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Software development like any other business process requires close monitoring. In fact, a survey held by Gartner found that organizations that effectively track and communicate KPIs are 50% more likely to achieve their business objectives compared to those that don't.

Good software metrics are not rocket science but a lot of companies are challenged with setting KPIs for software development teams as they are all over the map.

In case companies fail to pay enough attention to tracking software development KPI, it’s very likely that the software projects may veer off the route. 

For you not to fall into the trap of measuring wrong metrics, or ignoring software development KPIs at all, we prepared this blog that discusses the best KPI for software development that will ensure that your development efforts align with the business goals.

Explanation of the Meaning of Software Development Key Performance Indicators (KPIs)

Boards of directors typically assess the benefits, costs, and risks involved in implementing a software development strategy—or the implications of maintaining current practices. To facilitate this evaluation, they rely on a set of key performance indicators (KPIs) tailored to measure progress in software development initiatives.

Software development KPI is a set of measurable metrics that evaluate the efficiency and effectiveness of key performance indicators in software development.

Through careful monitoring of these metrics, dedicated development teams can recognize user experience gaps, and design and development inconsistencies, manage project requirements, and adjust their strategies in real-time. 

However, you’ll be surprised how often businesses choose the wrong KPIs and metrics for software development. For example, they start tracking lines of code, number of deploys, and so on, while working with agile development.

Software development KPI

Importance of KPI Metrics in Software Development

When working on a software development product, setting and tracking key metrics is defining how productive your team is performing. 

Imagine a project where KPIs for software development team are not tracked at all through the development lifecycle. Without KPI metrics for software development, there is no systematic way to measure progress, identify bottlenecks, or assess the quality of the code being produced.

As the project progresses, the team encounters various issues such as missed deadlines, frequent bugs, and inconsistent product quality. However, since there are no KPI for software developers in place to provide visibility into these issues, the team struggles to understand the root causes or take corrective actions.

What are the Benefits of KPIs for Software?

According to a study by Harvard Business Review Analytic Services, 90% of executives believe that KPIs are important for driving business performance and success.

And it’s completely true, that measuring KPI for software development company offers a lot of benefits.                 

benefits of software development KPIs

7 Important KPIs of Software Development

When it comes to creating KPI for software development company, keep it simple. You don’t need a great number of metrics to build a hierarchy of them. 

The best idea is to choose from 5 to 9 KPI metrics for software development to track, report, and act on.

Here is a list of KPIs for software development that PMs at inVerita software comany use to effectively manage scope, prioritize tasks, and optimize the team’s workflow to meet project deadlines and deliver value to stakeholders.
KPIs of Software Development

# Velocity

Velocity is a critical KPI for software developers that measures the rate at which a team delivers completed work over a specific time period, typically within an iteration or sprint. 

Why is it important?

It helps teams estimate how much work they can realistically accomplish in future iterations and enables stakeholders to forecast project timelines and make informed decisions about resource allocation for future tasks as well as project prioritization.

However, it's important to note that velocity is not a measure of individual productivity but rather a reflection of the team's collective output, taking into account factors such as team size, skill level, and complexity of the work.

Development velocity is a valuable KPI for Agile and Scrum teams, as it supports iterative development processes and promotes a focus on delivering value to customers in a consistent and predictable manner.

# Sprint Burndown

Sprint burndown is a more narrow software development KPI that estimates how much work the team completes during a sprint.

While the velocity tracks the team's performance over time, the sprint Burndown focuses on tracking the remaining work (often measured in story points or tasks) throughout the duration of a sprint.

How does a sprint burndown chart work?

  • At the start of a sprint, the team estimates the effort required to complete each user story or task in the sprint backlog, usually in terms of story points, tasks, or hours.
  • The total estimated effort for all backlog items is plotted on the vertical y-axis of the Sprint Burndown Chart.
  • As the sprint progresses, the team updates the chart daily to reflect the amount of work remaining. This is typically done during the daily stand-up or scrum meeting.
  • The chart tracks the actual progress of the team in completing tasks, showing a downward trend as work is completed and removed from the backlog.
  • The ideal burndown line, representing the rate at which work should be completed to finish all planned tasks by the end of the sprint, is also plotted on the chart.
  • The goal is for the actual burndown line to closely track the ideal burndown line, indicating that the team is on track to complete all planned work by the end of the sprint.

Why is it important?

By tracking the sprint burndown chart daily, the team can quickly identify any potential issues or risks that may impact their ability to complete the sprint backlog on time. For example, if the actual burndown line deviates significantly from the ideal burndown line, it may indicate that the team is falling behind schedule or encountering obstacles that need to be addressed.

sprint turndown chart example

# Release Burndown

The release burndown tracks the progress of completing all planned features or user stories for a specific release or iteration. It provides a visual representation of the remaining work (often measured in story points, tasks, or hours) over the duration of the release cycle.

Software teams use release burndown charts to track how they're doing with adding new features and fixing bugs over time. This helps them make sure they're sticking to their plan for releasing updates and changing their strategy if needed.

For example, a team is working on a video game. They have a plan to release an update in three months with new characters and fixes for any bugs players have reported.

Every week, they use a release burndown chart to see how much progress they're making. They track things like adding new characters and fixing bugs. If the chart shows they're falling behind, they might decide to spend more time on fixing bugs or work on fewer new characters to make sure they can still release the update on time.

Why is it important?

Release burnout provides a visual representation of the remaining work over time, helping teams monitor their progress, identify potential delays, and make informed decisions to ensure the timely delivery of the release.

release turndown chart example

# Lead and Cycle Time

Lead time and cycle time are two fundamental Agile project metrics that provide valuable insights into the duration of work items spent in a particular process. However, there exists a distinct difference between them.

Lead time measures the total time, including wait time, that a work item spends in the entire process from the moment it is requested to the time it is delivered. For instance, when a customer requests a service or feature, lead time begins accruing from the commitment to deliver the service/feature, even if work has not yet commenced. Lead time can be thought of as the "customer timeline."

Cycle time starts accumulating once work begins on the requested item in Agile. It measures the duration of active work on a task to completion. With cycle time, teams can track the hours/days spent actively working on tasks, providing insights into project duration and facilitating better forecasts for project completion. Cycle time can be likened to the "team timeline."

Tracking lead and cycle time metrics is facilitated by using a Kanban board. The board visualizes when a work item is committed for execution and when the actual work begins.

Why is it important?

Tracking lead and cycle time in Agile software development is crucial for understanding the total time from request to delivery (lead time) and the time spent actively working on tasks (cycle time). These metrics provide insights into process efficiency, bottlenecks, and predictability, enabling teams to streamline workflows, improve planning accuracy, and ultimately deliver value to customers more quickly and effectively.

# Test Coverage

Test coverage provides insights into the extent to which the codebase is exercised by automated tests, indicating the thoroughness of testing and potential gaps in test coverage.

It measures the percentage of code or software functionality covered by automated tests compared to the total codebase so that teams can evaluate the adequacy of their test suite and identify areas of the code that are not adequately tested. 

Why is it important?

By ensuring comprehensive test coverage, teams can mitigate the risk of undetected bugs and errors in the software.

One common approach to test coverage measurement is code coverage analysis, which involves running automated tests and analyzing which parts of the code are executed during testing. This analysis typically categorizes code coverage into different levels, such as statement coverage, branch coverage, and path coverage, providing granularity in assessing test effectiveness.

# Defect Rate

The defect rate shows the frequency and severity of defects or bugs found in the codebase, highlighting areas that require attention and improvement.

This metric measures the number of defects discovered in the software per unit of work, such as lines of code or user stories. It serves as an indicator of the overall health of the codebase and the effectiveness of quality assurance and testing processes. A high defect rate may indicate underlying issues in development practices, code complexity, or inadequate testing coverage.

Why is it important?

Tracking the defect rate allows teams to identify trends over time, monitor the impact of changes or enhancements on software quality, and prioritize defect resolution efforts. By addressing defects promptly and systematically, teams can improve the stability, performance, and usability of the software product.

# Code Quality and Maintainability

Using static code analyzers can be a valuable tool for tracking software development KPIs, particularly in areas related to code quality and maintainability. These analyzers automatically examine source code without executing it, identifying potential issues such as coding standards violations, security vulnerabilities, and performance bottlenecks. 

By integrating static code analysis into the software development process, teams can monitor metrics such as code complexity, code duplication, and adherence to coding standards over time. 

Why is it important?

This helps ensure consistent code quality, reduce technical debt, and ultimately improve the reliability and maintainability of the software product. Static code analyzers provide actionable insights that empower teams to address issues early in the development lifecycle.

A good option is SonarQube which we use at inVerita for the .NET platform.

It’s an open-source tool widely used to improve code quality and maintainability in software engineering projects. It supports languages such as Java, JavaScript, C#, C/C++, Python, PHP, TypeScript, Ruby, Swift, Kotlin, Go, Scala, HTML/CSS, and XML.

SonarQube can analyze various aspects of code quality, including

  • Code Smells 

Identifying areas of the code that may indicate a deeper problem, such as complex methods or duplicated code.

  • Bugs

 Detecting potential bugs and errors in the code, such as null pointer dereferences or resource leaks.

  • Security Vulnerabilities

 Highlighting security issues and potential vulnerabilities in the code, such as SQL injection or cross-site scripting (XSS) vulnerabilities.

  • Code Coverage 

Measuring the percentage of code covered by automated tests, helping teams ensure adequate test coverage.

  • Technical Debt

 Quantifying the amount of technical debt accumulated in the codebase, including areas that require refactoring or improvement.

  • Maintainability

 Evaluating the overall maintainability of the code, including factors such as code simplicity, coupling, and cohesion.

Metrics such as lines of code and cycle time charts also provide valuable insights into the development process, helping teams identify areas for improvement and streamline workflows. Simplifying code not only enhances readability but also contributes to improved flow efficiency, reducing the time it takes to complete tasks and move through each stage of development. 

By monitoring these metrics over a period of time, teams can make informed decisions to optimize their processes and deliver high-quality software products efficiently.

In Summary

Good performance requires continuous monitoring. Measuring software development KPIs serves a lot of purposes. They help to find errors, track the team’s progress against measurable goals and objectives, examine and refine development patterns throughout the course of the project, and, finally, make data-driven decisions based on this analysis.

However, it’s also important to remember that software development KPIs are not static, they may change over time to adjust to your specific project and team needs.

At inVerita, we recommend reviewing KPIs at least quarterly or after significant milestones or changes in project scope. This allows engineering teams to assess the effectiveness of existing KPIs, identify any new metrics that may be needed, and make adjustments as necessary to drive continuous improvement in software development processes.
Frequently Asked Questions
Why are KPIs and metrics crucial for measuring software development success?

When working on a software development project, establishing and monitoring KPIs is crucial for evaluating your team's productivity.

Now, picture a scenario where KPIs for the software development team are completely overlooked throughout the project's lifecycle. Without these metrics, there is no structured method for estimating progress, pinpointing bottlenecks, or assessing code quality.

As the project advances, the team encounters numerous challenges such as missed deadlines, frequent errors, and inconsistent product performance. However, lacking KPIs for software development, the team faces difficulty in identifying the underlying issues or implementing corrective measures.

What challenges come with implementing KPIs in software development?
Implementing KPIs in software development industry can be challenging due to the need to define relevant metrics, gather accurate data, overcome resistance to change, set realistic targets, interpret KPIs correctly, and balance conflicting strategic objectives among stakeholders. It requires careful planning, clear communication, and collaboration among team members to identify KPIs that align with project goals and effectively measure performance. Additionally, ongoing evaluation and adjustment of KPIs are necessary to ensure they remain relevant and continue to drive improvement in software development processes.
How often should software teams review and update their KPIs?
It’s generally recommended to review KPIs at least quarterly or after significant milestones or changes in project scope. This allows teams to assess the effectiveness of existing KPIs, identify any new metrics that may be needed, and make adjustments as necessary to drive continuous improvement in software development processes. Regular reviews also provide opportunities for teams to solicit feedback from stakeholders and ensure KPIs reflect evolving priorities and objectives.
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