In almost all industries, a standard set of KPIs helps to guide teams on whether they are doing the right things in the right ways, with the right outcomes. In software development, this is something that can sometimes go untouched, allowing ourselves and fellow developers to continually work on our code and platforms without making sure we are paying attention to what matters. Some development frameworks, such as Agile, have some KPIs baked directly into them. For example, when calculating your team’s story point velocity, you likely establish a benchmark after a few sprints, which becomes a team KPI to meet or exceed. However, focusing a bit more explicitly on KPIs as part of the development process is something that many teams could benefit from in terms of efficiency and even morale.
In this blog, we will look at what software development KPIs are, what areas could use attention when it comes to KPIs, and some best practices for teams looking to dig further into finding and tracking relevant KPIs for their teams. Let’s start by looking a bit deeper at the core subject: what are KPIs for software development?
What are Software Development KPIs?
KPIs – or Key Performance Indicators – are quantifiable metrics that help track a software development team’s progress toward a predefined goal. In essence, the KPI gives a metric by which progress can be tracked, giving a signal both when you are pacing toward success and failure.
KPIs act as a bridge, connecting development efforts at the team level with broader business objectives. In many teams, the project success may not feel directly connected to the business value – with KPIs, software developers have a clear roadmap towards how their code quality, software tasks, flow efficiency, etc., level up towards a meaningful and measurable impact on the overall business value and goals.
Importance of KPIs in Software Development
Establishing clear software development KPI metrics and ensuring a team has the tools and abilities to meet them can significantly increase the chances of delivering high-quality software on schedule and within budget. KPIs are not just an end goal in the distance – they form a North Star that can be targeted and measured against.
Effectively tracking KPIs allows you to manage specific issues and prioritize the metrics you think stand out the most. For instance, a KPI can help you build better observability in the development flow, which can help to identify bottlenecks, identify trends in software quality and iterative processes, and measure progress against the overall schedule.
Finally, KPIs contribute to team productivity by allowing you to measure work output against key metrics. This can help identify issues with quality assurance, burnout, quantity (e.g., how many code lines are written), quality (e.g., how many of those lines actually work), and more! This can ultimately help development efforts align more closely to the business goals, providing valuable insights into the resource allocation against those goals and inefficiencies that disrupt the flow state and efficacy of the development team.
Types of KPIs for Software Development
Customer Metrics
Customer metrics are metrics that measure customer satisfaction, retention, and efficiency. These metrics provide critical insights into your software’s effectiveness at satisfying, acquiring, and retaining users. Metrics such as Customer Acquisition Cost (CAC) or Customer Lifetime Value (CLV) allow you to understand the efficiency of your software development in converting users to long-term monetary value. Other values like the Net Promoter Score (NPS) allow you to get a sense of the quality of your product through customer satisfaction, e.g., how much the user likes the product in practice on a scale of zero to ten.
Performance Metrics and Development Efficiency
Performance metrics are those metrics that allow you to measure how efficient the development process is. This can include time spent per process, the cumulative flow, the release burndown chart, sprint burndown charts, and other metrics that measure the development velocity, cycle time, and lead time for development. In total, this helps you measure the amount of time it took to develop the product, allowing you to get a sense of how efficient the process itself was.
This category also tends to focus on the amount of work done in discrete units of time. For instance, development velocity is the amount of work a team completes within a sprint, while a sprint turndown is the total amount of work done in the context of the whole project for a given sprint period. Release burndown takes a broader view, tracking progress towards a product release that may encompass multiple sprints.
Quality and Reliability
KPIs in this category are concerned chiefly with the overall quality and reliability of the code produced. Code coverage, for example, measures the percentage of code tested, usually through automated testing. A higher percetnage of code coverage helps to ensure adequate testing was deployed before the product was released. Of course, there’s also a lesson here in setting realistic and meaningful KPIs as well. Regarding code coverage, for instance, some non-technical people may want to see 100% code coverage, but most teams will aim for 70-80% coverage, making sure the most critical pieces of the application have coverage.
Code stability is also tested against the frequency of code changes, how much of the deployed code has resulted in downtime, and how often the code was substantially changed in terms of core functionality from initial planning.
Deployment and Maintenance
These KPIs are chiefly concerned with the deployment of code and the maintenance that has taken place upon that code. For instance, deployment frequency is the frequency of code updates deployed to live environments. Change failure rate is a percentage-based indicator that tracks the percentage of deployments that fail once implemented in production or reaching end users. Mean Time to Repair (MTTR) refers to a system’s total time to repair an issue or failure. These metrics allow you to track the overall deployment process and its maintenance post-release.
Every team and organization will have different KPIs they want to track depending on what is most important to them. The areas above give a good idea of some places you may want to focus on. Getting too many KPIs going can slow things down and lead to analysis paralysis as teams try to dial in every aspect of their development and deployment efficiency. Not having enough could be leaving better productivity and processes on the table. So, how do you choose the right KPIs for your team?
Choosing the Right KPIs
Selecting the right KPIs is crucial for your team and organization. What is measured can vary wildly from metric to metric, and choosing the right metric ultimately comes down to precisely what you’re trying to test. For instance, code churn will give you a decidedly different KPI value than code simplicity, and defect detection ratio metrics will be vastly more useful in improving code quality and compliance than the release burndown chart data.
To get on the right track, you must first start with the right organizational goals. By setting your goals and KPIs in alignment with specific business objectives and strategic initiatives, you can ensure that your KPIs work with – instead of against – your core value proposition.
As an example, you may be focused entirely on your team’s performance in developing a software project. This will give you a strong sense of the team’s effectiveness at developing a particular product. However, this will not help measure market performance if the overall market fit and consumer satisfaction are low. It’s possible to have a perfect development process with balanced story points and a terrible product, and incorrectly tracking KPIs will miss this.
Conversely, it’s possible to have a software product that has high NPS and CLV but is extremely buggy, has poor test coverage, or has fundamental flaws in the source code that make future feature development daunting or outright impossible. If you’re not tracking multiple metrics, it’s possible to get focused on the minutia rather than on the specific software metrics that might point toward the quality of your overall development process.
So, in short, start with the business objectives as your guide. From there, ideate on which metrics the development team has control over, which would directly contribute to a positive effect on meeting the business objectives. This should point many teams in the right direction when it comes to setting their initial KPIs for software development.
Best Practices for Implementing KPIs
Setting software development KPIs effectively is critical for aligning software development projects with a company’s strategic objectives. The KPI process ensures that engineering teams maintain focus, productivity, and quality throughout the software development lifecycle and software delivery process. While this approach has many benefits, it requires you to plan out and think through your KPI strategy.
Below are some best practices for setting up your software development KPIs to foster continuous improvement, build stronger teams, and deliver high-quality software development.
Align KPIs with Strategic Objectives
As mentioned above, KPIs should reflect the broader goals of the software company and support software development efforts aimed at achieving business outcomes. For instance, if the strategic objective is to enhance product reliability, KPIs like defect density or test coverage should be prioritized. It’s not good enough to just have KPIs – they have to be good, focused, and relevant KPIs in order for them to be useful in any meaningful way.
Focus on Relevant Software Engineering KPIs
Selecting key software engineering KPIs that resonate with project goals is essential to generating buy-in with the teams who will be measured. Common metrics like those below can be used to bolster efficiency and track project efforts:
- Sprint Burndown Charts and Sprint Velocity – these charts help track progress during sprints, ensuring timely delivery and efficient workload distribution. By tracking story point burn over time, you can then find and set a KPI for sprint velocity.
- Test-Driven Development Metrics – these assess the success of TDD practices by measuring test coverage and the ratio of tests written to tests executed. This can measure both the total testing coverage and output as well as the accuracy of the testing itself.
- Code Quality Indicators – metrics like cyclomatic complexity can reveal the prevalence of complex code, measuring total maintainability and efficiency.
Involve Software Engineers and Development Managers
Both software development managers and software engineers should be actively involved in setting and measuring key performance indicators. Their input ensures that the selected KPIs are practical, achievable, and reflective of actual engineering workflows.
This will also help customize the KPIs to fit the actual software development lifecycle. During the early stages, metrics like MVP stability might be critical, while later stages might emphasize deployment frequency or mean time to recovery. Tailoring KPIs ensures they remain relevant and actionable.
Leverage Data for Continuous Improvement
KPIs should not just measure outcomes but also guide the path toward improvement. For example:
- KPIs monitoring delivery speed can help identify bottlenecks in the software delivery process, providing methods to decrease the time to market.
- KPI feedback can drill down on more actionable KPIs and closer alignment to core business strategies.
Balance Complexity and Simplicity
While KPIs should capture meaningful data, they must also be easy to understand and actionable. Tracking too many metrics or relying on overly complex code for calculations can dilute focus. Instead, emphasize clear and concise KPIs that directly impact outcomes.
Encourage Transparency and Collaboration
Make KPI data visible and understandable to all stakeholders, including engineering teams and leadership. Transparency fosters accountability and enables collaborative problem-solving to address areas needing improvement.
By implementing these best practices, organizations can ensure their KPIs drive meaningful progress in software development efforts, enhance alignment with strategic goals, and support the delivery of robust, high-quality software.
Conclusion
KPIs can help the software development process, allowing you to get better, simpler code executed successfully in more places. KPIs can ultimately guide teams to successful project completion and set the groundwork for iterative improvements over time.
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