Requirement Management in Product Development in B2B: A Study on the Process of Capturing Customer Requirements

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IN

DEGREE PROJECT TECHNOLOGY,

FIRST CYCLE, 15 CREDITS ,

STOCKHOLMSWEDEN2020

Requirement Management in

Product Development in B2B

A Study on the Process of Capturing Customer

Requirements

ILAKIA AMIRTHALINGAM

NADJA ZAHIRALDINNI

KTH ROYAL INSTITUTE OF TECHNOLOGY

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Examensarbete Integrerad produktutveckling grundnivå, 15 hp, kurskod MF131x Kravhantering i produktutvecklingsprocessen inom B2B Ilakia Amirthalingam Nadja Zahiraldinni Examinator Sofia Ritzén Handledare

Magnus Eneberg och Gunilla Ölundh Sandström

Sammanfattning

Världen står konstant inför för nya utmaningar samt förändringar och därav bör omgivningen utvecklas i enlighet med detta. Inte minst gäller det för produktutvecklingsprocessen som har eftersträvat att anpassa sig till diverse utvecklingar. Detta kan bland annat uppnås genom att observera marknaden och särskilt kunderna. Kunderna kan besitta kunskap som kan vara avgörande information när man utvecklar produkter. Enligt litteraturstudien kan involvering av kunder resulterat i ökad mångfald av information och på så vis kan det bidra till att produktkvalitet förbättras såväl som utvecklingsprocessen. Integrering av kunder kan emellertid visa sig vara en ledsam handling såväl som en kostsam sådan, särskilt om

kunderna är av en komplex karaktär. Därför kan det vara lämpligt att använda olika metoder för att kartlägga kundernas behov samt krav för att vidareutveckla dem på ett systematiskt vis.

Syftet med denna studie är att erhålla bredare kunskap om kundinvolvering med fokus på internationella såväl som komplexa kunder. Vidare kommer studien inrikta sig mot att studera hur en organisation navigerar runt kunder samt vilka roller och ansvarsområden som finns inom organisationerna. Studien genomfördes på Xolaris, ett mindre företag (SME) som specialiserar sig i mjukvaruutveckling, därav härstammar all erhållen data från denna

organisation.

För att besvara på samtliga frågeställningar genomfördes en litteraturstudie för få en djupare förståelse om kundinvolvering . Detta kompletterades med intervjuer från respondenter som besatt relevanta positioner inom organisationen. Intervjuerna genomfördes på ett

semistrukturerat viss i syfte att optimera informationsflödet. Data som samlades in kodades samt delades in i lämpliga kategorier.

Resultaten av studien visade att det finns hinder när kunderna involveras. Trots det, finns det metoder samt verktyg för att hantera dessa hinder, å andra sidan är de inte effektiva i alla

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situationer utan man böra anpassa efter förhållandet. Vidare bekräftade denna studie att det är av stor vikt att upprätthålla en god kundrelation. Däremot visade studien på att det bör finnas en sund gräns för graden av kundinvolvering då för mycket involvering inte alltid gynnar projektet.

Nyckelord

Kundinvolvering, kundintegration, produktutveckling, mjukvaruutveckling, internationella kunder, hinder vid kundinvolvering, kundrelation, kundkrav, kundbehov, metoder för kartläggning av krav

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Degree project in Integrated Product Development First cycle, 15 cr, course code MF131x

Requirement Management in Product Development in B2B Ilakia Amirthalingam Nadja Zahiraldinni Examiner Sofia Ritzén Supervisor

Magnus Eneberg and Gunilla Ölundh Sandström

Abstract

Our world is ever-changing hence the surroundings ought to develop accordingly. This applies particularly to the product development process and therefore, it is of high priority to adapt to the changes. This can be achieved by observing the market and especially the customers. It is believed that customers possess certain knowledge that can be crucial pieces of information when developing products. According to the literature, involving customer will result in the increased diversity of information and as a result, this may enhance the quality as well as the development process. Nevertheless, integrating customers may prove to be a tedious task as well as a costly one especially if the customers are of a complex nature. Due to this, it may be appropriate to apply various methods to map customer’s needs and requirements to further develop them in a systematic manner.

The purpose of this study is to gain greater knowledge about customer involvement, mainly focusing on international as well as complex customers. The essence of the study is to obtain information about how an organisation navigates around customers along with what roles and responsibilities there are within the organisations. The study was conducted at Xolaris, a small-medium size (SME) company within software development, hence the collected data stems from that organisation.

Initially, a comparative literature study was executed to obtain a broader spectrum of knowledge. This was complemented by interviews with respondents who held relevant positions within the organisation. The interviews were conducted in a semi-structured manner for the sole purpose of optimizing the information flow. From the data that was collected, several categories were derived that contributed to the study in a suitable manner.

The results of the study proved that there are obstacles when involving customers. Yet, there are methods and tools to overcome these obstacles, conversely, they may not always prove to be efficient and one must adapt oneself according to the situation. Furthermore, this study

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confirmed that it is of great importance to maintain stable customer relationships, hence there cannot be a fixed method to process the customer's requirements. Moreover, the study also proves there ought to be a limit to the degree of customer involvement.

Key Words

Customer involvement, customer integration, product development, software development, international customers, obstacles, customer relationship, customer requirement, customer need, methods for mapping requirements

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Acknowledgement

This project was pursued at The Royal Institute of Technology (KTH) during spring term 2020 to serve as a Bachelor thesis within the field of Integrated Product Development, MF131X.

The completion of the thesis would have not been feasible if not for the help and support of several individuals. We would like to express our deep and sincere gratitude to our

supervisor, Magnus Eneberg, for providing us with invaluable guidance during this project. Our gratitude also extends to Xolaris, especially, our respondents who have provided us with vital information that has served as the backbone for our thesis. Finally, we would like to thank our classmates for offering us generous feedbacks as well as fruitful discussions.

Stockholm, 2020

Ilakia Amirthalingam Nadja Zahiraldinni

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1. Introduction

This project aims to understand the process of capturing customer needs and requirements in the product development process, in a business to business context. It is our understanding that there is a significant knowledge gap in the practice of attaining requirement when involving corporate customers of a more complex nature, such as rigid, large and international companies. In the following text, the scope of the study, purpose and problem-statement will be presented. 1.1 Scope

It is well known that the product development process is ever-changing, however, in recent times, some vital factors have been brought to light. In particular, the importance of the crucial role that customers and suppliers possess, which emphasises the capacity of accessing essential information as well as knowledge from the customer. Acquiring such information will serve as an important factor of success for the developer. (Brown & Eisenhardt, 1995)

Moreover, it is thought that involving customer will result in the increased diversity of information, this will, later on, prove to enhance the quality as well as the development process (Brown & Eisenhardt, 1995). The aim of involving customers ought to be to develop improved functional requirements or to improve the product itself to meet the customers wish. Additionally, this relationship can allow more proficient ways of producing products and services to customers. Likewise, it is important to allow the customers to give direct feedback for further improvements. (Yli‐Renko, 2001)

The growing importance of customer involvement in the product development process has led to businesses shifting toward considerably more customised product development (Smets, et al., 2013). Seemingly, an increased understanding of customer needs is vital to gain competitive advantage (Fung, et al., 1996). In order to understand and satisfy customer needs, further integration of customers in the product development process is suggested. However, understanding customer requirements and translating them into concrete product specifications can be a long and tedious process. Partly due to customers requirement articulation tending to be non-technical or fuzzy (Jiao, et al., 2006). Moreover, involvement with international customers may cause additional obstacles such as cultural, technological and language-related barriers (Brockhoff & , 2003).

Due to the potential barriers between customer and product developer, it is of great importance to capture the essence of customer requirements and further process the information across all departments in order to map and prioritize them. (Fung, et al., 1996)

The process of capturing and prioritising customer requirements is complex, yet ever-so crucial. Although it may not be possible to create a generic framework for requirement management, systematic procedures are suggested in order to efficiently capture customer requirements (Jiao, et al., 2006).

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Furthermore, one must acknowledge the significance of the relationship that occurs in business to business (B2B) transactions. The characteristic of the relationship will define the likelihood of continued prosperous transactions between the parties (Crosby, et al., 1990). The factors that will mould the quality of the relationships are trust, needs, integration and profit (Ka‐shing, et al., 2004).

Whilst the benefits of involving customers in the product development process is an immensely researched area, there is a knowledge gap regarding the activities, roles and interactions in requirement management when involving customers in B2B (La Rocca, et al., 2016). Hence, that is where the focus for this thesis lies.

1.2 Purpose

The purpose of the project is to study various aspects regarding the process of capturing customer needs and requirements in the product development process, as well as the interaction between internal and external stakeholders. This project aims to emphasis the requirements of more complex customers such as international, large companies and the obstacles that may be encountered.

1.3 Problem Statement

What is the process for translating customer product requirements into product specifications?

What roles and responsibilities is there in requirement management?

What tools and methods are there for effective requirement management when handling customer of complex nature?

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2. Exposition of theory

This chapter will shed light upon matters such as requirement management, methods to process requirements and obstacles one might face when managing customers.

2.1 Introduction to Requirement Management

Requirement Management is the process of understanding, prioritising and translating customer requirements into concrete product specifications. Developing customer-focused products has proved to be vital in order to satisfy customers and gain a competitive advantage in the marketplace. Performing effective Requirement Management is therefore of great importance in order to achieve customer satisfaction. However, this process is long and complex. In practice, Requirement Management is an iterative process amongst internal and external stakeholders. The process involves activities such as documentation, analysation, prioritisation and agreeing on requirements. Lastly, monitoring change and communicate them to relevant stakeholders (Jiao, et al., 2006).

In B2B interactions, the process of involving complex customers such as international large scale bureaucratic organisations may prove to be a challenge. From a marketing perspective, satisfying customer needs and requirements extend to not only develop desired product or service but to offer a solution, creating a superior customer value. Distinguished for B2B, this solution consists of several elements such as logistics, assistance, service that needs to be developed and integrated with several interdependencies taken into account. This is a rather complex process where the customer often times only have a partial understanding of possible solutions and continuously develop needs and requirements as they interact with others. Therefore, this process requires close and continuous interaction with the customer as well as efficient methods in order to truly satisfy the customer. (La Rocca, et al., 2016)

The practice of requirement management can be described as a three-step process. “Requirement elicitation”, “Requirement analysis” and “Requirement specification”. During the first step of the requirement management process, requirement elicitation, the customer’s requirements are gathered and situational analyses are performed in order to assess the feasibility of the project. Following, the requirements expressed by the customer are interpreted and translated into clear requirements aligned with the customer’s preferences, by classifying, prioritising and negotiating them. The processed requirements can then be communicated to all departments involved, such as marketing and IT. Lastly, the derived requirements are further processed into concrete product specifications, this process requires the project team to alter the requirements and negotiate in order to derive into functional product specifications. (Jiao, et al., 2006)

Another aspect to consider when involving customers is the expenses that may come along with it. According to (Brockhoff, 2003), it is with some financial sacrifice the customers are involved.

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* The ability to translate fuzzy customer needs into concrete product specifications ₇

The more information that is extracted from the customers the more information needs to be transferred within the company. However, he also mentioned that the new technology allows to store and share information in a significantly more cost-efficient manner.

2.2 Organizational Approach for Identifying Customer Needs in B2B

Due to the mentioned complexity of capturing customer needs adequately in the product development process, it is ever-so crucial to adapt a suitable organisational approach when managing customer interaction. Distinguished for B2B, it is of great importance to nurture customer relationships, therefore one team is often responsible for all customer interaction, usually the sales function. (Hatton, et al., 2017). This is due to the sole fact that the sales managers tend to acknowledge the customer-relating capabilities for bringing customer issues and considerations into operation at various phases in the product innovation process (Cron, et al., 2014).

However, when the product is technically complex, it might be beneficial to involve the Research and Development team (R&D) in customer interaction, to understand the customer’s technical needs better. Depending on the customer’s approach and ways of expressing needs and requirements, combined with the complexity of the product, four different organizational approaches are suggested. (Hatton, et al., 2017):

1. Expressed customer and technology needs: Indirect single-channel approach. 2. Expressed customer needs, latent technology needs: Direct R&D approach.

3. Latent customer needs, expressed technology needs: Indirect multichannel approach. 4. Latent customer needs, latent technology needs: Hybrid approach.

The indirect single-channel approach is suggested when the customer provides clear explicit (“expressed”) needs in terms of technology needs as well as general customer needs. This approach implies that R&D would not engage in customer interaction. The commercial side, e.g. sales representative with appropriate solution design skills* may own the customer relationships.

A direct R&D approach is suggested when the customer provides expressed needs but latent technology needs. This approach is suitable to recognize the technology needs accurately. It is highly fitting if the customer is skilled in technology, the customer is then suggested to be incorporated into the product design process. Needless to say, this may result in the product development process lacking the commercial aspect. Also, it can be discussed whether the customer relationship is truly nurtured when handed over to the R&D function.

The indirect multichannel approach is suggested for latent customer needs but expressed technology needs. The product development process is then led by the commercial function, who provide R&D with the necessary input to arrive at a conceptual design to be approved by e.g. a service department. This approach proves a good method for capturing different types of needs. On the other hand, this may lead to R&D having a vast amount of requirements to take

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into account when developing the product therefore effective communication and coordination are required as well.

Lastly, a hybrid approach is suggested for latent customer-and technology needs. The latter approach requires a cross-functional team, allowing both sales and R&D to have direct contact with the customer regarding commercial as well as technical concerns. However, it is highly complex due to the multiple communication streams and therefore requires great coordination and clear responsibilities within the team.

By using an appropriate organizational approach, fitted to the customer’s ability to express their needs studies have shown an increased success rate by 100% amongst product development projects. (Hatton, et al., 2017)

2.3 Translating Customer Needs into Product Characteristics

In order for a product to succeed the means of understanding and processing customer needs is crucial. Customer needs are ever-changing, in order to constantly meet the specific needs and requirements while simultaneously reduce product cycle time, increase quality and decrease costs to get an upper hand at the market, different techniques have developed accordingly. (Temponi, et al., 1999)

One of the central methods, solely developed for translating customer needs into product characteristics is Quality Function Deployment (QFD). QFD emerged in 1972 by Mitsubishi and is a well-known framework with the purpose to assess customers “wants” and relate them with the technical “how” (Prasad, 1998). The core of QFD is House of Quality (HoQ), it is one of the matrices used for QFD, a well-known practice to structure the customer needs and the functional characteristics as well as analyse and evaluate the importance of each characteristic and the interrelations between them (Prasad, 1998). The concept and practice of QFD have been adopted by companies worldwide, within several industries such as manufacturing, transporting, electronics and service. The aim of QFD is creating a customer-focused product, decreasing lead-time and increasing product quality. (Sivasamy, 2016)

QFD is performed in cross-functional teams involving departments such as marketing, engineering and R&D by deploying customer input throughout the product development process. Research states that cooperation of such contributes to greater success amongst the developed products and more profitable products. The method commences from the voice of the customer and make up the basis of engineering, manufacturing and R&D decision. Additionally, one advantage of the method is argued to be the visual data representation that both marketing and engineers find effortless to use, see Figure 1. (Griffin & Hauser, 1993). The practice of HoQ is initiated by extracting the customer needs by e.g. surveys or one-on-one interviews, these perceived needs are placed at the left, in the first square of the House of Quality in Figure 1. When conducting interviews, it is important to frame the questions so that there is no room for interpreting the customer wants. Following, the importance of the customer

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9 needs are then assessed, the scale of the importance can be chosen suitable for the situation. (Temponi, et al., 1999)

The product developers, e.g. engineers (depending on the product to be developed) will then derive measurable function characteristics, the “hows”, related to the customer needs. Following the interrelations between the functional characteristics are assessed. As in, the trade-off for each function. The interrelations can be on a scale of positive, negative or have no impact, e.g. when developing a car, a function might be large, aligned with the customer’s needs, however, another requirement might be high acceleration. A large car will affect the acceleration negatively. The assessment of the trade-offs is presented in the roof of HoQ and gives a visual representation of what parameters is affected negatively/positively if one changes. (Temponi, et al., 1999)

Furthermore, the relationship matrix can be evaluated. The matrix represents the level of the association the customer needs are with the functional characteristics in terms of strong, medium, weak or not associated, with a corresponding numerical value e.g. 9,3,1,0. The sum of products of the percentage weight of the customer need and the numerical value in the relationship matrix results in the function scores. The function score presents what function characteristics are most important and what one should focus on. (Temponi, et al., 1999)

Competitive analysis can also be performed within the HoQ method. The last matrix to the right in Figure 1 presents a visual representation of the analysis, where similar competitive products are compared against the same customer needs and function characteristics. (Temponi, et al., 1999)

More parameters can be evaluated in the HoQ, such as degree of technical difficulty. The necessity of addition as such depends on the characteristics of the product to be developed. Lastly, the finalized HoQ is suggested to be signed and used as an official document for the product to be developed

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2.4 Methods for Processing Customer Requirements

Methods for mapping and processing customer needs and requirements tend to intertwine in business-to-business interactions due to the established customer relationships where the needs and requirements are expressed by the end-user. Since this study aims to showcase the requirement management process of such interactions, the methods used for mapping and processing customer needs and requirements do not differ much. However, there are some methods developed to chart requirements only, with the purpose of structuring the execution of product development projects. Central methods of such will be discussed in this section. Project breakdown structure (PBS) is a method, beneficial to use in product development of complex products, such as intricate technical products. By performing a PBS, the requirements are clustered and categorized in a tree-like structure. This contributes to a holistic view of the requirement specification and as well as the expectations of the project. (Tonnquist, 2018) Prior to the PBS, the requirements ought to be evaluated and categorised in order to ensure optimal priority of the requirements during the execution. Renowned models such as the MoSCoW model can be used for evaluation. MoSCoW is short for: Must, Should, Could and Won’t. Further explained, “must” represents requirements that must be met in order for the result to be usable, “Should” represents requirements that need to be met in order to fulfil the project goal. “Could” represents requirements that do not necessarily need to be met but will add value to the product. Lastly, “Won’t” represents requirements that will not be met during the present project, but might be postponed to upcoming projects. (Tonnquist, 2018)

However, previously described HoQ matrix involves elements showcasing the same purpose as the MoSCoW model and the PBS does, it is simply different techniques of visualizing and categorizing product requirements in order to satisfy the customer and structure the project. HoQ is rather extensive and requires more effort to execute, nevertheless, it gives a deeper analysis of the relation between general customer needs and technical requirements and can, therefore, be argued to be more powerful.

2.5 Obstacles in Requirement Management

Collecting data from the customers may be of great importance, however, this can also prove to be overwhelming (Nambisan, 2002). Some factors that contribute to this are the overwhelming amount of raw data, the difficulty of integrating the requirements into the product and acquiring direct access to the customers. Moreover, it is not uncommon for the customers to adjust the requirement during the project.

Nambisan sheds light upon the impact that the customer’s knowledge may have in the project development. He perceives customers as a promising resource that has for a long time played a passive role but in recent times have emerged into the product development processes. Though, he also recognises the obstacles that may emerge when involving customers, these obstacles are divided into three main categories.

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11 The first challenge relates to the selection of customer innovators and the establishment of ties with them to ensure that the customers are included. This must be done in an efficient manner, according to Nambisan it is believed to be difficult to find a cost-effective manner to interact with the customers.

The second challenge organisations face is to offer adequate incentive to nurture the relationship with the customers. It is of great importance that the customers are constantly willing to contribute to new ideas.

The third challenge Nambisan mentions is the process of capturing customer’s knowledge. According to Nambisan, it is believed that the customer's requirements are better understood when the customers are in their natural setting. Likewise, it is easier to capture the needs of the customer by informal data rather than formal data. However, due to the availability of new technology, most companies do not consider the importance of natural knowledge capture. Nevertheless, the innovative methods of communication provide a cost-effective way of communicating with customers.

Moreover, Nambisan mentioned that as customers get further involved in the project there is a risk of uncertainty within the project. There may be a need for a new mechanism that control and monitor the development of quality as well as efficiency. The customers may not possess an adequate level of technical awareness. This will force the company to implement customer training which may not always be an appropriate investment. In addition to this, the customers may abdicate their role as a co-developer and this will severely distress the company.

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3. Method

This project aims to gain an improved knowledge of how companies interact with customers, hence qualitative research has proven to be an appropriate approach according to various sources of literature. In addition to this, a semi-structured approach will be used in order to increase the data that will be acquired. This will be accomplished by in-depth interviews with respondents that possess relevant positions within the company.

3.1 Comparative Literature Study

In order to capture the finest essence of customer involvement, the project begun by a thorough comparative literature study regarding this very matter. Comparative literature has two definitions, the first being the knowledge of more than one national language and/or the application of various discipline in the study. In this case, the research was done in Swedish as well as English, the latter used as the dominant language. The purpose of this was to obtain a broader spectrum of information to process. The second definition of comparative literature is the ideology of inclusion of other marginalized literature (Zepetnek, 1998). The study focused on retrieving data from various sources to later compile into sensible information that could be of use. Various platforms were utilized to find relevant data, some of these included Google Scholar, Web of Science and KTH’s very own library.

3.2 Data Collection and Analysis

As previously mentioned the project opts to apply qualitative research which per definition means that data is collected by observing and/or asking individuals questions. Qualitative research is known to retrieve data that cannot be expressed in numbers (Tesch, 2013). In this project, several interviews were conducted within the organisation and this was carried out in a semi-structured manner. A semi-structured interview is looked upon as a verbal interchange where the interrogator has prepared a ray of questions. The semi-structured interview ought to unfold in a conversational manner, allowing the respondent to enlighten issues they might feel are of value (Clifford, et al., 2016).

The first two interviews were carried out in Xolaris headquarters and the remaining one was conducted through computer-mediated communication. The interviews were primarily lead by one scholar whilst the other focused on writing notes and seldom interrupted the interviews except when inquiring about details that may possess a certain value to the study.

Direct contact with the respondent, preferably face-to-face is usually perceived as a recommended method (Opdenakker, 2006) However, this was not a viable method for all of the interviews that were conducted in this project due to the prevailing pandemic during the execution of this thesis. Therefore, the methods had to be altered to simply two interviews with the respondents physically present.

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13 The interviews were transcribed and analysed separately to avoid influencing each other. Moreover, the interviews were conducted in Swedish, however, the transcription was done in English as well as the coding. The transcription ought to serve as a foundation to find keywords and relevant information that could be of use. The keywords were discovered together and written on post-it notes to then be placed in various sections, representing different topics. Subsequently, the interviews were sub-classified into the following eight categories:

● The Integration of Customer in the Product Development Process ● Roles and Responsibilities

● Management of Customer Requirement ● Processing Customer Requirements

● Obstacles That May Occur in Foreign Customer Management

● Obstacles That May Occur Internally When Managing Requirements ● Product Testing

● Implementation of Methods to Process Customer Requirements

3.3 Chosen Company and Respondents

The qualitative study was performed at one company only, allowing a study of several stakeholders involved in the requirement management process. Moreover, to truly grasp all possible obstacles in the requirement management process, a company working with foreign customers, developing complex technical products were of great interest. The Luleå based company, Xolaris (previously part of Mobilaris AB) fit the purpose and was chosen for the study. At Xolaris, sales who is mainly responsible for the customer interactions were particularly of great interest since this person is initially responsible for capturing customer needs and requirements. Furthermore, other roles of interest, involved in the requirement management process was project managers and solution architects (see Table 1).

3.4 About the Company and the Respondents

Xolaris is a global leading provider of software solutions for positioning based services. A service provided by the company is a solution that enables to track phones as well as identify patterns in movement and usage of the phones, by analysing data traffic. Not the content of the traffic but where and how mobile phones are used. The service is mainly provided to governments and counterintelligence worldwide. The service is customized and adjusted to the customer needs, therefore the product development process varies depending on the scale of the customization.

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Table 1: A brief summary of the interviews Name of

the company

Respondent Execution Duration (min)

Method of storage

Date and time

Xolaris R1: Co-founder of the company, responsible for sales, product management and requirement capturing. On-site meeting 31 min Audio recording and notes 2020-03-17 14:25

Xolaris R2: Project manager- leader of the project, manages time and budget

On-site meeting 31 min Audio recording and notes 2020-03-27 13:30

Xolaris R3: Solution architect, designing, describing and managing the overall technical vision for a particular solution Video-call (Teams) 43 min Audio recording and notes 2020-04-02 15:00 3.4 Measure of Quality

The theory for the project was derived from well-known studies conducted by numerous individuals who possess great knowledge in their specific fields. The research for this project was done through KTH’s library in order to make sure that the content was of a reliable nature. Furthermore, the project aimed to collect data that showcased the complexity of collecting customer requirements. To achieve that, the interviews were conducted with respondents who possessed distinctive roles within the company. Similar questions were asked in order to investigate how certain problems could be perceived amongst the co-workers. It is also worth mentioning that the interviews were conducted in Swedish. Although the interviews were transcribed into English with utter delicacy, it may contain a certain inaccuracy. To further ensure a correct translation, the transcription was made separately by two scholars in order to prevent further mishaps.

Additionally, this project has the potential to further develop by interviewing other companies to obtain adequate comparisons. This project was directed towards one company and consequently, the conclusions were drawn from it. The company is considered small, with 24 employees. In addition to this, the chosen company is Swedish but operating worldwide, consequently, the study may not be relevant in other countries due to cultural differences and varying morals. Hence this may prove to be insufficient in certain contexts, nevertheless, it will provide a solid base for research within the customer requirement process.

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4. Empirical findings

This chapter will showcase the data that was collected during the interviews. The respondents are mentioned as R1, R2 and R3, according to Table 1. In addition to this, the result is

presented in eight different categories.

4.1 The Integration of Customer in the Product Development Process

According to R1 the initial interaction between the customers and Xolaris does not happen via computer-mediated communication or telephone due to the immense sensitivity of the security service they provide. However, as the project develops meetings can be transformed into encrypted video-or phone meetings in order to efficiently move further with the project. R1 continues by stating that the project always starts with the customer presenting their problems to the appointed sales representative who will translate the requests into a product specification. R2, the project manager is rarely part of the initial interaction, the project manager is typically appointed after an agreement has been formed. It is vital to realize that the customers need to approve the specification before the project can start. These specifications will, later on, be refined by solution architects to break down the issue at hand. Generally, the customers have a spokesperson or a group of individuals who are well-informed regarding the issue in order to adequately communicate the technical requirements.

Regarding the level of involvement of the customer, R3 states that it differs a lot depending on the formality of the procurement. When dealing with non-established customers a formal procurement process is initialized by a request for proposal (RFP) or request for quotation (RFQ). RFP states all requirements to be fulfilled by the vendor, whilst RFQ includes quotation. In these scenarios, there is no customer interaction until the RFP or RFQ is answered by R3 together with R1, where R3 is responsible for presenting solutions according to the customer requests. Further on, R3 maintains frequent dialogues with the customer, where suggested solutions are discussed and adapted to fit the customer needs. In other cases when the process is more informal and the customer is not able to express their needs in a clear and concise way, R1 and R3 derive the requirements together with the customer. At times, Xolaris work with an intermediary, in such cases there is no direct customer interactions throughout the product development process.

4.2 Roles and Responsibilities

R1 explains that for most common cases, during the pre-study phase the sales representative is mainly responsible for all customer interaction and will initially register the customer needs and requirements. A solution architects from Xolaris and the client’s architects will derive all technical product requirements. Following, a project manager will be assigned and a project team consisting of solution architects and software developers is assembled. The project team will test the technical performance requirements on a high level by simulating the product in order to assess to what extent the requirements can be met, whether Xolaris are compliant or

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not. The sales representative will then negotiate with the customer regarding the compliance of the requirements in order to set a protocol of delivery. Throughout the project execution, sub-deliveries are presented, parts of the product will be delivered, assessed and confirmed. Apart from described roles and responsibilities which make up the core processes for the product development other supporting processes, such as legal and finance is of great importance, allowing the execution of the core processes.

4.3 Management of Customer Requirement

R1 explains that the expressed requirements from the customers will be compiled in a spreadsheet called Technical Solution Description. These files will showcase as previously mentioned, factors such as how compliant the company is with the various requirements, this naturally depends on the company’s capacity and competence essential to meet specific requirements. If the company fails to meet certain expectations there will generally be an alternative solution, which in some cases are a superior solution compared to the initial one. Moreover, R1 continues by stating that these documents will not only display the compliance of the requirements but also present every identified requirement and interpretation of how the company assume the customer will use the systems as well as what results are expected. The compilation of these documents is considered an immense iterative process due to the complexity of the product as well as the fact that the customers frequently have adjustments that ought to be met. These are discussed and analysed in several meetings in order to satisfy both parties.

“The immense complexity of the developed service, involving factors such as user experience and creating databases requires a vast amount of customer meetings with several roles

involved” – R1 (translated citation)

Regarding the fact that customers may continuously want to add requirements, R2 states that in order to manage this, it is important to be aware from the start that additional changes may occur. In order to handle the changes in an efficient manner, it may not be wise to rely on formal processes, requiring a document to be filled out and processed every time but to handle them in a rather informal manner. R2 states that it is a challenging process due to the importance of setting boundaries while at the same time aim to please the customer, for in the end, they are the ones financing the product.

In practice, R3 explains that additional requirements often occur via email or during meetings with the customers. If the vendor is to accept the requirements for the current project, the additional requirements are answered by solution architects with a presentation of a potential solution, together with a Technical Solution Description.

R2, states that due to the modest size of the company, communication regarding customer requirement is managed swiftly. R2 explains that the organisation has a smooth flow of information, verbally as well as though shared documents. On the other hand, R2 also recognizes that there can be flaws even with the small number of co-workers. R2 explains that

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17 not all of the collected information from the customer is recognized by the organisation and this can prove to be a challenge.

4.4 Processing Customer Requirements

R2 explains that prior to the execution of the product, the requirements are prioritised according to the customer’s wish combined with what is strategically beneficial for Xolaris. The prioritising process is performed during meetings were core stakeholders such as project manager, sales representatives, solution architects and system architects participates. During the meetings, mentioned stakeholders discuss and agree on what should be prioritised. The activities are then registered in their backlog, outlining the order the activities should be carried out in.

For project management, R2 explains that they work agile with established processes according to the Scrum method, where the activities in the backlog are based on the prioritised requirements.

R3 explains that the products they offer normally have standard functions, however, some features and functions may be added if the customers wish to do so. For instance, Xolaris offers various language support in their products, on the contrary, they do not offer the option to choose different symbols that may be used in diverse countries.

4.5 Obstacles That May Occur in Foreign Customer Management

One of the main concerns R1 expresses regarding obstacles that may occur when working with foreign customers is the language barrier. It is not uncommon for customers to hire an interpreter to translate if they cannot speak in English. However, according to Xolaris, this has proven to be ineffective. The interpreter may lack technical knowledge which in turn will result in poorly translated communication. Instead, they prefer to bring staff, possessing adequate language skills. Though, in some situations, even this can be insufficient. The company also pointed out that a few countries may find it hard to accept that not all requests are viable which in some cases may result in conflicts.

“Interpreting extremely high-tech request is incredibly challenging, even I would not be able to interpret them correctly in my mother tongue” – R1 (translated citation)

Moreover, R1 reveals that some customers may argue that the end product was not what was requested, even if there is evidence suggesting otherwise in the form of an agreement. Due to the immense level of hierarchy in the workforce that some countries possess, the middlemen often find themselves in a position where they are reluctant to admit to their management if they have collected inadequate requirements. Therefore, the company who provided the product, oftentimes have to take the blame. Generally, the problems do have solutions but this may result in distress and complications within the company. R1 explains that in order to avoid any misunderstanding, it is in the company's best interest to review the agreement with

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customer’s several times throughout the project. On the contrary, this may not always be beneficial since some customers tend to develop new ideas whilst re-examining the fixed agreement, ideas, which cannot always be incorporated into the project.

Furthermore, R1 expresses obstacles related to communication within the company. Many engineers tend to rely on written communication rather than direct communication. This, combined with a language barrier toward the customer may lead to misinterpretations of the customer’s expectations. The developers will adjust the product according to their interpretation of what was communicated by the customer which will, at times turn out to be not in line with what the customer requested in the starting phase. R1 expresses that using direct communication would help to avoid misunderstandings as well as misinterpretations. According to R1 Xolaris has taken actions to encourage direct communication by investing in technical solutions such as video-cameras in conference rooms and wireless speakers to improve the sound quality during phone calls. Apart from encouraging direct communication, these actions have greatly improved the current communication with customers.

In contrary R3 explains that challenges may occur in the communication with the customer during conference calls due to varying technical issues such as weak signal. This combined with other interpretation difficulties caused by language accents results in R3 relying on written communication.

Another obstacle that R3 mentions is that the customer may demand a tighter time frame than what is plausible. In these cases, R3 explains that it is difficult to prioritise the various tasks. Xolaris has also tried to implement an agile approach with the customers by involving the customers throughout the project and allowing the customers to contribute with continuous feedback. When R3 was asked if the involvement of customers can be seen as a disadvantage the respondent mentioned that it purely depends on the customers. There are customers that are more inclined to be pragmatic whereas others prove to be otherwise. A few customers tend to be indifferent to the impediments that the company may face and less understanding when there are not enough resources to satisfy their requirements.

4.6 Obstacles That May Occur Internally When Managing Requirements

R2 shares some obstacles such as disagreements regarding prioritising customer requirements during these meetings. E.g. solution architects make sure the developed product is aligned with the product roadmap whilst sales may prioritise to nurture customer relationships. Consequently, sales representatives may be more inclined to execute according to the customer’s needs, accepting requirements that may not be aligned with the overall business strategy. This may cause conflicts regarding which customer requirements that should be acted on.

Furthermore, R3 highlights some challenges when external sales representatives are involved. Due to the fact that they may not have an extensive technical background. This combined with customers not expressing their needs in a clear and concise way has at times led to

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19 misinterpretations of the requirements. For example, a minor requirement might become extensive and expensive to solve. If there had been a direct dialogue between the customer and a solution architect from the start the requirement could have been processed properly, in terms of technological features.

4.7 Product Testing

Moreover, R1 and R2 state that Xolaris works according to an agile work methodology. In order to work agile, it is of great importance to regularly test the product. R2 mentioned that the deliverance support team at Xolaris are dedicated to continuously test the product as well as offering partial deliveries to the customer to ensure that the customer is satisfied with the product development. In addition to this, R1 states that the company also provides a protocol of delivery and acceptance before the project starts. This will showcase the capacity of the product and what tests will be executed to ensure that it will perform adequately. Therefore, the protocol has to be approved by the customer before the project begins.

According to R3, when a product does not excel in all the tests it may have to be re-examined or the customer will opt to pay less for the provided product. In some cases, the customer may wish to change or add certain functions. This will often result in increased payment, on the contrary, the customer may argue that certain function ought to be indirectly included, without formal documentation. R3 states that this may be due to the fact that not all the requirements are explicitly documented. Nonetheless, R3 states that certain thresholds cannot be crossed, the respondent explains that some tweaks are not in line with the original roadmap, in these cases Xolaris has to take drastic measures which in some cases will result in termination of the project.

4.8 Implementation of Methods to Process Customer Requirements

R3 explains that Xolaris lacks the usage of conventional methods and tools to prevent misunderstandings while recognising it may be worth implementing them in the future. R3 mentioned that they use storage forum that is optimal for short-term usage and this may present as a disadvantage in the future. R3 also mentioned that information from informal meetings can be lost due to lack of proper documentation.

R2, similar to R3 states that for mainly prioritising the requirements, methods have not been established. However, R2 argues that the reason for this might be due to the size of the company. Using established methods and documenting might be counterproductive and slow down the processes.

Considering the current size of the company, standardized processes may not fulfill its purpose to optimize the way of working, it may even be counterproductive. However, the

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5. Discussion and Analysis

This chapter will analyse as well as discuss the data with regards to the acquired comparative literature study. The aim is not to only find similarities but also differences with the established study regarding the customer relationship.

5.1 The Degree of Customer Involvement

Aligned with all three respondents, the involvement of the customers seems to mainly happen during the first phase of the project. Although this may prove to be the most efficient way, some customers may be of a more complex nature and seek a constant update. Customer needs are ever-changing therefore, it is of great importance to have a clear structure as to how one ought to adapt to the circumstances. As previously mentioned, not all customer expresses their needs in the same manner. Depending on the complexity of the product the process ought to be altered (Temponi, et al., 1999). Both R1 and R3 did not mention different techniques they utilise when integrating the customers of different origin. Hence, according to the literature, this may be problematic.

Moreover, R3 mentioned that Xolaris are not always in direct contact with the customers. In some cases, they work through vendors. From our understanding, this way of working was not preferred by R3 who rather favours to be in direct contact with customers. This can be seen as beneficial due to the fact the customer relationship will flourish. It is of great value to nourish the relationship with the customer (Hatton, et al., 2017). Another suggested method to develop the customer relationship is to appoint one specific team to interact with the customers. R1 describes that the initial interaction usually starts with the project leader as well as the sales department. Implementing a strong relationship will not only result in a loyal customer but also a reoccurring one. Furthermore, the customers may build a certain trust towards the company if they are involved in the product development process, consequently, they may be more inclined to compromise on certain matters.

Based on the empirical findings, we reckon that the requirement management process at Xolaris resembles the recommended three-step process. The processes are; “Requirement elicitation”, “Requirement analysis” and “Requirement specification” (Jiao, et al., 2006). These are executed in steps rather than simultaneously which will allow the customers to interact with the company in a slower phase. This method of collecting customer requirements will also preserve the company's resources due to the fact that not all the employees are involved in the project from the start but rather included when the project requires further development. 5.2 The Issues That May Emerge When Involving Customers

R1 mentioned that the language barrier can prove to be a difficult hurdle to overcome and do not believe an interpreter is sufficient enough to solve this problem, due to the lack of technical knowledge. R1 mentioned that the interpreter is normally provided by the customers. This leaves room to speculate whether an in-house interpreter would be of a better suit. If Xolaris

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21 managed to hire a professional interpreter during projects that require translation they may gain better control of the information flow. One of the main concerns R1 expressed was that the interpreter lacked extensive technical knowledge of the product, however, if the interpreter is hired by Xolaris this may not prevail as a large issue.

Another obstacle all three respondents mentioned is that constant update with the customer may prove to be unfavourable for the organisation itself. They believe that the constant update may pave the way for new ideas from the customers. On the contrary, Nambisan believes it is important to keep an ongoing dialogue with the customer in order to develop new ideas (Nambisan, 2002). Nevertheless, the three respondents seemed to believe that new ideas that are delayed may not prove to be of value. It can in some circumstances be difficult to implement new ideas into the project, hence they prefer if new ideas were introduced in the starting phase of the project. Yet, R3 makes it a point to review the agreement with the customers several times during the project to avoid potential misunderstandings. This leaves room to speculate if it would be in the company's best interest to avoid involving the customers once the project is fixed with an approved agreement. By implementing strict rules regarding changes within the project, Xolaris may avoid unnecessary surprises from the clients. On the other hand, this may negatively impact the relationship with the customers. To maintain a stable relationship with the customers is greatly important, hence, strict rules may deteriorate that bond (Hatton, et al., 2017).

Furthermore, (Nambisan, 2002) also mentioned that the process of capturing customer's needs are better understood when the customers are in their natural setting. From our understanding, Xolaris also believe that this is the preferable method, considering they practise the same manner. After the initial phase of the project is completed, R1 and R2 describes that they will meet the customer in person to further develop the project. This may also serve as an excellent foundation for a great customer relationship. As previously mentioned, it is of great importance to nurture the relationship with the customers, hence a solid foundation is favoured (Hatton, et al., 2017).

Nevertheless, even though we consider Xolaris are taking great measures to avoid potential misunderstanding, one obstacle prevails. Based on experiences R1 argues that many engineers tend to prefer written communication, instead of direct communication. This combined with the language barrier towards the customers may prove to be challenging when developing products. Therefore, R1 explains they have taken initiative by installing video-cameras and wireless speakers to mimic direct contact with the customer. As stated before, direct contact is preferable, however, one must consider the expenses and most importantly the logistics. It is not wise and inconsiderable of the environment to fly to every meeting that could have easily been held through computer-mediated communication. Moreover, by establishing a functioning alternative communication, organisations can prevail and work to their best of abilities even when the world is suffering from a pandemic.

Nambisan also stresses on the fact that informal data may be superior to formal data (Nambisan, 2002). R3 specified that some data may be captured in an informal manner. Unlike Nambisan,

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R2 considers that in some cases this way of collecting information is not superior but rather inconvenient. Furthermore, according to Nambisan, there is a risk of uncertainty when involving customers. There may be insufficient methods to monitor the development when a second party is involved. In addition to this, customers may lack technical knowledge (Nambisan, 2002). Both R1 and R2 mentioned that the lack of technical knowledge amongst some customers is a problem and this could lead to increased obstacles during the project. Insufficient knowledge will not only deteriorate the project but also lead to several misunderstandings. These misunderstandings pave a way to arguments and dissatisfaction amongst the customers. As already stated, this contradicts the preferred relationship one ought to have with the clients.

5.3 The Necessity of Established Methods

As previously stated there tend to occur a few misunderstandings within Xolaris. It is our understanding that they have several unconventional methods for requirement management. For instance, R1 explained that they use a pre-built excel file, Technical Solution Description to manage the requirements. However, these only seem to be relevant in the starting phase, we believe they lack established methods to manage requirements changes and a proper manner to store them. On the other hand, Xolaris is modest in the sense of the number of employees, hence, aligned with R2 they may not be in need of extravagant methods to document. Nevertheless, R3 did mention that customers may be insensitive to Xolaris time schedule and demands the product to be finished quicker. In addition to this, R3 explained it is difficult to prioritise in a mutual manner. Therefore, one can speculate if an established method to document and plan the project would be of a better suit for the company. An established method will not only save time but also decrease the expenses in the distant future. This will result in a more accurate schedule as well as a coordinated method to prioritise the various tasks. For instance, QFD is a method that allows one to break down the product and analyse the various tasks (Prasad, 1998). This will serve as a great foundation for discussion in order to come to a fixed agreement with relevant information regarding how to prioritise. An established method may also be of value when customers are of a complex nature. By documenting all received data the company will decrease potential misunderstanding. The documentation may serve as a form of agreement therefore the company can refer back to those if the situation calls for it.

5.4 The Importance of Fulfilling the Customer's Needs

Our view is that the importance of fulfilling the customer needs at Xolaris are crucial in different aspects. R3 mentioned that the organization is ranked based on the level of compliance they have towards the customer requirements, the more requirements they conform to, the higher ranked they are for future procurements. We believe that this contributes to an incentive for Xolaris to fulfil the full set of customer requirements, apart from keeping customers satisfied. Regarding the fact that additional customer requirements appear throughout the product development process, R2 emphasized that it is a tough balance to nurture the customer relationship and completely satisfy the customer whilst maintaining the product roadmap and upholding boundaries. Distinguished for B2B, nourishing customer relationships is of great

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importance (Hatton, et al., 2017). Moreover, fulfilling customer needs in B2B is an iterative process compared to B2C, since corporate customers require not only a product or service but a set of features, e.g. assistance, services, logistics etc. that needs to be developed and integrated. This is a rather complex process where the customer needs in most cases cannot be anticipated. New solutions are rarely developed independently by the supplier and constant adjustments of the solutions are required in order to adapt to market change. (La Rocca, et al., 2016). By working in a flexible manner towards additional customer changes, avoiding requesting formal documents from customers whenever additional changes appear, we consider that Xolaris succeeds in satisfying the customer without delaying project deliveries, both factors crucial for a successful product. R2 mentioned that it is important to be prepared that additional changes will occur, which completely is aligned with a typical B2B product development process (La Rocca, et al., 2016).

5.5 The Roles and Responsibilities That Are Vital in Requirement Management

Essentially the roles involved in the requirement management process at Xolaris is, based on the empirical findings: sales, solution architects and project managers. The sales representative is mainly responsible for maintaining customer relationships as well as managing the initial customer needs and requirements. The solution architect is responsible for deriving and presenting solutions to the customer, throughout the product development process as well as the technical feasibility of the requirements. Summarized, at Xolaris both Sales and R&D interacts with the customer when capturing customer needs, giving them solid prerequisites for creating a successful product and satisfy customer needs (Hatton, et al., 2017). R1 and R2 outlined that the level of expressing needs and requirements in a concise manner varies a lot amongst Xolaris customers, as well as the design solution skills when working with external sales representatives. Due to this, it might be beneficial to adapt the customer interaction approach depending on the characteristics of the customer and responsible salesperson for each project. By regulating the level of involvement of R&D and sales based on the customer’s ability to communicate their needs and sales ability to interpret them, the project success rate is suggested to increase (Hatton, et al., 2017).

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6. Conclusions

The purpose of the project was to study various aspects regarding the process of capturing customer needs and requirements in the product development process, as well as the interaction between internal and external stakeholders. This project aimed to emphasis the requirements of more complex customers such as international, large companies and the obstacles that may be encountered.

The study has shown that needs and requirements of customers are ever-changing and tend to vary as they interact with others, therefore an iterative process and joint collaboration to derive at solutions are encouraged and suggested. Nonetheless, this has proven to cause challenges in practice. When working with international, bureaucratic customers combined with developing a high technology product, integrating the customer too much may cause project to overrun in terms of time and budget. Due to the characteristics of the product, language barriers and customers lacking an extensive technical knowledge of the product may lead to misinterpretations and incongruent requests that are not aligned with the product roadmap. From an organisational perspective, instead of constantly encouraging a joint collaboration it is important to find a balance where the customer feels involved while maintaining boundaries and the product roadmap.

Regarding the interaction between internal and external stakeholders the study has shown that one team/person should own the customer relationship, preferably sales due to their capabilities of considering customer’s issues and incorporating them in the operational work. However, when gathering customer needs and requirements for a high technology product it is beneficial to include R&D or equivalent. This arrangement can be problematic whenever third party sales representatives are involved. Situations as such tend to result in misinterpretations of the requirements, causing time spent on non-value-adding activities. Therefore, it is important to assure that the person responsible for initial customer interaction possess sufficient design solution skills as well as involving R&D early in the process. The level of involvement should be adapted to each individual customer, depending on their ability to express their general and technical needs. When the requirements are gathered, working in cross-functional teams is suggested in order to take different perspectives into account when prioritising them.

Methods for interpreting, structuring and prioritising customer needs and requirements have developed, with the purpose of creating customer-focused products, decreasing lead-time and increase product quality. This aspect of requirement management tends to differ a lot depending on the size of the company. The usage of established methods such as QFD may not drastically improve the processes at an SME company. Establishing methods and increasing the documentation of requirements might be counterproductive and slow down the processes considering all stakeholders involved works closely together, oral communication combined with ad hoc solutions appears to be an efficient way of working. However, as the size of the company increases, so does the need for established methods. A standardised process will not

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25 only save time in the long run but also decrease financial expenses and act as an agreement to be referred to when needed.

6.1 Recommendations

A suggested area for further research is, based on the size of the company, when are standardised processes more efficient than informal processes and flexible way of working. As well as, is it possible that it may be financially disadvantageous to involve the customer in an extensive manner considering that the study proves otherwise. From an organizational perspective, it is not always encouraged to fully integrate the customer in the product development process.

6.2 Contribution to current knowledge

This study contributes to the current state of knowledge in various aspects. The study showcases the importance of pursuing efficient requirement management in an ever-changing market where customer-focused products are crucial in order to create successful products. The research gap regarding the crucial activities and roles in requirement management is studied and assessed at an SME company, operating in an international B2B environment. Furthermore, the benefits of establishing standardised methods for requirement management is challenged and discussed from different perspectives.