The Most Important KPIs for Software Development

Setting clear and concise goals is critical for a development team to reach project objectives on schedule. In fact, a Harvard study found that 3% of its graduates from the MBA program earned more than 10 times more than the remaining 97% of the class when they set clearly defined goals for themselves.

When considering this application within the software development process, software metrics can be utilized to assess the development team’s efficiency and how they can improve. These software development metrics are beneficial when working with a remote group of software developers or outsourcing.

Software metrics are a critical way to allow planning for which areas resources should be allocated to. The acronym KPI stands for key performance indicator.

Appropriate key performance indicators help a software development team stay on top of their goals and decrease the amount of needed interference.

Software development is a complicated process. Using specific KPIs in software development makes the procedure more manageable and allows the development team to stay on task and within budget.

What is Software Development?

But before discussing further about software development KPIs, this article will briefly explain software development. Software development is the process of designing, creating and maintaining computer programs through writing code in a programming language that a computer can understand and execute. Software development aims to develop programs that solve problems or perform user tasks. This can range from simple programs like calculators to complex systems like operating systems or video games.

The Importance of Software Development Metrics

Key performance indicators are an essential part of work-life in general, especially when it pertains to software development teams. Those managing the development process can use KPIs for software development in order to prioritize tasks accordingly.

Managers can do this by easily identifying issues, keeping track of all progress, and communicating with their team as needed during software development with the help of key performance indicators. These software metrics are also a good way to stay on top of areas that could use improvement. It also allows the software developers to constantly refine their results and productivity.

Clients and stakeholders of different software development companies can use software development KPIs to also monitor the progress of the project. They are able to assist with workflow management while also planning for any future projects that may occur.

Suitable KPIs for software can also aid in decreasing costs during the development process. By staying on top of the set goals, software development teams are able to minimize the amount of extra edits that are needed with little to no extra management.

Software development KPIs allow for an increased investment return because they improve performance throughout the development process. When KPIs are used properly, they allow a team to finish in a timely and budget-friendly manner.

Understanding Software Development KPIs

Key performance indicators used in software development quantify overall business performance during all stages of the development process. Specifically, KPIs for software development allow for the work done during development to align with the objectives of software development companies and other businesses using the software as a whole.

To get the best results, proper software metrics need to be chosen according to the team’s preferred model. Using suitable metrics will allow for the effective measurement of the project's success.

It is rather typical to see metrics such as lines of code or the number of deploys being used, but these are not great choices. They are not clear and do not set tangible goals for the team. A software development KPI needs to be more distinct.

Since software development is a complex process, the business manager can often fall short when creating a plan to meet deadlines and stay on track. However, key performance indicators can help avoid this.

Modern development teams tend to prefer Agile software development because it is quick and established. Agile focuses on rapid application development to provide steady delivery, results, and deployment.

When considering performance measures, business growth is a key measure that any software development KPI should lean on. There are four major groups of KPIs for software teams focused on what the performance indicator is measuring. These include defects metrics, software performance metrics, usability and user experience metrics, and developer productivity.

Tips and Best Practices Implementing Software Development KPIs

Some tips for implementing KPIs include aligning them with business goals, monitoring them regularly, evaluating them periodically, communicating them effectively, and incentivizing software developers to hit their KPIs. 

To align their KPIs with business goals, software developers need to clearly understand what they want to measure and why. It's also essential to make sure their KPIs are realistically achievable. Monitoring their KPIs regularly will help them track their progress and performance.

However, it is essential to recognize that these metrics can be affected by various cognitive biases that influence developer actions, potentially leading them to adopt an incorrect course of action or make poor decisions.

Potential KPI Biases

One of the most studied biases in the field of software development is the optimism bias. This bias manifests when developers overestimate their abilities, skills, or team efficiency, causing them to underestimate the time and effort required to complete a task. This can result in missed deadlines, inadequate resource allocation, and increased project costs. Project managers can implement more conservative estimates, use historical data for reference, or gather feedback from diverse experts to counteract this bias.

Another pervasive bias in software development is the confirmation bias. This occurs when developers selectively seek information confirming their pre-existing beliefs, hypotheses, or opinions while disregarding or ignoring contradictory evidence. Confirmation bias can lead to flawed decision-making, as developers may not consider alternative solutions or identify potential issues with their current approach. To mitigate confirmation bias, it is important to encourage open communication, foster a culture of constructive criticism, and promote the use of diverse perspectives and objective evidence in the decision-making process.

Finally, the anchoring bias is yet another cognitive bias commonly found in software development. This bias occurs when developers rely too heavily on an initial piece of information, such as an early estimate or a specific technology choice, when making subsequent decisions. 

Anchoring can result in developers being resistant to change or adapting to new information, hindering a project's ability to innovate and evolve. To address anchoring bias, it is helpful to encourage regular re-evaluation of decisions, provide multiple sources of information, and foster an environment that supports continuous learning and adaptation.

The Best Defects Metrics

These are the KPIs for software that will help find and get rid of as many issues and bugs within the software as possible before release. Managing software malfunctions can be an extremely frustrating and stressful part of the software development process. Utilizing appropriate metrics can help.

Actual Security Incidents

This KPI for software development provides a look at any possible security threats. This can include attempts at unauthorized access, disclosure, use modifications, destruction of information, or other security problems.

If left unchecked, these issues can allow for theft, denial of service, or compromised user accounts. This metric is essential to ensure that the software being developed is secure.

Security Incidents metric can be measured by tracking various metrics such as the number of incidents, number of viruses blocked, number of patches applied, number of spam blocked, number of virus infections and number of port probes. By analyzing this data, developers can identify trends and patterns that can alert them to potential security risks

Code Defect Detection Percentage

Code defect detection percentage is another great way to test the efficiency of the development team.

CDDP is calculated as a ratio of the number of defects discovered before software release and the total number of defects (including those found by customers after release).

The relationship between the number of faults found before the software’s release and the total number of defects, including those discovered after the product's release, needs to be examined to calculate this percentage. This metric can help teams understand how effective their testing processes are at catching issues before they reach customers.

Mean Time to Detect Defects and Mean Time to Repair

The mean time to detect defects metric(MTDD) can be used to figure out how long it takes developers to discover a malfunction within the software on average. It is calculated from when the issue occurs to when the developer notices the problem.

The time between the discovery of the problem and the working fix for it is the average time to repair. The fix must be functional and employed to consider the stop time.  These metrics can be used as KPIs in software development to measure how well equipment or services are being maintained and how quickly issues are being responded to. By tracking these metrics over time and comparing them to industry benchmarks, software developers can identify areas for improvement and implement changes to reduce MTTD and MTTR values.

However, businesses must take note that the MTR is not always calculated at the same time as the system outage. In some cases, repairs start within minutes of a product failure or system outage. In other cases, there’s a lag time between the issue, when it is detected, and when repairs begin.

Vulnerability

This software metric will help discover any potential weaknesses in the product during software development. Vulnerability metrics can be used to track and improve software development by measuring various aspects such as scanner coverage, scan frequency, number of critical vulnerabilities, number of closed vulnerabilities, and exclusions. When compared to industry benchmarks, these metrics can identify areas of improvement to make the software more secure.

Limitations for vulnerability metrics include potentially having outdated or incomplete metrics. Security threats constantly evolve in their sophistication, and there could be new ways to attack software security not covered by current vulnerability metrics. This can result in biases in the interpretation of the metrics and a false sense of security.

The Top Software Performance Metrics

During the quality assurance process, software performance metrics can evaluate and rank any problems within the software.

These KPIs for software development are helpful tools for managing the project, debugging the software, measuring performance levels, and estimating cost.

Availability

This specific KPI for software development focuses on the likelihood that the software will function when it needs to. The availability is a percentage of the software's operating time.

This metric indicates to a business how well a service performed over the measurement period.

A high-end availability means that the software can function even through malfunctions and defects. This is not to say they will not happen, but rather that if defects do occur, the software can separate the issue and continue working at a decreased capacity.

Reliability

This metric calculates the ability of the software to produce the expected results at any set time. The software can accomplish this through factors that avoid, find, and fix defects within it.

To effectively apply reliability metrics, it is important to first define the scope and objectives of the software project. This includes identifying key areas or functions that most users rely on the software to perform.

Developers can ensure the product will not constantly deliver errors by appropriately measuring and checking this KPI throughout the development lifecycle.

This means an application should not be written, modified, or updated before being thoroughly tested. By following a test-driven development approach, teams can catch issues early on and prevent them from becoming larger problems down the line.

One limitation of reliability metrics is that terms used to describe them often have multiple definitions and ways to count or measure characteristics. This can make comparing data accurately between different projects or teams difficult.

Serviceability

Serviceability is a KPI in software development that calculates how easy it is to fix the software system when any problem arises. There is an inverse relationship between serviceability and availability. If one decreases, the other will inevitably increase.

A method for assessing serviceability involves monitoring service availability metrics such as downtime duration, which measures the length of time that a system is offline or not accessible. Through data analysis, areas for improvement can be identified, and changes can be implemented to enhance serviceability.

One limitation of using software metrics such as serviceability is that terms used to describe these metrics often have multiple definitions and ways of being measured. This can lead to inconsistencies when measuring serviceability. It’s important to clearly define how serviceability is measured in order to avoid these inconsistencies.

One can establish benchmarks by comparing their metrics with industry standards or setting targets based on past performance to maximize the benefits of the serviceability KPI.

Throughput

Throughput measures the amount of features, tasks, issues, and other possible activities that are finished within a certain period. With this metric, project managers can easily oversee how the development team allocates their time and what their workload is like.

It is similar to the software metric of velocity, which will be covered in the developer productivity metrics, but throughput is more technical.

To accurately measure throughput, one needs to track the number of user stories or developer tasks completed over a specific period, such as a week or a sprint. Once this data is available, the average throughput for that period can be calculated. When teams refer to their throughput, they typically review the previous period's throughput.

Average throughput can also be helpful in understanding trends and making predictions in order to enhance software development’s efficiency.

The Ideal Usability and User Experience Metrics

KPIs for software do not stop once the software development is finished. They continue into the release of the product to record user interactions with the software.

These software metrics are heavily subjective since they depend on customer input and feedback.

Customer Effort Score

The customer effort score, or CES, ranges from 1 to 7. CES reflects the effort a customer exerts to use a product or service, find the information they need, or resolve an issue. CES is measured by asking, "How easy was it to interact with us?" Customers rank their experience on a seven-point scale ranging from "Very Difficult" to "Very Easy".

The calculation includes:

• Customer transactions.
• Reporting an issue to the support team.
• Other methods of connecting with the business through the software.

It is a powerful tool to know exactly how consumers feel about the product's usability.

One limitation of CES is that it only measures one aspect of customer experience - effort. It does not consider other factors, such as satisfaction or loyalty. Additionally, there may be biases in how customers respond to the survey question.

In order to make better use of CES, it is important to ask the right questions at the appropriate time, such as after a customer has engaged with the product or service. Additionally, it is crucial to ensure that the survey is designed to reduce bias.

Customer Satisfaction Score

The customer satisfaction score, or CSAT, uses a scale from 1 to 5. With this software development KPI, one can measure how satisfied a consumer is with the product. The rating is based on the customer’s experience with the software.

The metric is assessed through customer feedback and represented as a percentage. For instance, with 100 user responses, 15 of them are rated 0-6 (detractors), 25 responses fall within the 7-8 range (passives), and 60 responses are scored 9-10 (promoters). The NPS score is calculated as 60% - 15% = 45%. By consistently evaluating CSAT and examining the data, software development teams can pinpoint areas needing improvement and implement modifications to enrich the user experience.

Collecting feedback from a diverse group of customers is important to ensure that the CSAT data is representative. Businesses should provide incentives for customers to complete surveys or leave reviews can help increase response rates.

One limitation of CSAT is that it only measures customer satisfaction at one point in time and does not take into account changes in customer satisfaction over time. Additionally, there may be biases in the data collected if certain groups of customers are more likely to provide feedback than others.

Net Promoter Score

The net promoter score, or NPS metric, determines how likely a customer is to recommend the software to friends, family, and others they may interact with.

NPS scores are measured with a single-question survey and reported with a number from the range -100 to +100, where a higher score is desirable2. To calculate NPS, customers are categorized into three groups—promoters (score 9-10), passives (score 7-8), and detractors (score 0-6)—depending on how they answer the standard “how likely are you to recommend us” question3. The percentage of detractors is then subtracted from the percentage of promoters to obtain the NPS score.

The NPS can be used to consider consumer loyalty and long-term customer satisfaction in regard to the business’s software.

Since the NPS is based on a single survey question asking respondents to rate the likelihood that they would recommend a company, product, or service, it may not capture all aspects of customer satisfaction. Additionally, cultural differences can affect how customers respond to surveys.

To make better use of NPS data, it’s important to follow up with customers who give low scores (detractors) and understand their concerns. This can help identify areas for improvement. It’s also important to track NPS over time and monitor changes in customer satisfaction.

The Best Developer Productivity Metrics

During the process of software development, teams can use these KPIs to focus on their efficiency and work rate. Developer productivity metrics allow project managers to assess how much time and work is needed for a specific software project.

Code Churn

This software development KPI calculates the frequency of code changes. While code changes will happen, a frequent need for changes in code can cause problems.

If software needs to be revised each time a new feature is added to it, this will lead to a product that requires a high level of maintenance and is generally high-risk.

Code Coverage

Using the code coverage metric promotes constant delivery and development that is centered around proper testing. It calculates how much the source code achieves during testing procedures.

The higher the value of this metric is, the better the outcome. However, it will rarely ever be 100 percent.

Although code coverage serves as a useful indicator of the extent of testing conducted, it may not accurately represent the quality of testing performed on a product as it only quantifies the portion of code that has undergone testing but fails to assess the efficacy or comprehensiveness of the tests themselves. To overcome this, test code coverage with other metrics to have a complete picture.

Code Simplicity

There are several different ways to calculate code simplicity. A project manager could use cyclomatic complexity to view the number of separate paths the code must go through. The fewer paths needed, the better.

A more straightforward code is less complicated to support and test.

Code Stability

Code stability is a KPI for software development that looks at the possible impact of small adjustments on the product and if those adjustments could harm the objectives of the project or the software overall.

Developers can track code stability by measuring the frequency of code changes, such as through the frequency of commits on GitHub against the frequency of downtime occurrences.

Cumulative Flow

The cumulative flow(CF) visually represents where tasks are at during software development.

The CF visual representation offers a visual depiction of potential obstacles or difficulties in the software development process and assists in pinpointing bottlenecks within software development. CFs are used in Agile software development.

Many different task stages can be represented in the diagram, including backlogged tasks, tasks that are currently being worked on, and tasks that have been finished and approved. A different color typically represents each stage.

Using a CF chart helps project managers to balance the workload and prevent negative occurrences, such as task congestion. Additionally, it grants insights into productivity across various stages of a software development lifecycle, facilitating evaluations of product quality and monitoring team performance.

Cycle Time

Cycle time is a metric that measures process speed in software development. It measures how fast developers can deliver a feature to the customer, from when work has started to when it’s been delivered. To measure cycle time, developers can track the time from the first commit to production release.

By doing this, they can accurately predict the time the team will require for future tasks and projects.

Flow Efficiency

This metric shows the relationship between active work time and the total time spent on a task. Although an assignment may be labeled as a work in progress, things may be at a standstill, known as waiting time.

Typically this is due to periods where the software developers cannot proceed from one task to the next and must therefore wait until a separate task is completed. You can compute the flow efficiency by dividing active work time by the total time of the cycle.

Low efficiency in specific time frames can allow project managers to deduce inconsistencies within the workflow. Oftentimes an adjustment in the way the project or workload is being managed can provide a better workflow.

However, waiting time can be encountered for many reasons, such as dependencies, priority changes or an overload of work-in-progress and a low flow efficiency doesn't always indicate a problem with a software developer’s work efficiency.

Release Burnout

Release burnout is a very important metric used during software development, as it allows management and the development team to accurately oversee the software’s release.

The development team can keep track of the project’s schedule, viewing whether it is ahead of schedule, on schedule, or falling behind. Using the release burnout metric, a business can provide accurate software release updates for consumers.

Velocity

Velocity is a KPI in software development that calculates the amount of work the development team can finish in a single execution. A higher velocity value during software development means that the team is functioning well.

It can be used to predict the level of productivity. Velocity can be calculated by things such as the number of tasks finished and ideal days. A common way to calculate velocity is by using story points.

Three or more iterations during software development will be needed before the average velocity for the team can be accurately measured. When calculating the amount of work that is finished in a single execution to use for measuring velocity, a software metric known as sprint burnout is used. Sprint burnout allows project managers to see the team's work time in a single iteration. These are then used to compute velocity properly. Velocity metrics also provide useful information to support sprint planning and forecasting future sprints.

As velocity is a team metric and does not calculate individual work rates, which makes this is a limitation of the metric. Furthermore, comparing velocity between teams can make them uncomfortable as they quickly understand that leaders are using this metric to measure their productivity. 

This could lead to friction between and within teams, resulting in lowered morale and, ironically, lower productivity. Additionally, it's important to note that velocity is not a perfect measure of productivity as it only takes into account tasks completed and not the quality or impact of those tasks.

Tools to measure Software Development KPIs

Power BI

Power BI can be used to create KPI visualizations that communicate the amount of progress made toward a measurable goal. A KPI visual requires a base measure that evaluates to a value, a target measure or value, and a threshold or goal. The KPI visual can draw data from a variety of sources. For example, POWER BI can connect to a Web data source by selecting Get Data > Other > Web. Other tools, such as Microsoft Forms or SharePoint Lists, to collect data from multiple users can be setup to provide data which will then be visualized in Power BI. 

Power BI's price range is very affordable and even offers a free tier. However, the tool performance degrades when importing and analyzing large data volumes. Businesses can learn more about creating KPIs in Power BI by visiting Microsoft Learn.

Oracle Analytics Cloud

Alternatively, Oracle Analytics Cloud provides a platform for building reports and dashboards to analyze KPI data displayed in graphical formats. Oracle Analytics Cloud can collect, transform, and clean data collected to provide high-quality data insights. Additionally, it uses machine learning to enhance the data insights given. 

Despite these advantages, some users have found Oracle Analytics Cloud's dashboard hard to navigate and clunky. However, Oracle addresses this with its online Help Center, which provides a guide for businesses.

Conclusion

Using the proper software development KPIs is indispensable during the development process and an irreplaceable tool for the business the software is for. Appropriate software metrics allow team productivity, project timeframe, and budget to be measured correctly.

Project managers and software development companies can successfully use key performance indicators to evaluate and prioritize team goals and project objectives.

Each group of KPIs allows development teams, project managers, and clients to understand the overall status of the software development progression. Using them will help developers reach steady and maintainable goals while keeping on schedule and hopefully under budget.

‍