Top 10 Important KPIs for Software Development You Should Measure

Understanding software development KPIs and their importance are essential to every company. In this blog, we dive deep into KPIs in software development, their business benefits, and the top 10 KPIs you must establish for your development team.

As a manager, company owner, or even a team lead, you will probably aim for company goal fulfillment and business success . That’s where these KPIs come into play. You gain a significant advantage using software engineering KPIs as you’ll have a card up your sleeve with all the analytics done. For instance, you can use KPIs to measure your team’s strengths and weaknesses and further work on them to improve results.

There’s no denying that quality performance in software development is imperative for project success. Such performance does require continuous monitoring of various metrics, which in this context, are known as KPIs for software development.

Software engineering KPIs and their importance

Key performance indicators, abbreviated as KPIs, are the definite metrics used to assess a company or team’s performance. Alternatively, KPIs can also help measure specific activities that require ongoing monitoring. This is one of the key steps towards goal-setting and fulfilling company objectives as effectively as possible. More importantly, in technical work settings, these KPIs are a valuable method to stay accountable to the goals you set for yourself and your team.

As the abbreviation suggests, KPIs in software development indicates how strongly your development efforts are lining up with your business objectives. Almost everyone is prone to measuring key performance indicators in the software development industry. For instance, companies can measure KPIs for development time estimation. This can improve and optimize the time spent during the software development stage.

Choosing the correct software metrics is the initial step. More often than not, businesses end up selecting the wrong KPIs to measure their development team’s performance and success. Some example KPIs for software development include the number of commits, lines of code, and the number of deploys. While these aren’t uncommon, they can be grossly misleading. These metrics don’t often correspond to actual objectives, and the KPIs you need require much more nuance.

The importance of KPIs in software development

Just like any other undertaking, fulfilling objectives means being intentional about how one can complete them. Similarly, establishing KPI metrics and ensuring your team is dedicated to seeing them through will guarantee successful project completion and high-quality software development. Also, chances would be higher for your team to complete the project on time and within budget.

Furthermore, your KPIs will provide valuable insight for finding the problem when a certain bottleneck occurs. These metrics assist your business in monitoring and tracking certain challenges and prioritizing the specific numbers that stand out the most.

Types of KPIs for software development projects

Software development KPIs usually measure a company’s activities and are broadly divided into three categories of metrics: financial, customer, and performance.

Customer metrics

Measuring your customer’s satisfaction, retention, and efficiency, is one of the most vital metrics, as they provide critical insights. For instance, you can measure the CLV (customer lifetime value) to predict how much money a customer will spend on a project and their willingness to spend more on other projects your company develops.

Alternatively, you can also measure the customer acquisition cost (CAC), which evaluates the total money spent on sales and marketing to acquire a new customer. Comparing your CAC and CLV, you can understand the efficiency of your team’s efforts to gain new customers.

Financial metrics

Financial KPIs for software development usually help measure the company’s profits and revenue. Hence, these mostly include the net profit (revenue remaining) after deducting company expenses, interest payments, and taxes. This determines the annual spending plan budget that the company can use for the development process. Businesses often compare these numbers with the ones of their competitors to understand what worked and what needs to be changed to stay profitable.

Performance metrics

KPIs for software development engineers measure how the company operates in all its departments. For example, you can assess the number of successful; projects and those with problematic solutions. The measurement will indicate the percentage of projects requiring more attention, which can be reduced by working on continuous improvements.

Moreover, you can also use KPIs to check how much time someone is spending on a given process. For example, you can measure the time spent on discovery, project requirements gathering, project planning, document signing, development, testing, and so on. These KPIs generally estimate the time needed from initiation to the product’s full release. Checking them, you can determine blockers and ways to streamline and fast-forward the process in any way you can.

What are the advantages of KPIs for software development?

The significance of KPIs for software development projects cannot be understated. Setting even a single software metric can help you in the following ways.

• Defining a strict process for development to ensure steady progress
• Understanding where your team or you stand and what needs improvement
• Evaluating project status concerning future objectives
• Improving an already existing product or solution by identifying triggers, failures and removing obstacles
• Minimizing the time needed to complete tasks by establishing the KPIs for software development projects
• Optimizing control over your or your team’s workflows
• Identifying a particular direction to improve business conduct
• Significantly increase ROIs while saving both time and money

Top 10 KPIs for software development

As mentioned earlier, choosing the right KPIs goes a long way in ensuring project success. Selecting indicators that fit perfectly into your customer’s goals can help you monitor performance and guarantee a seamless transition from the initial development stages to the full-fledged product launch. Here are the top 10 KPIs for software development to include on your list.

Sprint burndown

Sprint burning defines the process of measuring the number of tasks executed when executing a sprint (an established time period for certain tasks to be completed). Among software engineering KPIs, this is one of the key indicators as it measures the work done during sprints.

Using sprint burndown as a KPI can help your team adjust their performance accordingly when the measurement doesn’t align with predictions. Companies often use sprint burndown charts for their development teams to represent data, gauging time against story points. Here, a story point means assessing a software project’s size and the time needed to build it.

Velocity

Velocity indicates how much work a team can finish during a sprint, but it’s not entirely similar to a sprint burndown. The latter is a narrow metric, whereas velocity involves measuring multiple story points.

It typically takes about three sprints to give you a strong idea of your team’s average velocity. Measuring each sprint and story point, you can find the average velocity and estimate how realistic your team’s goals are.

Release burndown

Release burndown KPIs for software development measure the product release progress. This is an extremely useful metric as it helps guide teams in managing product releases. Development teams can use a release burndown chart to understand if they’re behind, ahead, or on schedule. Moreover, this KPI can also help you obtain hard data to present to your stakeholders about when they can expect their returns post-release.

Cumulative flow

Cumulative flow is one of the key software engineering KPIs that depicts what state your software tickets or tasks are in using a visual diagram. Various colors on the diagram will represent stages such as ‘approved,’ ‘backlog,’ ‘acknowledged,’ ‘in progress,’ etc. Cumulative flows are beneficial to stabilize workflows when or if you find any bottlenecks in development.

Cycle time

Cycle time is a metric that shows how much time is spent undertaking a single task. It is one of the essential KPIs for software development that allows teams to gauge the efficiency of their development process by studying cycle time charts. Measuring this metric not only allows you to quantify your team’s performance but also helps to get an estimate of how quickly your team can finish future tasks. You can also spot inconsistencies in your otherwise speedy workflow in that same route.

Code coverage

Code quality is vital during development, usually done by code coverage. This key KPI for software development is critical to development life cycles prioritizing test-driven development (TDD) and continuous delivery. Also known as test coverage, this KPI determines the amount of source code executed while testing. Any of your code that doesn’t execute may have a few undetected bugs, and while 100% code coverage is an unrealistic goal, higher coverage is usually better.

Flow efficiency

Flow efficiency is a software engineering KPI that measures your total and active time ratio.

Often, any work in progress doesn’t automatically mean there’s a task in progress. There might be waiting periods where your developers cannot readily move from one project or task to another. Hence, you can use this KPI to identify where the “work in progress” was just a status and developers couldn’t get that particular work done due to certain bottlenecks. Ultimately, this KPI allows you to track standstill periods and optimize your workflow.

Code simplicity

Code simplicity is one generic KPI for software development, which can be measured using multiple metrics. Simple code is essential as it’s easy to test and maintain. Hence, if your code is clear and simple, that’s ideal. If not, you may have to devote extra time to debugging and support.

One of the metrics used for this KPI is cyclomatic complexity, a quantitative measure of how many independent paths your code must take. Usually, the fewer the paths, the better, resulting in simpler code.

Code stability

The stability of your code is one of the most challenging KPIs for software development. You can either trace the changes in code within the software or report them. Alternatively, you can track how frequently these changes occur to determine what will be done next.

Code churn

Code churn is often used as a code stability measure as it refers to the frequency of code changes over time. If your team often needs to rewrite its code to accommodate new features, your software system will require high maintenance. Ultimately, this is high risk and must be avoided.

In conclusion

The above KPIs for software development shows what you need to measure at every stage of development to ensure project success. Moreover, these KPI metrics allow you to understand how to organize work faster, more efficiently, and more easily. They also help evaluate how you can develop software aligned to the established timelines and budgets, which is key for both your customer and you.

Along with essential software engineering KPIs, it’s important to build a stable and skilled team of software developers to ensure you get the ROIs you want. However, hiring such elite tech professionals is often tedious, so you must choose Turing. We take the weight off your shoulders and match you with top remote developers in no time. Our Intelligent Talent Cloud helps us source, vet, and match you with the exact talent you need for seamless project completion. Hire software developers with Turing and scale up your engineering team hassle-free.