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Quality performance requires constant monitoring of different metrics. In the software development sphere, everyone is prone to measuring KPIs. For example, they measure the KPI of software development time estimation. It is used to enhance and optimize the time spent on the development stage. What are the other software development KPIs to measure? How can you define them? And, what do they do, in particular?

KPIs, or key performance indicators, are specific measurements used to evaluate the company’s performance. Or, these are the particular activities that need ongoing monitoring. Having all the analytics done you have a card up your sleeve. For example, when you know your performance’s best strengths and weaknesses, you can work on them. And, eventually, improve the results. With the right KPI knowledge, problem-solving and decision-making can be carried out faster and with a better outcome. Sounds perfect if you want to grow your business, scale, and succeed!

What are the benefits of software company KPIs? Mainly, there are 5 general ones:

  1. Company health monitoring
  2. Progress measurement
  3. Pattern analysis over a certain time
  4. Problem-solving to catch opportunities
  5. Adjusting to the best plan, and keeping on track

10 Metrics and KPIs for Software Development You Should Measure

So, any organization can succeed with the help of software development key performance indicators. But, what exactly should you measure? Let’s find out together!

Types of Software Development KPIs

Key performance indicators for software development measure the companies’ activities. Let’s discuss, which activities fall under this monitoring and enhancement procedure.

The main three types of metrics you should be measuring are:

Financial metrics

What concerns finances, companies measure their revenue and profits. The measurements include the net profit (the amount of revenue remaining) after there were deductions as to company expenses, taxes, and interest payments. This is done to understand how much money the organization has to meet the annual spending plan. Also, businesses compare these sums with the ones of their competitors. Why? To get an idea of what has been done good and what has to be changed in the future to stay profitable.

Customer metrics

Measuring customers as to their efficiency, satisfaction, and retention will also give valuable insights. For example, you can measure the CLV, which is the customer lifetime value. We use it to predict the amount of money one customer is going to spend on a project. And, also, his/her willingness to spend money on the other projects developed with your company. Or, you can measure CAC – the customer acquisition cost. It counts the total costs used for sales and marketing in an acquisition of a new customer. If businesses compare their CLV and CAC, they will understand the efficiency of efforts input to obtain new customers.

Performance metrics

KPIs for software developers measure how the organization operates across all of its departments. For instance, you can measure the number of successful projects and the ones that had problematic solutions. The number you will get will show the percentage of projects that require more attention. This percentage should be lowered by working on constant improvements.

Also, with KPIs for software engineers, you can measure the time spent on any process. For instance, the time spent on the discovery phase, project requirements gathering, signing of documentation, project planning, design, development, testing, etc. In addition, these processes can be broken into pieces, i.e. sprints that follow a demo. You can measure the time spent on every sprint and its effectiveness. It is also possible to measure the team’s productivity by taking the time spent on development and the scope of work done.

In general, KPIs for the development team estimate how much time it takes from the initiation phase to the product’s full release. Carry out any measurement you find useful and want to enhance. With the help of these metrics, you will surely find out what are the blockers on each step and will certainly eliminate them.

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Role of Software Development Key Performance Indicators in SDLC

There are lots of software developer performance metrics to choose from. These metrics should be chosen carefully and based on your software development processes in the company. Most companies measure costs (planned, spent, over-budget), project implementation, application reliability, security, user satisfaction after the product launch, and the quality of software. All of these variables depend on your organization’s needs, values and priorities.

Why do you need to track the software development metrics? What do key performance indicators for developers give out in the long run? It’s pretty simple:

  • KPIs help you understand where you stand and what to improve
  • KPIs allow you to set goals and see how they are being implemented
  • KPIs increase effective communication between departments and clients
  • KPIs promote data-driven decision-making

10 Metrics and KPIs for Software Development You Should Measure

That’s why you should always implement KPIs into the process if you want to structure and monitor activities the right way.

Most Useful KPIs for Software Engineering to Measure

Software engineering KPIs are essential KPIs for software companies. Here, you might need to measure:

Velocity

Velocity pinpoints the factual data of how much work your team can cover during one sprint. Any sprint can last one or two weeks as it depends on the scope of work to be done. To measure sprints you should assess the size of the project and the time it might take to complete it. To do some take at least three sprints and measure their efficiency. The biggest aim of velocity is not to show how much time your team will need to build an application. But, whether the team’s goals have a background and are quite realistic to fulfill.

Sprint burndown

Sprint burndown copies velocity in a way. But, it’s narrower. It focuses only on the actual amount of work completed during a single sprint. While velocity needs several averages, sprint burndown has only one. It aims to show whether the work done was as predicted. If there are deviations, sprint burndown will show how the actual result differs from predictions.

Release burndown

This metric is similar to the previous one but broader. Release burndown takes project management to a newer level as allows altering this process via the gathered analytics. This way, the team will be able to trace whether they are on time with the release or fall behind. Or, maybe, are ahead of the schedule. And, what’s more, you will be able to show this chart to your potential customers and stakeholders. Just to ensure the product launch will be within the measured deadlines.

Cycle time

This metric measures how much time is spent on a particular task. The notion of time spent allows teams to be more productive and efficient. And, it will be easier to measure the team’s performance. Also, you will be able to spot any process blockages on the go.

Cumulative flow

Cumulative flow is a table with three or more main colors representing the task level of completion. For example, “approved”, “in progress”, “backlog”, etc. These colors are in bands with different widths and correspond to the cycle time. We use this table to stabilize the workflow, easily track bottlenecks, and see whether the workflow is consistent.

10 Metrics and KPIs for Software Development You Should Measure

Flow efficiency

Flow efficiency uses time values. To understand whether the flow is effective, you should take the ratio between the active time and the total time. This is done to identify where “work in progress” is just a status and developers can’t get this work done due to certain obstacles. This allows tracking the times of standstill and optimizing your workflow.

Code coverage

We use this metric to understand the quality of the team’s code. So, mainly, it shows how much of the source code can be executed during the testing phase. And, how much of this code needs improvements. If the code does not work, it means that there is a bug to fix. Don’t aim at 100% quality, aim at the more the better.

Code stability

The stability of code is not an easy metric to measure. You can either trace the code changes within software or report them. Or, track the frequency of these changes to figure out what has to be done next.

Code simplicity

Simple code is really easy to maintain and test. So, if your code is simple and clear and has fewer independent paths – that’s great. If not, you will have to take extra time on support and debugging.

Code churn

Code churn allows measuring code changes over time and counting how many of these were done. Usually, if the software needs new feature integration, there is a need for code change. And, of course, it results in high maintenance. This process is always risky.

Learn more: how to develop minimum viable product

Consider Inoxoft Your Trusted Partner

10 Metrics and KPIs for Software Development You Should Measure

Inoxoft is a software development provider with more than 7 years of experience and success on the market. Our team offers software development services for startups, discovery phase services, and custom development services to make your idea into a market-leading product!

We value our clients and their trust, so we should constantly track and monitor our developers’ KPIs. This way we get a detailed idea of what should be enhanced, changed, or even got rid of in the process. We tend to conduct quality projects from start to finish, estimate the right amount of time and costs you will need, offer technologies and tools to use, and many more. KPIs for developers allow extracting valuable project information on our expertise and performance.

With Inoxoft you are prone to win! Get ahead of your competitors, click here to get a proposal. If you want to be the best, choose the best! Implement KPI for a software company that you own.

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Final Thoughts

KPI for software development is something that you shouldn’t neglect. There are lots of ways and techniques you can measure your company’s performance and your team’s productivity. So, KPI for software engineering should become one of your primary goals. It will set the right process, predict timeframes, and show good results to your customers. KPIs are the best tool to grow and succeed with your business development. KPI for the engineering department makes you enhance the quality of your code and produce flawless software afterward. Track your performance and excel. 

Frequently Asked Questions

What is KPI for software development?

KPIs or key performance indicators are specific measurements used to evaluate the company’s performance or particular activities that need ongoing monitoring. Having all the analytics done you have a card up your sleeve.

Why do companies need to measure developers' KPIs?

Mainly, because they need:

  • Company health monitoring
  • Progress measurement
  • Pattern analysis over a certain time
  • Problem-solving to catch opportunities
  • Adjusting to the best plan and keeping on track

How do KPIs for software companies impact business growth?

  • KPIs help you understand where you stand and what to improve
  • KPIs allow you to set goals and see how they are being implemented
  • KPIs increase effective communication between departments and clients
  • KPIs impact better data-driven decision-making