Software KPIs: 4 Types to Track Your Business Performance
Software KPIs have become essential tools for developers across a multitude of spheres. These metrics are paramount in ensuring the software is high quality, meets the client’s expectations, and corresponds to established project requirements.
The goal of software development KPIs is to help specialists gain valuable insights into the development process. Assessing these metrics at different stages of development aids the team in evaluating their advancements and getting a comprehensive view of how the project progresses.
Each software KPI can be divided into categories since every indicator covers specific aspects and processes. These include software development, software testing, Agile development, and software delivery. Our guide will explore the types of instrumental metrics and how they allow teams to stay on the right track and make informed decisions that would lead to successful project completion.
What is KPI in software development?
Key performance indicators (KPIs) are metrics that are used to measure and analyze the quality and efficiency of the software development process. These metrics help technical teams keep track of their progress and make data-based decisions about the areas that need improvement.
Depending on the types of projects the specialists are working on, project managers must choose KPIs that will adequately reflect the development process and correspond with the established objectives. Therefore, selecting incorrect metrics to assess the progress may lead to misleading results.
Example of software KPIs.
You may find that many organizations, like software development companies in London and across the globe, prioritize certain KPIs over others. For example, some of the most widely used KPIs include metrics measuring the quality of code by evaluating its complexity and number of defects. Others analyze the development, testing, and delivery speed, allowing teams to oversee the workflow and plan release times.
Overall, coming to understand the importance of KPIs and implementing the most appropriate metrics can make a massive impact on the productivity and effectiveness of software developers. It also helps foster a culture of continuous improvement and the ability to bring more high-quality and competitive software to the market.
4 fundamental software KPIs
For the most part, there are several types of KPIs that can be applied to different categories and stages of the development process. With such a variety of distinct metrics, software development specialists can pick and choose whichever reflects their objectives and help analyze work tasks the most.
Below, we are going to explore 4 of the most common types of performance indicators. In particular:
- General
- Testing
- Agile
- Delivery
List of key software KPIs.
Additionally, we will dive deeper into the purpose of the following KPIs and provide the formulas you can use to assess the results.
#1 Software development KPIs
Each KPI in software development is aimed at helping the team assess the efficiency and effectiveness of the overall development process. Many different KPIs exist for tracking the process of development, with varied degrees of significance and relative value. Let’s begin our examination with some of the most vital ones.
Velocity.
Velocity measures the amount of work a team can complete during a sprint. In development, a sprint refers to a given period of time during which developers are meant to perform a certain number of tasks. Typically, developers measure the effort needed to complete a task in relative story points.
The formula to measure this KPI looks like this:
Cycle time.
Cycle time refers to the overall time it takes to complete the entire cycle of a task. It encompasses all stages of development, from coding, designing, and testing to deployment. By measuring the whole time it takes to finish a task, you can analyze the overall performance of a software development team during the cycle.
A simple formula to calculate cycle time is the following:
Code churn.
Code churn rate is the total number of times a code has been modified or rewritten during a set period of time. Generally, code churn is meant to measure code stability, with higher numbers indicating a potential code instability.
Here is how this software metric is calculated:
Mean time to recovery (MTTR).
Mean time to recovery (MTTR) is a software engineering KPI that measures the average time it takes for a system to recover from a failure. Since failures are inevitable during software development, it is crucial to have a quick repair time for efficient response to breakdowns.
We can use the following formula to calculate MTTR:
Code simplicity.
As the name suggests, code simplicity is measured by the number of independent paths the code has, with fewer paths indicating better simplicity. Such an approach allows for smoother code maintenance, as well as reduced time it takes to review and test it. Since it is a subjective concept, there isn’t a definitive formula to measure this KPI for software development.
Bug rates.
The frequency at which bugs are discovered is an important metric to keep track of. Besides identifying and logging in the number of bugs, the team should also be mindful of the severity of errors and defects. If the severity and the number of bugs exceed your benchmarks, it is best to adjust your code.
A basic formula for calculating bug rates is the following:
In summary, you can explore each of these KPIs further to determine which of them will serve the most purpose for your development project and yield the most business value.
#2 Software testing KPIs
Testing teams leverage different key performance indicators to gain insights into how productive the quality assurance process is going. These tools aid in understanding whether the specialists are going in the right direction and whether the process will be finished on time. Some of the most common KPIs software development companies use during testing include the following.
Defect detection efficiency (DDE).
Defect detection efficiency (DDE) is a metric that measures the ratio of the bugs detected during each testing phase. This basic KPI is instrumental as it can demonstrate the testing team’s effectiveness throughout all development stages, including coding, design, and delivery.
You can calculate defect detection efficiency with a simple formula:
Test case efficiency.
The test case efficiency key performance indicator helps quality assurance teams measure how effective the test cases are at each phase. A high test case efficiency rate indicates that test cases effectively identify bugs and defects. Hence, this reflects positively on the overall software system.
Measuring test case efficiency can be done using the following formula:
Time to test.
As the name implies, the time to test metric is used to identify how quickly the quality assurance team can begin testing activities to evaluate and eliminate the defects. This is a valuable metric, as it can demonstrate team productivity since a lower time to test ratio implies issues with productivity or communication.
Being a relatively straightforward KPI, you can calculate the time to test with the formula below:
Defect resolution time.
Similar to DDE, defect resolution time is a KPI used during testing that measures the time it takes to patch up the defects from the moment they were discovered. Interestingly, it is one of the software metrics that can be used to evaluate the effectiveness of the overall quality assurance team, as well as applied individually to a specific testing specialist.
Defect resolution time can be calculated with an elementary formula:
Tests executed.
Another one of the fundamental yet simple software developer KPIs is called tests executed, which essentially calculates the total number of tests that were performed on a specific software during the testing period. These include a whole spectrum of testing, like regression testing, integration testing, etc.
This metric is highly useful in identifying the productivity of the team and how quickly the business objectives can be met. Here is the basic formula you can use:
Defect density.
Defect density is a quality assurance KPI that calculates the total number of bugs and defects detected in a specific software component or module during a set period of time relative to the size of that component. This metric helps measure code quality and evaluate the overall development efforts, providing a better understanding of when software is ready to be released.
Identifying defect density can be done by utilizing the formula below:
There are many more KPIs that quality assurance teams can leverage to assess the performance and productivity of their efforts. In addition, they help project managers evaluate the progress and the quality of work to deliver the best end results.
#3 Agile software development KPIs
KPIs for software development in Agile teams share similarities with other types of software development approaches. However, there are differences since Agile is one of the development methodologies that operate on distinct principles and practices. Here, we compiled a list of a few of the most widely used KPIs for Agile development.
Code coverage.
This highly practical KPI measures how much of your source code is covered by automated tests. A higher percentage generally indicates better test coverage, although the result can still be nuanced as it may not account for critical scenarios.
Software specialists typically use special tools to calculate this metric. Despite that, below is presented a formula that you can also use:
Sprint burndown.
Sprint burndown is an Agile KPI that is used to track the team’s productivity and performance level during a particular sprint. This metric compares the amount of work that needs to be done (in hours or story points) to how the development team progresses. Ideally, the burndown chart should demonstrate a steady decrease in the workload.
Sprint burndown is commonly represented through a standard chart and can be measured by leveraging a simple formula:
Sprint burnup.
While sprint burnup and sprint burndown are quite comparable metrics, they focus on different aspects of the team’s progress during a given sprint. The sprint burnup KPI measures the amount of work that has already been completed and allows stakeholders to understand at which pace the business objectives can be reached.
This software metric’s formula is somewhat similar to the previous one, with a few differences that you can see below:
Cumulative flow.
Cumulative flow is a widely used chart demonstrating the number of work items and how they progress over a given period of time. Since the cumulative flow is represented as a diagram, there isn’t a single formula to calculate it in the sense of percentage. Instead, it is used to track the flow of software task distribution and completion.
Undoubtedly, it is one of the more complex software engineering KPIs that requires specific knowledge to interpret the diagram. With that being said, it is a valuable tool that helps teams identify various issues and bottlenecks in the work process.
Throughput.
Similar to the velocity KPI, throughput measures the number of tasks, story points, and items that are completed over the span of a specific time, like a sprint, week, month, etc. While this metric doesn’t account for the complexity or the scope of work, it helps analyze the level of productivity of a team and forecasting timeframes.
Here is what the typical formula for measuring throughput looks like:
Flow efficiency.
Flow efficiency measures the ratio between the value-adding time and lead time that is necessary to complete the process. In this context, value-adding time refers to the time when an item is being actively worked on. In comparison, lead time is the overall time spent on an item, from beginning to completion. Ultimately, flow efficiency calculates the percentage of the total active time during the Software Development Life Cycle.
This KPI is commonly measured with the following formula:
Overall, choosing the right KPIs for the Agile development teams can make a significant difference in what kind of data you will receive and be able to evaluate during the process of completing a project.
#4 Software delivery KPIs
Various KPIs measure the process of software delivery and help specialists identify any areas for improvement for continuous delivery practices. Some performance indicators include customer metrics that let us analyze software and business success. Let’s discuss the KPIs that are meant to track the progress of delivering software to the end users.
Deployment frequency.
Deployment frequency is a standard delivery key performance indicator used by many development providers that measures how often new updates and code changes are released to production. Typically, this metric is tracked over a certain period of time to evaluate at which frequency new software is deployed to the end users and customers.
It can be considered one of the leading indicators of the efficiency and effectiveness of the delivery process. Here is how you can calculate the deployment frequency simply:
Lead time.
As we mentioned before, lead time is a KPI used in software development projects to measure the time it takes to complete a work item, starting from the beginning and including all of the time spent in various stages, like designing, developing, testing, etc. This is one of the fundamental metrics that help assess the team’s performance overall.
Lead time is not a complex performance indicator compared to some of the others discussed today and can be measured using the straightforward formula below:
Deployment success rate.
The deployment success rate is somewhat related to the deployment frequency metric and can be used in conjunction with the deployment process to get a more holistic picture of it. Essentially, this KPI measures the percentage of successful deployments over a given period of time to analyze the ability of the team to deliver software without critical issues or setbacks.
A higher deployment success rate indicates that software development teams can strike the right balance between rapid delivery and quality software. Here is the formula for identifying this metric:
Time to market (TTM).
Time to market is an essential KPI that measures the time it takes for software or a particular feature to be developed and deployed to the general market and become available to the customers. Measuring KPIs like these can demonstrate how quickly a business is capable of delivering a finished product and being competitive against others.
While time to market does not account for the quality of the final product, it is still helpful in conjunction with other KPIs to track your progress. You can look at the formula below to calculate TTM:
Change failure rate (CFR).
The change failure rate is a performance indicator that is meant to detect and determine the changes, such as updates, that lead to failures or defects after they have been released to the production environment. This metric is tightly intertwined with other deployment measurements and helps companies assess the stability of the delivery process.
An important thing to note here is that the change failure rate does not account for the failures during the testing phase and only counts issues after the deployment. A formula to determine CFR looks like this:
After reviewing the main types of metrics and performance indicators, you should now have a clearer understanding of what measurements can be adopted to suit your software development project the most. Keep in mind that KPIs show a cohesive view of the process only when they are used in combination with each other.
Benefits of choosing the right KPI for software development
Leveraging KPIs to track the progress of your development project can offer a variety of benefits and advantages. Since it’s common for different software development methodologies to be used, KPIs provide insight into many intricate details of the process.
KPIs for software engineers act as guidelines that point toward a more cohesive and comprehensive improvement, targeting specific areas as opposed to making generalized choices. The indicators also serve as a better communication line between the development providers and their clients. This can ultimately streamline the progress and help avoid miscommunications.
Overall, using the metrics we have discussed today has become an established practice, without which the process would suffer significantly. To put it more shortly, here are the main benefits of using KPIs:
- Identify strengths and weaknesses,
- Better resource allocation,
- A clear understanding of the project’s status,
- Set realistic expectations,
- Evaluate the team’s productivity,
- Culture of continuous improvement.
By taking a deep dive into the different types of KPIs with our guide, you can hopefully paint a clearer picture of why your software team should definitely utilize at least some of these metrics. Be sure to assess your project needs to figure out which indicators of success would best reflect your business goals and objectives.
Final thoughts on software KPIs
Implementing the right kinds of KPIs can be extremely helpful in understanding a multitude of intricate processes that encompass software development, testing, and delivery efforts. Each software development KPI acts as a guiding tool that enables specialists to have a birds-eye-view of the whole development process, identify areas for improvement, and bring high-quality software projects to life.
With the help of KPIs, you gain a comprehensive picture of the team’s performance and enable streamlining software tasks, identifying issues before they reach a critical point. In our article, we intensely studied what software KPIs are, the four main types of metrics, and the benefits of using them. With formulas provided for each type, you can equip your system with the necessary metrics today.