How Do Real Options Concepts Fit in Agile Requirements Engineering?

Abstract

Agile requirements engineering is driven by creating business value for the client and heavily involves the client in decision-making under uncertainty. Real option thinking seems to be suitable in supporting the client’s decision making process at inter-iteration time. This paper investigates the fit between real option thinking and agile requirements engineering. We first look into previously published experiences in the agile software engineering literature to identify (i) ‘experience clusters’ suggesting the ways in which real option concepts fit into the agile requirements process and (ii) ‘experience gaps’ and under-researched agile requirements decision-making topics which require further empirical studies. Furthermore, we conducted a cross-case study in eight agile development organizations and interviewed 11 practitioners about their decision-making process. The results suggest that options are almost always identified, reasoned about and acted upon. They are not expressed in quantitative terms, however, they are instead explicitly or implicitly taken into account during the decision-making process at interiteration time.