TOP 7 Software Development KPIs to Measure

When an engineering team works on a product, they must know everything is going well and as expected. KPIs are essential to meet business goals and stay updated on the progress. They also help the team meet product launch deadlines. Gartner found that 45% of product launches are delayed by at least one month, and 20% of them don’t meet their internal targets.

This article covers the core software development KPIs to follow. Leobit uses these KPIs in the projects completed for our customers and recommends them as best practices.

A KPI (key performance indicator) is a specific measurement used to evaluate the performance of a company or project. When applied to software development, KPIs allow teams to align with business objectives and follow the initially approved schedule.

Even though custom software development KPIs are usually associated with the volume of written code or commits, they are much more versatile. You can also check the financial metrics and other KPI types below.

Software development KPIs fall into three categories: financial, customer, and productivity. All of them are critical to launching a successful software product. Yet, you will need to monitor them at different project stages. While productivity metrics matter during the software development stage, financial indicators are more critical in the long-term perspective.

Financial KPIs measure the profitability of the company or software product. They allow you to estimate the funding necessary to meet the annual spending plan. The financial KPIs are also essential to compare yourself with competitors and use these findings to improve your market position.

Financial KPIs include Working Capital, Net Profit Margin, Operating Cash Flow, Monthly Recurring Revenue Measure, Average Sale Price, and others.

American Deposit Management reports that out of the 400,000 businesses launched annually, half will cease operations within their initial five years, with inadequate cash flow management emerging as the leading cause, cited by 82% of failed businesses.

Customer-focused KPIs allow you to see how satisfied your customers are with the product. Start using them after making the first app version available to end users. These KPIs show customer retention and the time spent in your app. If the users leave your applications too soon or show low activity, it’s a direct sign you need to modify your product. In financial services, a 5% boost in customer retention translates to a more than 25% increase in profit due to the tendency of returning customers to make progressively higher purchases over time.

The main customer KPIs are Customer Lifetime Value (CLV), new/lost customers, acquisition cost (CAC), and NPS score.

This group of KPIs evaluates software quality and your team’s productivity. These metrics are mainly used by PMs, engineers, and quality assurance specialists. You can measure the time spent on any process (e.g., discovery phase, requirement discovery), sprint duration, the volume of written code, the number of source code lines tested, etc. Establishing quantifiable objectives such as Key Performance Indicators (KPIs) enhances individuals’ effectiveness, resulting in a 33% increase in their ability to achieve goals.

By measuring software development KPIs, you make the SDLC more controlled and predictable. You can ensure the quality of the created product and enjoy the following benefits:

These advantages make tracking software development KPIs worth the effort it takes. Contact us for consulting if you need help organizing software development and tracking. Leobit can provide recommendations, cover specific SDLC stages, or create a custom product from scratch.

You have a variety of financial, customer, and productivity KPIs to measure in your project, but there is no need to track them all. Focus on several key performance indicators critical in your case. Here we have gathered the core software development KPIs we use in our company and recommend adopting.

Sprint burndown helps measure the progress of your Scrum team and see whether you need any changes to the work process. It measures how many tasks your team completes during a specific sprint. This KPI is visualized as a graph comparing the completed and remaining work.

The desired burndown speed is the burndown speed required to finish all the remaining tasks in the sprint.

Release burndown is similar to the sprint burndown metric but covers a larger scope of work. It shows the remaining work for a product release. Using a release burndown graph, you can determine whether your team keeps up with the schedule. It’s a helpful metric for internal team management and communicating the software development progress to the customer.

By the way, the release burndown report is available in Jira. So if you use this tool within your team, tracking release burndown should be easy.

Cycle time is a software development KPI measuring the time spent on a particular task. It allows you to evaluate your team’s performance and plan the following product development stages more efficiently.

Velocity is the scope of work your team can complete during a sprint. In agile development, the average duration of a sprint varies from one to four weeks. Thus, you need to measure velocity every several weeks.

The most convenient way to measure it is story points. Story points are the effort required to complete a product backlog item or piece of work. Usually, it takes at least three sprints before you understand the average team’s velocity. Once you know the velocity, use it to ensure your project goals are realistic at every stage.

The cumulative flow diagram is a Kanban and Agile analytics chart that visualizes cycle time, throughput, and work in progress. It shows how stable your flow is and provides quantitative and qualitative insight into past and current problems. You can see when more tasks are given than completed to keep the balance.

Flow efficiency is the ratio between your team’s active time and total time spent. The work-in-progress status doesn’t always mean your teammates are working. They may wait for new tasks or remain at a standstill for another reason. Hence, you should know the actual efficiency of your team.

To calculate flow efficiency, you must divide the active work time by the total cycle time.

Code coverage is a KPI to measure the code quality and effectiveness of your tests. It’s essential for projects that require continuous delivery and test-driven development. Simply put, the code coverage metric shows what percentage of code your tests are reaching. The higher the percentage, the more bugs you are likely to find.

To calculate code coverage, you need to divide the number of lines of code executed by a testing algorithm by the total number of lines of code in a system component.

The listed KPIs are particularly valuable for project managers who want to track team performance and software quality. They also allow you to keep all stakeholders informed on the project’s progress.

Hire Leobit as an engineering services provider to develop an app with maximum efficiency. We use multiple KPIs to create quality solutions and manage the SDLC.