Essential Software Development Metrics & KPIs for Businesses

What Is Software Development Metrics?

Software metrics, to put it in simple terms, are a way to determine the quality of the current process and plan accordingly based on the insights that can be derived after measuring the quantifiable characteristics of the software.

The primary goals of software development metrics were to track the development process and understand the developer’s progress. It helped them derive a rough estimate of time and cost, thus ensuring top-quality software solutions delivery within a reasonable time frame.

It was the introduction of KPIs that made even the post-development tracking easy, making the process more fruitful for businesses. But in all this, the crucial factor is finding the right software development metrics tool.

With the right tools, businesses can easily perceive complexities, identify problem areas, and streamline the project in a manner that reduces the risk of failures. These tools when combined with your management functions to design procedures simplify the development projects.

Benefits of Tracking Software Development KPIs and Metrics

From optimizing workflows to facilitating collaboration, software metrics tracking can augment businesses across diverse facets and in multiple ways, some of which are:

• Simplifies  evaluation of software’s quality and progress
• Improves the analysis of workflow risk and efficiency
• Enhances software quality with easy-to-track data
• Promotes collaboration for a healthy work environment
• Encourages effective resource allocation with data-based decisions
• Refines code stability by reducing the amount of code changes

How to Track the Software Metrics

There are numerous metrics in the market today. This is why it is essential to first understand the requirements and priorities. Then you can easily decide on the metrics you want to implement.

These metrics will help the development team derive actionable insights and, thus, will play a major role in directing the software development journey.

With these 6 easy steps, one can easily track the software development metrics

Step 1: Decide which part of your business operations you want to track to facilitate metrics selection

Step 2: Select the metrics that align with your business goals based on the priorities decided in step 1

Step 3: Use modern project management tools like CI/CD pipelines to minimize manual effort and errors

Step 4: Assess performance and identify improvement areas based on past data and current trends by setting targets for each metric

Step 5: Analyze and update the metrics to stay in sync with trends and improve decision-making

Step 6: Regularly hold meetings to distinguish strategies that worked well from the ones that need to be changed.

Different Types of Software Metrics

There are various types of software development metrics in the market to track different aspects of the development process.

It is essential to integrate the right form of metrics for the exact function you seek. For example, to assess the performance and development quality of the developer, you need to implement developer metrics, while to understand the system performance, you should track operational metrics.

Let us understand the different types of metrics, their specific roles in the development process, and how these metrics optimize software development services.

Developer Productivity Metrics

Quality development requires utmost attention, understanding, and optimal productivity. Businesses use software developer performance metrics to understand their proficiency throughout time or based on certain criteria.

Some of the top developer productivity metrics are:

1. Work Log
   This metric helps you understand how much time is spent by a developer on a particular task, thus giving you an insight into their work patterns and team dynamics. With the help of “Work Log” metrics, you can easily collect valuable insights from various data sources like code commits, merge commits, PR comments, etc.
   
   Using this, you facilitate development and quicken the process by taking proper measures against the obstacles.
    
2. Code Churn
   Code churn implies the number of times a developer has revised a given code by either rewriting or immediately deleting it. The time spent by developers on modifying the codes can be measured with software developer performance metrics.
   
   This helps the development team make data-driven decisions and bridge the gap between quality product development and requirements. Some of the commonly used metrics for measuring code churn include noting the percentage of modified code lines, the number of code files modified, and many more.
   
   These metrics will help the team to identify how their code is turning out, if there are any loopholes, and make required decisions.
    
3. Lead Time
   As the name suggests, these software developer performance metrics are used for measuring the amount of time taken to deliver the final product to clients. The time is calculated from when the company receives the project until it is developed and successfully delivered.
   
   These metrics show how the project is progressing, and what part is consuming how much time. This will help the team to make an effective plan for an improved development process.

Operational Metrics

The rise of custom software development services has increased the requirement for real-time tracking of business activities. Operational metrics help identify the improvement scope in the development process.

Various types of software development performance metrics such as inventory turnover, error rates, employee productivity, and cycle time can be implemented to monitor different domains like marketing, sales, development, and many more.

Some of the commonly used Operational software development metrics are:

1. Mean Time Between Failures (MTBF)
   MTBF is used to calculate the average time between the operations and failure. This metric is a great solution for software services. If the duration between the two failure incidents is longer, that means the system is reliable.
   
   It also gives developers an idea of when the failure is occurring, along with the time consumed in fixing it.
   
   It helps developers predict possible failures and an estimated time frame for resolving the issue.
   
   To put it mathematically, MTBF is:
   
   MTBF = Total operating time / Number of failures
   
   For example, suppose a software solution operated for 2500 hours in a year, and experienced 10 failures in the said timeline.
   
   Then, MTBF would be 2500/10 = 250 hours.
   
   This implies that on average the software can work for 250 hours continuously before it fails or breaks down. While there are other deciding factors as well, with MTBF, one gets a starting point. This gives them a basic understanding of how the system works and how reliable the final product is.
    
2. Mean Time to Recover (MTTR)
   MTTR is a software development performance metrics that is used to measure the time required to repair the failed software component. Measuring MTTR can be a good way to check an organization’s efficiency and disaster management skills.
   
   MTTR encompasses everything from alerting the technician about the issue to diagnosing the root cause to getting the necessary repair work followed by reassembling and calibrating the software.
   
   Assuming that the tasks are performed by an experienced developer and in a set sequence, MTTR can be represented mathematically as -
   
   MTTR = Total maintenance time / Number of repairs
   
   To explain it with an example, if a software development team has spent about 150 unplanned hours on fixing the failed software within one year and it has broken down 5 times in the same time frame, MTTR would be -
   
   MTTR = 150/5 = 30 hours
   
   MTTR is a strong indicator of how resilient the system is and how often it experiences a breakdown. Things like other infrastructure, software’s age, type, criticality, etc. also play a major role in determining MTTR.
   
   A lower MTTR score implies the reliability of the software, though a score below 5 is generally considered ideal.
    
3. Sales Revenue and Profit Margin
   In the end, all the metrics employed are primarily to get an insight into how the business is performing — whether there is a considerable amount of growth or not, or whether the strategies implemented are in sync with the company’s goal or not.
   
   While there are numerous nuances that add to determining the business growth and expansion, one way of determining it is by calculating the sales revenue and the profit margin.
   
   Calculating the sales revenue will give you an understanding of what strategies are working for your business and which ones need revision, while, the gross profit margin will help you separate the cost of goods sold (COGS) i.e. cost incurred in producing the said product from the profit made.
   
   To represent both of them numerically,
   
   Sales Revenue = Income from sales - Returns in sales
   Gross margin = [(Sales revenue – COGS) / Sales revenue] x 100
   
   Again, to understand it in the form of an example, suppose the company gets $1000 returns for every sale worth $2000. The sales revenue in this case would be $2000 - $1000 = $ 1000.
   
   Now, continuing in the same scenario, with the sales revenue of $1000, the company also incurs a COGS of $600, so the gross margin profit would be [($1,000 - $600) / $1,000] x 100 = 40%
   
   These two are good measures to see if the software solutions and agile software development metrics integrated are working in sync with the business goals and objectives or not. 

Test Metrics

Faster testing is a necessity to deploy top-quality software products. And it can be easily optimized with test metrics. These are good indicators of the quality and performance of the software testing techniques.  

Developers working on complex projects that involve numerous intricacies, for example, aviation software development or FinTech, or the healthcare industry can especially leverage the benefits of testing metrics for designing quality software within the stipulated time. This is what makes test metrics one of the key metrics for software development.

Some of the commonly used test metrics include:

1. Defect Distribution
   It helps developers identify the parts in their software that are vulnerable to defects and also sort them on the basis of type, root cause, priority, severity, etc.
   
   The data tracked using these software development metrics can be stored in the form of different charts like histograms and pie charts for a better grasp of which areas require maximum defect removal.
    
2. Test Economic Metrics
   Every step of the software development journey requires some investment, whether it is in the form of time, effort, tools, or funds allocation. Tracking these investments is important to get an accurate estimate of the cost incurred.
   
   This is where test economic metrics come into play. With a diverse range of test economic metrics in the market like, schedule variance, cost per bug fix, budget variance, etc. knowing and bifurcating various testing costs can be simplified.
    
3. Test Team Metrics
   While working with a team to test a particular software can quicken the task, it also makes it difficult to track the roles and tasks distributed per team member. And, if you are considering software development outsourcing for testing your software, the remote locations can add to the already existing difficulties.
   
   This is why, businesses invest in test team metrics. It allows easy tracking of the development process and progress. With test team metrics businesses can easily see the amount of defects discovered, allocation per team member, and how many defects returned per team member. 
    

Usability Metrics

The ultimate testament to a project’s success is how the customers interact with it. While the initial success can be because of effective marketing strategies and brand preferences, but eventual customer retention or loyalty can only be achieved by maintaining a quality customer experience.

To ensure continuous interactions and maintain usability, you need to design marketing and branding strategies that match your business goals. This can be achieved with the help of usability metrics.

These metrics give you an in-depth insight into customer behavior, interaction, and improvement scope. Additionally, if combined with SaaS architecture businesses can get complete insights about software performance and user insights. This will help them to optimize decision-making with data-driven insights.  

Regardless of whether you hire SaaS developers or not, these usability metrics can assist you in analyzing the user experience and assist you in designing the right interfaces -

1. User Error Rate
   As per the name, it records how frequently users enter the wrong details in the application. It can be a major signifier of error opportunities and thus a reliable and good metrics for software development.
   
   A high user error rate means a less user-friendly website or application. Using these insights, developers can improve overall customer experience with easy-to-understand and navigate UI/UX designs.
    
2. Conversion Rate
   As the name suggests, the conversion rate is used to see the total number of visitors and how many of them did the desired tasks like showing interest in the brand, requesting a quote or making a purchase, etc.
   
   A high conversion rate will imply that your business is moving in the right direction with the right strategy and, thus, will yield more consumers. A lower conversion rate, on the other hand, shows how the particular strategy requires revision, thereby identifying gaps between the goals and methodologies.
    
3. PULSE Metric
   PULSE metrics is mainly used for large-scale tracking of how the business is performing. Diverse aspects like bounce rate, average time spent, areas of interest, etc. can be easily measured using PULSE metrics.
   
   Even though, unlike other usability metrics that track how easy it is for users to navigate through the website or application, PULSE is a software development metrics that determines how engaging the brand is for users. This is highly beneficial as businesses can leverage it to improve user experience with PULSE metrics.

Agile Metrics

The present business model requires an agile methodology for streamlined processes. And, to track its effectiveness, agile software development metrics are needed.

Using the agile methodology with software development metrics, the team can break down the whole project into smaller, easy-to-manage tasks, making the project management throughout the development process a lot simpler.

Some essential agile metrics are:

1. Lead and Cycle Time
   To measure the time required for a given project or a part of the project, lead time and cycle time metrics are used.
   
   Lead time determines the amount of time spent from when the project is requested till the delivery. While cycle time calculates the amount of time it takes for the development team to complete the given task.
   
   These two software development metrics when used together can improve the effectiveness of the development team for a faster development process.
    
2. Throughput
   Throughput is used for measuring the number of tasks and subtasks completed within a specific period of time. This shows the amount of work done by every member of the team for a clear understanding of their workload.
   
   Using these agile development metrics, team leaders can effectively distribute the tasks so as to avoid resource burnout and better quality end product production.
    
3. Net Promoter Score
   Net promoter score is one of the most preferred software development metrics that focuses on tracking customer loyalty based on how satisfied they are with your services.
   
   According to the net promoter score, the customers can be divided into three groups based on the rating, namely:
    

• Promoters - Will give a rating of 9 or 10
• Passive - Will give a rating between 7 to 8 
• Detractors - Will give a rating of 0 to 6  
   

Key Performance Indicator

KPIs or Key Performance Indicators help you understand how well your business process aligns with the business goals. This is done by taking into account the overall business performance. It includes the productivity of the members, their punctuality, and the quality of products delivered.

Some of the highly essential KPIs required for software development are:

1. Sprint Burnout Charts
   It is the graphical representation of the project’s progress thus making it one of the important software development metrics. Majorly used by scrum teams, it can help in better comparison of planned and actual tasks, thereby bridging the gap caused by inconsistencies. It also helps the team stay updated throughout the process by holding regular meetings.
    
2. Velocity
   Velocity is used to assess how much work is getting done per sprint. Out of all the ways, the most popular one is story points, which evaluate the project size and the time required to complete it. Velocity can also help get an approximate of the development costs in advance.
    
3. Release Burndown
   It is one of the most important KPIs as it is a graphical record of the entire development process. This can be especially useful for team leads to better manage the on-time release of the final product.
   
   The release burndown charts, that contain sprints on the x-axis and story points on the y-axis, will help the team realize if the process is going per schedule or not. Additionally, it can be really helpful to inform the clients beforehand in case of any delays or early release.

Conclusion

All in all, it is evident that regular tracking is a huge aspect of a successful project deployment, and, software development metrics can simplify it. Using these, the development teams can witness considerable improvement by leveraging the valuable insights.

These metrics are beneficial for all business models, whether you hire in-house developers or go for offshore software development. Developers can easily track performance, identify improvement opportunities, and design the software development process accordingly using the software metrics.

However, the crucial thing to remember for the right integration is to understand your requirements and accordingly decide which software metrics and KPIs will suit your business model. After that, you can connect with the right service provider for hassle-free implementation.