CUSTOMER VALUE CREATION 2018 - MYCOURSES

CUSTOMER VALUE CREATION 2018 - MYCOURSES
Customer value creation
The ultimate goal of requirements engineering
                                              29.1.2018
                      CS-E4940 Requirements engineering
                        Marjo Kauppinen and Juuso Tervo
CUSTOMER VALUE CREATION 2018 - MYCOURSES
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

    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




                                                           2
CUSTOMER VALUE CREATION 2018 - MYCOURSES
Learning goals of the course: Today

                          SOLUTION PLANNING AND DEVELOPMENT


Why to invest in RE?                                    What kind of approaches are
What is the role of RE?                                 there to RE?
                                                        • Engineering
                                                        • Agile
                                                        • Customer value creation
What are the main RE                 Requirements
                                                        • Creativity
activities?                           engineering

                                                        How does RE link to other
                                                        processes?
What kind of good RE practices                          • Solution planning
are there?                                              • Testing and value evaluation


                                 SOFTWARE ENGINEERING




                                                                                         3
CUSTOMER VALUE CREATION 2018 - MYCOURSES
Learning goals of the course

Memorizing                    Surface learning

                              After the course, students are able to
                              •   explain why RE is important
 Explaining
                              •   explain what the main RE activities are
              Deep learning




                                                                                               Critical thinking
   Relating                   •   relate good RE practices with RE activities and approaches

                              •   compare different RE approaches
Comparing
                              •   combine RE with solution planning and customer value
  Applying                    •   apply RE practices in solution planning
                              •   critically evaluate RE approaches, practices
 Critiquing                       and solution concepts




                                    Focus of the today’s study session.                                    4
CUSTOMER VALUE CREATION 2018 - MYCOURSES
Deep and continuous learning




            Critical thinking
                                ?



                                    5
Deep and continuous learning

 Asking questions
                                          Critical thinking
                                                                             ?
 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)
                                                                                                               6
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

 Asking questions
                                           Critical thinking
                                                                              ?




                                                                                                                Expanding the worldview
 Reflecting on earlier experiences
 Comparing material from different sources
 Analysing and challenging
                                        Reading texts closely
                         Creating an inner dialog with the text
Questioning, summarizing, and connecting important ideas
                                    with other important ideas

                          Writing an important tool for learning deeply
             Analysing and evaluating ideas in texts and own thinking
Understanding important concepts and interrelations between concepts



 Marjo’s view before reading the article of Paul and Elder (2012) Critical Thinking… (see below)
                                                                                                                               7
 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

  Professional knowledge = functioning knowledge
  • is pragmatic
  • results from the experience of the learner who can apply
    declarative knowledge to work in practice

                                    Reflect on

  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)
                                                                      8
  Teaching for Quality Learning at University, third edition,McGraw
Assignment 1: RE process and activities
•    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.                                                               9
Proceedings of the Conference on the Future of Software Engineering, ACM Press, pp. 35-46.
Role of RE in problem solving
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?


  * These research projects were done in collaboration with Finnish companies   10

   during 1999-2009.
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
                                ?
                                              Customer value
         needs

                  RE can have a significant role when
               discovering customer and user needs and
                  supporting customer value creation.


                                                                11
Main RE activities

     Requirements definition
                                            Customer
                                              value
                Analysis
                                            evaluation   Nuseibeh and
                                                         Easterbrook (2000)
  Elicitation              Representation
                                                         • Elicitating
                                            Acceptance   • Modeling and analyzing
                Validation                    testing    • Communicating
                                                         • Agreeing
                                                         • Evolving

                                             Testing

 Requirements change management




          What are commonalities and differences of these activities?          12
Basics of RE: A simple process model
         Discovering customer and                           Prioritizing needs and
               user needs actively                          identifying critical requirements

                                            Analysis
  Problem

 Customer             Elicitation         Prototyping Representation
& user needs

                                            Validation

          Using multidisciplinary teams                     Representing requirements
               to review requirements                       as use cases and user stories

                                                  Business requirements
                                                  User requirements
                                                  Technical requirements


                Communication and collaboration is                                      13

                 essential part of all RE activities.
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)                                                   14
    The Elements of Value: Measuring and delivering what consumers really want
    Harvard Business Review, 94(9) 47-53
From feature development to
customer value creation



Critical questions:
Where is customer value created?
What does customer value mean?
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 –        Normann R. and Ramirez R. (1993)
Customer Management in Service Competition,             From Value Chain to Value Constellation,   16
third edition, John Wiley & Sons, Ltd.                    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
Customer value
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
                       =              Benefits                -           Sacrifices
       value


        Benefits and sacrifices can be both tangible and intangible.
   Quality                                                            Satisfaction
                    Money                  Fear
             Time           Frustration                   Fun


                                Smith J and Colgate M (2007) Customer Value Creation: A Practical   18
                                 Framework, Journal of Marketing Theory and Practice 15(1) 7-23.
Elements of
customer
value

Value Pyramid
•   30 elements
•   4 categories
•   extends Maslow’s
    “hierarchy of needs”




Almquist E, Senior J and Bloch N (2016)
The Elements of Value: Measuring and delivering what consumers really want   19
Harvard Business Review, 94(9) 47-53
Customer value

   Value is created in the customers’ processes and
              it is perceived by customers.

    Customer
                     =             Benefits      -       Sacrifices
     value


       Benefits and sacrifices can be both tangible and intangible.
  Quality                                              Satisfaction
                   Money                 Fear
            Time           Frustration          Fun




     Customer value of the MyCourses system?                          20
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.

   Kauppinen M., Savolainen J., Lehtola L., Komssi M., Töhönen H., and Davis A. (2009)
   From feature development to customer value creation,                                      21
   Proceedings of 17th IEEE International Requirements Engineering Conference, pp. 275-280
Current state: Inside-out Approach




  Kauppinen M., Savolainen J., Lehtola L., Komssi M., Töhönen H., and Davis A. (2009)
  From feature development to customer value creation,                                      22
  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.


  Kauppinen M., Savolainen J., Lehtola L., Komssi M., Töhönen H., and Davis A. (2009)
  From feature development to customer value creation,                                      23
  Proceedings of 17th IEEE International Requirements Engineering Conference, pp. 275-280
Future: Outside-in Approach




  Kauppinen M., Savolainen J., Lehtola L., Komssi M., Töhönen H., and Davis A. (2009)
  From feature development to customer value creation,                                      24
  Proceedings of 17th IEEE International Requirements Engineering Conference, pp. 275-280
Supporting the customer’s processes
Customer’s processes
Becoming   Selecting     Ordering      Getting                                  Using         Having         Upgrading
 aware        the           &             &          Paying       Usage        advice &      problems           the
of needs   solution     purchasing    installing                               support       corrected        solution



                                  Adapted from Grönroos (2007, Figure 16.2) and MacMillan & McGrath (1997)




    Grönroos C. (2007) Service Management and Marketing –     MacMillan I. and Gunther McGrath R. (1997)
    Customer Management in Service Competition,                 Discovering New Points of Differentiation,     25
    third edition, John Wiley & Sons, Ltd. Page 27              Harvard Business Review, 75(4)133-145.
Supporting the customer’s processes
                   Customer’s processes = customer journey
Becoming   Selecting    Ordering     Getting                             Using       Having       Upgrading
 aware        the          &            &        Paying      Usage      advice &    problems         the
of needs   solution    purchasing   installing                          support     corrected      solution




      Service            Service     Service     Service     Product           Service             Service

                Company’s processes and the whole solution.

      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..


                       Adapted from Grönroos (2007, Figure 16.2) and MacMillan & McGrath (1997)     26
Practices that support value creation


       Identify customer                                Discover information about
   segments and user groups                                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,                                      27
   Proceedings of 17th IEEE International Requirements Engineering Conference, pp. 275-280
Summary




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



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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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