings of 17th IEEE International Requirements Engineering Conference, pp. 275-280

Future: Outside-in Approach 24 Kauppinen M., Savolainen J., Lehtola L., Komssi M., Töhönen H., and Davis A. (2009) From feature development to customer value creation, Proceedings of 17th IEEE International Requirements Engineering Conference, pp. 275-280

Supporting the customer’s processes Becoming aware of needs Adapted from Grönroos (2007, Figure 16.2) and MacMillan & McGrath (1997) Selecting the solution Ordering & purchasing Getting & installing Paying Using advice & support Having problems corrected Usage Upgrading the solution Customer’s processes 25 Grönroos C.

(2007) Service Management and Marketing – Customer Management in Service Competition, third edition, John Wiley & Sons, Ltd. Page 27 MacMillan I. and Gunther McGrath R. (1997) Discovering New Points of Differentiation, Harvard Business Review, 75(4)133-145.

Supporting the customer’s processes Becoming aware of needs Adapted from Grönroos (2007, Figure 16.2) and MacMillan & McGrath (1997) Selecting the solution Ordering & purchasing Getting & installing Paying Using advice & support Having problems corrected Usage Upgrading the solution Service Service Service Service Product Service Customer’s processes = customer journey All the customer’s processes must be supported in a satisfactory way.. Some of the processes are more critical to the customer than others.. Those processes have to be supported especially carefully.. Company’s processes and the whole solution.

26 Service

27 Practices that support value creation Identify customer segments and user groups Discover information about customer processes actively Create direct contacts between development engineers and users Kauppinen M., Savolainen J., Lehtola L., Komssi M., Töhönen H., and Davis A. (2009) From feature development to customer value creation, Proceedings of 17th IEEE International Requirements Engineering Conference, pp. 275-280

Summary Value is created in customers’ processes. Understanding customers’ processes is the core of value creation. 28

29 The ultimate goal of requirements engineering is to support development teams in building solutions the usage of which creates value for customers and users.

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