Software Development KPIs: Measuring Metrics That Matter

Software development requires large and complex projects leaning on many distinct disciplines and pulling in multiple directions at once. Building success in this environment takes dedicated effort, cutting-edge engineering tools, and strong management skills. Software development KPIs (key performance indicators) provide the tools you need to build towards success and create better, more informed teams capable of reaching your goals.

To deploy these highly capable tools, however, you need to understand them well. In practice, this means learning which indicators to deploy, what metrics to pay attention to, and how to read them effectively to get an accurate picture of what's going on under the surface.

Choosing the wrong metrics, focusing on the wrong areas, and over-emphasizing the wrong statistics are three of the biggest hurdles to clear in this field. In our guide to software development KPIs, we look at precisely how to stay clear of these pitfalls in practice to deploy effective KPIs for your teams.

Here, we take a look at the metrics your project managers should be measuring for a comprehensive insight. We'll answer the most important questions about deploying KPIs to maximize success and teach you how to adjust your management style and direction to stay on the right course using your data.

What Are Key Performance Indicators (KPIs)?

KPIs are performance statistics collected through your technology, customers, and teams to tell you how well your business is doing by its data. The single biggest advantage of building and maintaining a set of strong KPIs comes from creating a measuring post to better understand and improve the efficiency of your teams.

When used in software development, engineering team KPIs can provide important information on code quality, performance, and progress toward an organization's priority targets. In short, they provide the data necessary to ensure teams are on track for long-term success through measurable figures built for your business.

The key to using software engineering KPIs well is choosing the right metrics to measure and then tracking them over time. When done with expert knowledge and guidance, good figures will give you visibility into even the largest and most complex software engineering projects with ease.

Conversely, when they're chosen poorly, they can do more harm than good. Many organizations have got caught out in the past focusing on productivity metrics obsessively, but this isn't the same as measuring business critical KPIs.

What's the Difference between KPIs and Metrics?

A metric provides teams with a standardized data point they can track and compare over time. This could be as simple as sales volume, financial profit, or marketing reach — three metrics that provide a simple way to define business success. A well-designed KPI, in contrast, uses one or more performance metrics in conjunction with pre-defined goals to measure a team's progress toward its target.

If we set a KPI for an application's customer retention, for example, we'd measure a wide range of metrics to contribute towards that figure. These would range from the number of active users and churn rate to user feedback and session length in order to gain a more accurate picture of user retention. Intelligent KPIs use a combination of metrics and measure them against the team's goal to give a more accurate picture of what's going on and what progress is being made.

Why Are KPIs Important in Software Development?

Software engineering KPIs are uniquely important to development because the challenges in the field are invariably large, complex, and time-consuming. With diverse teams spread across multiple areas of engineering and each team working towards its own goals and technologies within the project — gaining alignment and visibility is a challenging task.

High-quality KPIs provide much of this alignment by default, giving you the management tools necessary to maintain visibility and track progress as a project comes together. This allows you to assign resources to where they're needed most and provide guarantees about your project being delivered on time, within budget, and to a high-quality standard.

What Are the Top 8 Software Development KPIs You Should Track?

As we covered at the top, choosing the right software development KPIs is crucial to success in the field. Progress in software engineering is uniquely non-linear and the KPIs you choose to measure it should be capable of reflecting the unique challenges of your projects.

So what are the most important KPIs to track for a keen insight into the software development process? Eight of the most useful values engineering teams report using today include:

1. Velocity

Velocity is a metric that quantifies the progress made toward a goal in a given period of time. This is most often broken down into an iteration or sprint using agile methodologies and measured against story points or tasks created at the start of the project.

Why Velocity is a Great KPI

• It provides insight into productivity trends that illuminate the production process.
• It facilitates accurate sprint planning mid-project as performance is assessed.
• It assists in showing the workload a team can handle.

2. Lead and Cycle Time

Lead time determines the total duration of a task from initial inception through to its completion. Cycle time, in contrast, defines the time taken to complete a task only in active development — excluding time spent waiting for the task to begin.

Why Lead and Cycle Times Are Important KPIs

• Lead time provides managers with a measure of how effective and performant the development process is overall.
• Cycle time highlights how effective developers are when actively working on a task.
• Combined, both of these values provide an excellent way to assess the processes and efficiency within your teams and help determine where time is being spent.

3. Cumulative Flow

Cumulative flow highlights where time is being spent on tasks and at what stage they're being held up by delays. This is most commonly presented as a cumulative flow diagram — a visual representation of work items at various stages of development.

Why Cumulative Flow is Important

• It provides an easy-to-parse visual representation of work progress over time and makes it trivial to see construction delays.
• It helps management to assign resources effectively by highlighting which areas need them most.

4. Code Coverage

Code coverage defines the percentage of the codebase covered by automated tests. It tells developers how much of the code within the project have tests associated with it and which areas remain at greater risk through lack of testing.

Why Code Coverage is a High-Priority KPI

• It highlights at a glance where more work can be done to improve stability and reliability by showing which areas of code lack coverage.
• It helps in assessing the risk associated with code changes — providing a reliability confidence value against existing code.

5. Code Stability

One of the most challenging KPIs in software development, code stability, defines the impact of changes on the overall stability of the codebase.

Why Code Stability is Important

• It defines how well software withstands incoming changes without introducing new issues into the codebase.
• It allows for proactive management of any potential disruptions.

6. Code Churn

Code churn measures how frequently code is changed during a development project and provides one measure of stability for the codebase.

Why Code Churn is Important

• It highlights areas of the codebase that may need further attention through design, development, or testing.
• It helps to identify patterns in the codebase that can indicate unforeseen challenges or areas of inherent instability.

7. Code Simplicity

Another KPI that's made by aggregating the results of several others is code simplicity provides a measure of how complex your codebase is by measuring the number of available paths to be tested and maintained.

Why Code Simplicity is a Great software development KPI

• It often correlates strongly with code quality, defining how easy maintenance, debugging, and testing will be on the codebase.
• Code simplicity is one of the best indicators of long-term sustainability by promoting clean and maintainable code from day one.

8. Throughput

Throughput measures the rate at which features or tasks are delivered in a project. It's one of the strongest indicators there is of how effectively a team is able to deliver code.

Why Throughput Matters

• Throughput is a strong indicator of how healthy a project is and how well it's progressing.
• It proves a strong indicator of how likely it is future timelines can be adhered to and relied on later in development.

How to Choose the Right Software Developer KPIs for Your Organisation

The ideal KPIs for your project will depend on the specific needs, shape, and industry your organization is building for.

Generally speaking, teams should identify the processes and paths most important to their goals and build effective KPIs from there. These might involve gaining and retaining new users, delivering highly robust software, generating a high volume of conversions, or some combination of all these goals and others.

In most cases, efficiency and stability are the highest priority targets or teams focus on when building software solutions. This is a KPI associated with long-term success and the ability to deliver higher degrees of value in comparison to those focused on short-term productivity.

For the same reason, KPIs that prioritize code quality, documentation, and sustainable processes are more often leaned on than those focused on throughput and quantity.

How to Track and Measure Software Engineering KPIs?

Once you've chosen your software engineering KPIs you then have to decide how to track, measure, and react to them as your project evolves over time. To do this well, a systematic and data-driven approach based on software development KPIs is the best way forward.

Establishing a robust project management framework will simplify the collection of a wide range of metrics substantially. At the same time, this framework will provide processes and tools for you to act on those KPIs as data is gathered within the project.

Often, deploying DevOps knowledge and experience can be pivotal to success in this area. Version control, continuous integration platforms, and automated testing tools can enable real-time data collection that facilitates software development KPIs with ease.

Simply deploying CI tools such as Jenkins or GitLab CI can automatically enable game-changing insights into the health and efficiency of your codebase. However, simply deploying these tools alone isn't a one-click fix.

What Are the Challenges of Measuring Software Development KPIs?

As a first step, tracking and measuring your team's KPIs is a powerful tool to identify and visualize what's going on within your teams. It's also one that requires care, expertise, and attention when it's deployed, however.

We've already covered the importance of selecting the right metrics for your goals and ensuring you have a good number of KPIs to track your progress. After you’ve completed this stage, what are other pitfalls in deployment you should watch out for?

One of the primary challenges in measuring and responding to KPIs is fully understanding what they mean in context. If a team's velocity figures are unnaturally high, for example, it may mean the initial complexity estimates or early assumptions about the project were off-base to begin with and need to be adjusted.

Having an incomplete picture of the project is another challenge of monitoring KPIs effectively. Metrics involved in code coverage and stability require complete and up-to-date information to be fully relied on. Gaps in data can distort the image as a whole and lead to incorrect conclusions and mistakes in management

Overcoming the Challenges of Measuring KPIs

The most important thing you can do to overcome the challenges of measuring KPIs is to create a culture of transparency and accountability within your team. The collective knowledge and insight of your team will have a much greater degree of visibility than any one project manager. Being able to share those insights and issues as the project proceeds is the single biggest way you can contribute towards success.

KPIs aren’t static immovable figures or single sources of truth and we shouldn’t treat them as if they are. It’s more accurate to think of them as living and changing tools that consistently evolve along with your project.

Hiring experienced teams with a thorough knowledge of the domain, industry, and technologies you use will often provide key insights that can transform how an organization collects, measures, and acts on crucial KPIs.

This is something our vendors do routinely for the organizations they work with. To connect with experts in your field, fill out our smart brief and we'll send you a summary of the top talent working in your industry now to find, manage, and build KPIs that can make a difference within your organization.

FAQs

What is KPI in Software Development?

KPI stands for key performance indicator, a measurable metric that determines how effectively a team, product, or process is working within an organization. A KPI may be as simple as measuring the number of commits a developer or team makes per day to track productivity — though this wouldn't be recommended. A more effective KPI might measure the quality of code by combining multiple metrics, automated tests, and data collection points into a single stat for project managers to review.

Simple KPIs are often very reliable and easy to maintain, though they don't always give you an accurate picture of what's going on behind the number. More complex KPIs give you better insights and more data to action when managing your teams.

What Are the 5 Key Performance Indicators for Product Development?

Five Key performance indicators for software product development include:

• Velocity: A metric that quantifies the progress made towards a goal in a given period of time.
• Lead Time: A metric that determines the total duration of a task from initial inception through to its completion.
• Cycle Time: A metric that defines the time taken to complete a task only in active development.
• Code Coverage: A metric that defines the percentage of the codebase covered by automated tests.
• Code Churn: A metric for measuring how frequently code changes during a development project.

What KPIs there Are for IT?

Some of the KPIs available for working in IT include:

• System uptime: A measure of the percentage of time an IT system is operational and available.
• Incident Resolution Time: A metric covering the average amount of time it takes IT teams to resolve incidents reported to them.
• Service Desk Ticket Volume: A measure of the number of service desk tickets handled by the IT department.
• Network Performance: A measure of multiple metrics relating to networking performance statistics.
• Project Slip: A measure of how well IT projects have adhered to planned deadlines and timelines to implement new projects.