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

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
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
 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

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)

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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.

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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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