Best KPIs to Measure Performance Success of Software Developers in 2022

Research shows that remote teams work more productively than those based in an office. The question is: how much more productive are remote software engineers? 

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Managers who are interested in learning how remote work is impacting their team’s performance might set some key performance indicators. Some KPIs are better than others: data points such as lines of code, hours worked, and bugs fixed offer a false impression of productivity. As one expert writes, “these half-baked metrics are used to measure the wrong thing. They’re easy to game. And they don’t provide any real or actionable insight that individuals or teams can use to improve their performance.” 

It’s critical to measure the right metrics to keep your software development projects on track without destroying team morale. Empower your developers to work productively by giving them the right tools. Here’s why you need to incorporate KPIs into your business. 

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Why are KPIs important in software development?

KPIs are used in software development to align with business goals and objectives. However, surveys show that 90% of organizations still rely on their gut instinct to set a productive workflow and have trouble executing strategies, especially when it comes to measuring and planning for success. 

To prevent it, businesses should set clear-cut goals and top-notch strategies to measure productivity and efficiency KPIs of the software development process and align them with the quality of their targets. 

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To form these KPIs, tech leaders should ask themselves the following questions:

1. What outcomes are desired? What influences this outcome?
2. Why does the outcome matter to the business?
3. What measures can be taken to assess outcomes?
4. Which tech team is responsible for the success of business activities?
5. How often will progress, productivity, and performance be reviewed till the desired outcome is achieved?

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To determine if KPIs are properly aligned with your software development projects, make use of the SMART technique. This means that your KPIs should be:  

• Specific
• Measurable 
• Achievable 
• Relevant
• Time-bound

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By introducing better planning mechanisms and incorporating KPIs at varying levels your organization will be able to:

• Increase ROI (return on investment), reduce costs and overtime, optimize workloads management, and identify areas of improvement;
• Understand all processes, resources, and environments for software product development;
• Improve by detecting inefficiencies, roadblocks, and other failure triggers and finds ways to eliminate them;
• Offer tangible measuring tools to understand how productively its team of developers works toward completing the project objectives;
• Ensure that both short-term and long-term targets are achieved on time and within budget;
• Modify KPIs based on feedback and customize them to the project needs;
• Divide into higher-level KPIs to monitor performance goals and lower-level KPIs to focus on departmental success.

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Types of software key performance indicators

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The KPI engineering metrics can be divided into five main categories:

1. Formal code metrics: Used to evaluate the quality of the code, these metrics mainly ensure consistency between different developers in the team. They include Lines of Code, Instruction Path Length, Code Complexity, etc. 
2. Productivity metrics: They help assess how much time and effort developers invest in the project development process. The most popular metrics include Lead Time, Cycle, and Velocity. 
3. Test metrics: The quality of testing affects the product quality. The comprehensiveness of testing including Code Coverage, Automated Test Percentage, or Production Defects helps determine how effectively the product is tested. 
4. Operational metrics: These metrics include Mean Time Between Failures (MTBF) and Mean Time to Recover (MTTR) and are used to analyze the software stability and maintenance efficacy of the systems. 
5. Customer satisfaction metrics: They include Net Promoter Score (NPS), Customer Satisfaction Score (CSAT), and Customer Effort Score (CES) and help companies measure how satisfied their customers are with the software. 

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The key concept here is that metrics are functions, not measurements. Even if these two terms are often used interchangeably, by setting a specific metric, you can foresee upcoming performance. 

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To keep everyone on track, set your development team up for success with these key performance metrics.

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Lead time

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Lead Time KPI helps you to visualize the trends and evaluate how long it takes for a software development team to turn an idea into a product. To estimate the time required to deliver the task from concept to completion, you can generate a Lead Time distribution diagram.

Lead Time distribution charts are very useful for making improvements to your system of work. Understanding what to target and when will help you stabilize your system of work and improve predictability which will open doors for the next level opportunities for your organization.

Cycle time

“Cycle time” is a measure of the time it takes for a bug, feature, or task to move from one status to another. It can tell you more about a team’s speed and productivity. This KPI should be classified into issue types – i.e., bug cycle vs new feature development.

Your project management platform, like JIRA, will tell you what your cycle time is, measured by when a ticket comes in through each phase until the ticket is closed. Cycle time can tell you where there are bottlenecks, blockers, or breakdowns in your process and help set expectations for other teams in your organization for getting their issue addressed by your development team.

The formula for calculating Cycle Time is X – Y where X is the culmination date and Y is the starting date of a cycle. Using this formula will help you to compare cycle times and allow your software development team to have a better insight into the time spent on tasks.

Cumulative flow

Stability in the workflow is essential for software to become effective. A cumulative flow (CF) diagram is a visual representation of all the tasks that are in progress, in-do, and finished. It uses a color scheme that shows how tasks are distributed across the various stages of the project such as: “Acknowledged”, “Project approved”, “Task in progress”, “Work at the completion stage”, “Adjustment”, “Project ready”, “Tasks completed” and so on.

Covering three crucial elements of a workflow like Throughput, Cycle Time, and Work in Progress, CF can help you keep track of the development team’s work output and keep them accountable for consistent performance.

Flow Efficiency

Flow Efficiency keeps track of how much time you’re waiting for work to get done. It shows the difference between the time left and the amount of work in progress. This can help you identify areas of weakness, make changes to how the project is managed, and get insights into the distribution of work between the waiting periods. Plus, this metric shows what is not going according to plan.

To calculate the Flow Efficiency simply divide the time you spend on development by the total cycle time.

Sprint burndown

Sprint burndown is a metric integral to agile scrum, and tells you “the rate at which work is completed and how much work remains to be done.” This graph plots outstanding work to be done on the y-axis, and time along the x-axis. By tracking this metric, you can discern whether or not your team is running on schedule, as well as if a project has been scoped correctly.

It can also help you plan your sprints more effectively, delegating work in granular pieces to keep your team from getting burned out. 

Velocity

Velocity tells you how much “delivered value” your software developers accomplished. “Delivered value is typically described as the number of features completed within a period that are ready to ship or ready to test,” adds one developer blog. 

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Velocity is measured in story points or feature tickets, and can help you: 

• Set delivery expectations
• Forecast realistic sprints 
• See if your team is blocked (falling velocity)
• See if by changing a process you gain better results (stable or increased velocity)
• Spot any challenges that you didn’t account for in sprint planning

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To calculate the velocity of the software development team, it’s essential to determine the average speed of the team. Imagine that a team completes 80 story points within the first sprint followed by 90 and 130 story points for the second and third sprint respectively.

The average of these three sprints is 100, which forecasts the average time the team may need for project completion. In a real software development scenario, if a project requires 500 story points, then the team will need five iterations to complete the development for the project. A rule of thumb is that higher velocity displays better productivity and performance from the software development team.

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If your velocity metric varies wildly from week to week, then there’s something standing in the way of your software developers’ performance success. It can be a red flag if you see your velocity metric swing away from the average; something is broken in your process, so how can you fix it? 

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Here are a few tips on how to measure velocity:

1. If velocity does not change after multiple sprints, take other factors into the calculation;
2. If you want to do some forecasting for the upcoming software development process, the average of three sprints is more than enough for predicting the future performance;
3. The velocity can be calculated differently once multiple tasks are added or removed from the calculation.

MTBF and MTTR

It is undeniable: that a software failure can happen anytime and to any software. Mean Time Between Failures (MTBF) and Mean Time To Repair (MTTR) are two software development metrics that focus specifically on controlling how well a software recovers from failures. MTBF is the average time between failures and can be calculated by total uptime divided by the total number of breakdowns.

MTTR is the average time consumed in repairing the software after failure and can be calculated by total uptime divided by the total number of failures. Calculating both metrics contributes to evaluating the overall productivity and performance of the software development team. 

Code churn

The stability of the product is essential before release. The Code Churn metric reflects how many lines of code (LOC) were added, edited, or deleted within a certain period of time. It allows companies to monitor the development lifecycle, the quality of software engineers’ work, and, most importantly, determine which development stages are the most unstable.

Look for issues in code changes to identify if the code has spikes and investigate which tasks caused the spikes. Doing so will help you avoid providing unstable code. 

Code coverage

Code quality plays a key role in the software development lifecycle. Code Coverage is a software development KPI that is used by the software engineering team to evaluate test-driven development practices, analyze the overall code quality, and measure how many lines of code are made while a test is running. Without this KPI, it is almost impossible to carry out life cycles and test a digital product. 

It also helps you detect errors and understand what debugging needs to be done. To calculate the Code Coverage use the following formula: CCP = (A/B)*100, where A signifies the number of code lines executed by the testing algorithm and B represents the total number of code lines in a system. 

Open requests

Open requests, or open pull requests, tell you how many requests have not been addressed. If it’s a pull request, it tells you whether or not your team is working together efficiently. Pull requests are queries from one developer to the rest of the team to review changes or provide input.

If no one from the team can provide feedback, then the request remains open, stalling other requests or parts of a sprint. “Tracking Open Pull Requests over time will allow you to spot bottlenecks in your feature delivery process and allocate either more time or more resources for code review,” reports one developer blog.

Throughput

Last but not least, throughput is a measure of total work output – including the number of features, tasks, bugs, or chores completed that are ready to test and ship. Throughput is measured over a discrete period (like a week or a month) and tracked over time so you can see that your team is working consistently.

“By measuring throughput, you’re looking for alignment with your goals — if you’re focused on squashing bugs, you should see a healthy mix of defect tickets being resolved, and if you are focused on features, more featured tickets will be delivered than chores and bugs.” Refer to your tickets to get an accurate measure of throughput and help your software developers work productively.

Wrapping up

With remote working becoming the new normal, it’s pivotal to choose the right KPIs that can change and optimize the software engineering team and reach the development objectives settled. Moreover, it’s crucial to establish KPIs that are relevant to your project, which means they should be simple, achievable, measurable, visible, and timely. 

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To be certain that your software KPIs are measured properly, consider working with Index. 

Index developers are extremely qualified and have the expertise to meet all kinds of software development requirements and KPIs.

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To learn more about recruiting software developers and building high-performing software engineering teams, read our .NET, Big Data, Java, Full-Stack hiring guides.

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