1. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 1 SMU CSE 8314 / NTU SE 762-N Software Measurement and Quality Engineering Module 09 Value-Added Analysis

2. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 2 Customer Value

3. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 3 What Constitutes Customer Value? Customer value is the real target of any competitive business The exact definition depends on the customer and the market – Sizzle vs steak – Features vs ease of use – Cost of operation vs comfort and safety

4. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 4 Defining Value Correctly defining value is the first step of customer satisfaction Cut out the tasks or features that do not directly or indirectly contribute to value – They add cost but do not provide appropriate benefit

5. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 5 Dimensions of Customer Value Low Costs / High Productivity – Product development/manufacturing efficiency – Attractive price High Quality – Customer satisfaction – Reliability & few defects Short Cycle Time – Rapid product development – Response to orders

6. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 6 The Goal Improve all components of the customer value triangle Customer Value Quality Productivity Cycle Time

7. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 7 Without Process Change... You can improve any one at the expense of the others High Quality and Low Cost, but Slow High Quality, but Slow and Costly Fast, Cheap, but Shoddy

8. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 8 Even Better Value Better Value Good Value Satisfactory Value By Changing Process & Culture... … you can improve all together

9. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 9 Weinberg’s Definition of Quality “Quality is value to someone” In Weinberg’s sense, value is quality And the cost to produce value is the cost of quality But the term “cost of quality” is usually used in a different context, to describe tasks we execute that improve quality Keep this in mind as we continue on this topic

10. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 10 Value-Added Analysis

11. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 11 Who Produces Value? Value is the result of the best software engineers doing their best work. So software engineers produce value - and quality!

12. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 12 The Value Stream The sequence of steps that add value for the customer These are known as the value-added steps Get Requirements Ship to the Customer Implement the Design Design the Details Design the Architecture

13. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 13 The Non –Value-Added Steps The other things we do to produce the product Get Requirements Ship to the Customer Implement the Design Design the Details Design the Architecture Correcting Errors Project Management Quality Assurance Training Etc., etc.

14. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 14 WHAT ARE THE COSTS OF SOFTWARE DEVELOPMENT? Total Costs EssentialNon Essential Value-Added Non-Value-Added

15. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 15 Value-Added Costs Costs for tasks performed... – Materials (e.g.., paper, software) – Labor hours (salaries) – Capital equipment (workstations, facilities) … that produce value – Products – Customer satisfaction – Future labor that will not be expended e.g.., reduced maintenance and repair

16. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 16 The Strict Definition of “Value-Added” Any activity that is part of the process is considered a value-added activity if it meets three criteria: 1) Must change the product in some way 2) Must make the product more desirable to the customer (i.e., the customer wants the change) 3) Must be done right the first time

17. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 17 The Strict Definition This very strict definition helps us open our minds So we identify the proper targets for process improvement. Anything that is not value-added is a suitable target for removal or improvement.

18. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 18 Things Not Part of Value-Added Features the engineer thinks are nice but the customer doesn’t care about Moving a product around Translating between incompatible tools Repairing mistakes Tests and inspections Most management activities Activities unrelated to the process Many other things we tend to think of as “necessary” or “desirable” – And some of them are necessary!

19. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 19 Some Non-Value-Added Activities Management Quality Assurance Testing... The term “value-added” is used to help us improve our processes. It is not meant to imply that the above tasks are not worthwhile or that the people who do them are dispensable.

20. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 20 Non-Value-Added Essential Costs for tasks performed because the process is not perfectly efficient – Peer reviews – Evaluations, inspections, verification and validation – Data collection, storage and analysis – Extra reviews and verifications required by customer or company policy (usually because of past problems) – Certain overhead costs (benefits, support activities)

21. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 21 Why are they Essential? They might not be necessary in a perfect world But they are necessary with our current methods of product development and our current level of product development knowledge Every process has some essential, non-value-added elements

22. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 22 Another Perspective Non-value-added but essential tasks are things we might wish we did not have to do But if we did not do them, things would be worse. However, we still can study them to find out how to minimize them, optimize them, and improve them

23. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 23 Non-Value-Added, Not Essential Tasks that are not value-added and that are not essential Typically, these are tasks that we perform because we have not really optimized our processes – For example, things we have always done but no longer need to do – Or methods that once made sense but don’t any more due to newer technologies or changes in the organization or environment

24. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 24 Examples of Non-Value-Added, Not Essential Tasks – Excessive paperwork or approvals – Waits for test equipment or “signoff” – Debugging due to sloppy design or coding – Costs resulting from bugs in our software development tools – Costs for activities unrelated to the process These tasks should be eliminated or streamlined first, as they add cost for no useful purpose

25. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 25 Some Costs are Especially Painful High costs incurred later because of tasks not performed during software development (or not performed at the right time or in the right way) – Debugging – Correcting defects – Maintenance and repair These can subtract value: – Loss of customer good will – Future labor that must be expended

26. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 26 Typical Value-Added Categories Non-EssentialEssential Value-AddedNon-Value-Added (costs $, no value to customer) 1) Customer Wants 2) Changes Product 3) Done Right the First Time Design Development Fabrication Documentation Assembly Process Creation Upgrade Shipping Set-Up Training Planning Customer- required test Moving Data Between Steps Many Quality Improvement activities Rework Service Modification Expediting Recall Correction Retest Error Analysis Extra paperwork Waits Delays Bottlenecks Counting Installing Software Tools Extra Un- wanted Features

27. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 27 Analyzing Value-Added by Task or Category This is the first step of value-added analysis List all of the tasks or task categories in your process Then place each task into one or more of the three value-added classes Value-Added Essential Non-Essential Non-Value-Added If a task fits more than one class, you may want to break it up into parts

28. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 28 Example Result of Analysis by Task / Category Non-EssentialEssential Value-AddedNon-Value-Added (costs $, no value to customer) 1) Customer Wants 2) Changes Product 3) Done Right the First Time Requirements analysis Design Coding Documentation Integration Manufacturing Packaging Shipping Estimating Training Planning Customer- required acceptance test Configuration Control Inspections Debugging Service calls Warranty costs Fedex costs for patches Loss of customer goodwill etc. Approval by 7 people! Delays for test systems Data conversion between design tool and coding tool Wait for subcontracted hardware

29. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 29 Analyzing Value-Added Costs This is the second step of value- added analysis Each task can be assessed with respect to how much of its cost adds value Often, a task will contribute some value but have some non-value-added elements as well

30. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 30 Example of Cost Analysis

31. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 31 What Are the Units? The unit we measure for “cost”can be anything that is available … – Dollars – Labor hours – Percent of time spent For initial analysis, the data do not have to be very accurate – Estimated percent of time spent – Estimated hours spent

32. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 32 Suggested Exam/Plan Preparation Individually, or as a group, take a typical process from your work environment and do a value-added analysis by task or category For tasks that have some value-added and some non-value-added, estimate percentages of each Estimate what percent of the overall process is non-value-added Discuss how you might measure the costs (what units to use) using available information or information readily obtained

33. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 33 Typical Result Value-added -- 35% of total cost NVA Essential -- 20% of total cost NVA Non-essential -- 45% of total cost – Top three items: Rework due to design and coding errors -- 14% Extra customer support -- 12% Labor for individuals waiting for test equipment that is not available -- 11%

34. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 34 A Dilemma in Analyzing Non-Value-Added Costs Sometimes we must introduce non- value-added tasks to reduce the costs and impact of other non-value- added tasks This is a fundamental dilemma and a fundamental reason why we need to do more than analyze value-added We will discuss this more when we talk about cost of quality analysis

35. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 35 We Will Examine Value from Three Perspectives Quality (Fewer Defects; Customer satisfaction) Low Cost or High Productivity Customer Value Short Cycle Time or Schedule

36. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 36 Summary Understanding value is the starting point for effective and efficient processes Value-added analysis can help identify the best places to focus improvement efforts Just because something is “non-value- added” does not mean it is not worthwhile or necessary or good

37. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 37 References Crosby, Philip B. Quality is Free, New York, McGraw-Hill, 1979. Deming, W. Edwards, Out of the Crisis, MIT Press, 1986, ISBN: 0911379010 Juran, J. M., Juran on Leadership for Quality: An Executive Handbook, The Free Press, 1989.

38. CSE 8314 - SW Measurement and Quality Engineering Copyright © 1995-2005, Dennis J. Frailey, All Rights Reserved CSE8314M09 version 5.09Slide 38 END OF MODULE 09