As software development becomes an increasingly critical factor in today’s business landscape, the need for accurate and comprehensive metrics to track productivity and measure success becomes paramount. There are many different software quality metrics and key performance indicators (KPIs) that software development teams can track. Still, it can be challenging to determine which metrics are most relevant to your project’s requirements. At Nearshore Friends, the team believes that following the right metrics and KPIs can significantly impact the productivity and success of your software development team. In this article, we’ll share the 12 fundamental software development metrics and KPIs essential for any organization looking to optimize its software development process.[image]

Product Development Metrics: 4 KPIs to Consider

Before moving on with some development-specific metrics, reviewing the product metrics, which are handy for decision-making, could be relevant. Since these mainly focus on reaching business objectives, examining them from such a lens is crucial. Therefore, the most pertinent software metrics for product development are customer satisfaction, user engagement, employee satisfaction, and employee turnover. Each of the mentioned indicators and metrics significantly influences development productivity and thus should be reviewed accordingly. For this reason, let’s take a closer look at some metrics, ranging from employee satisfaction and turnover to customer satisfaction and time-to-market.

Employee Satisfaction

Employee satisfaction measures the level of satisfaction that developers have with their work and the development process. This KPI is essential as it helps the team understand the overall morale and motivation of the development team. A high level of employee satisfaction indicates a more engaged and productive development team. Moreover, you can also review the outsourcing options, such as the team extension, to help your existing team achieve the project’s goals by reaching top-notch industry expertise. Regardless of how you measure the satisfaction rates and whether you stick to team extension services, this metric is fundamental for long-term business success.

Employee Turnover

Employee turnover is a crucial KPI that measures the number of employees leaving a company within a given period. In software development, high employee turnover can significantly impact productivity, leading to a loss of knowledge and experience and heightened recruitment and training costs. Businesses can calculate the percentage of employees who have left the company within a specific timeframe, such as a year or a quarter, to measure employee turnover. Then, organizations can identify trends and solve the existing problems to improve employee retention in the long run. Employee turnover can become a severe development bottleneck, making it a reasonably necessary KPI to track for product owners and top-level executives.

Customer satisfaction

Customer satisfaction can be used to measure the effectiveness of the overall software development processes. High customer satisfaction indicates a successful software product, while low customer satisfaction can be a sign of issues with the development process or the quality of the product. Businesses can use various tools and techniques, such as surveys and feedback forms. Thus, organizations can analyze customer feedback and take steps to improve areas of dissatisfaction. Although this KPI is mainly concerned with product specifics, it’s often used for service companies and the ones delivering SaaS solutions to their clients.

Time-to-market

Time-to-market is a critical product development metric that refers to the time it takes to develop and launch a product from ideation to market release. According to McKinsey, more than three-quarters of companies already use the time-to-market KPI in their operations. The faster a product is developed and released to the market, the more competitive a business can be. This KPI allows companies to respond quickly to changing market conditions and customer demands, gain market share, and achieve first-mover advantage. Additionally, a shorter time-to-market can result in a better return on investment, as companies can start generating revenue sooner.

Software Engineering Metrics: 8 Metrics to Track

Except for product metrics, which are indeed crucial, dozens of KPIs are used for software measurement. In other words, these metrics serve a vital role in identifying areas for improvement and tracking each employee’s input to the development process. While there are dozens of approaches to metrics tracking, being aware of their application is necessary. Thus, you should review eight essential KPI software development metrics, which are widely used across the industry leaders, including:

• Lead time refers to the duration a remote development team takes to deliver a specific feature from the moment it is requested. This metric is crucial as it allows a team to measure the effectiveness of the development process, from the initial request to the final delivery. The shorter the lead time, the more efficient and productive the team is, as the developers can respond quickly to the needs of the business.
• Cycle time is not only the time it takes to develop and release a feature and the time it takes for the feature to be reviewed and approved. By monitoring cycle time, the team can identify areas to optimize the development process and reduce the time it takes to release features. A shorter cycle time can lead to a more responsive development process and a better user experience.
• Defect density is one of the most crucial development metrics that can detect defects in a codebase relative to its size. This metric is vital as it helps the team understand the code quality they are producing. A high defect density indicates that the codebase is prone to errors and bugs, which can result in increased development time and rework. AdAwer defect density can also improve team productivity, as they spend less time bug-fixing, thus dispersing the overall development scope.
• Code coverage is a metric that is well-known by DevOps specialists. It is used to measure the code quality, which is deployed for testing and production intentions. In other cases, code coverage is a KPI to determine how the code executes when deployed. A higher code coverage indicates that the code is more thoroughly tested, resulting in more polished products being released. When hiring the outsourcing development team, review this metric, alongside checking the vendor’s proven track record of delivering the related projects.
• Sprint burndown is a metric, often considered product-specific, that tracks a development team’s progress during a sprint. It measures the amount of work remaining in a sprint and helps the team identify potential roadblocks and adjust their course as necessary. A predictable and accurate burndown chart can also help the team set expectations for stakeholders and ensure they deliver features on time and on budget. On top of that, sprint burndown is one of the tools for measuring developer productivity from a retrospective standpoint.
• Velocity is an essential metric for teams that use Agile development methodologies. By tracking how much work the team can complete in a given sprint, developers can make more accurate predictions about how long it will take to complete the planned tasks. Tracking velocity can help teams identify areas where they can improve their process.
• Code quality is an essential KPI for a software company to measure the team’s productivity. Poor code quality can lead to increased errors and bugs, longer development times, and higher maintenance costs. Companies can use various tools and techniques to measure code quality, such as code reviews, automated testing, and static analysis. High-quality code can help teams deliver features quicker with fewer risks. Code reviews and automated testing can help teams ensure their code is of the highest quality.
• Bug resolution time is a crucial metric for tracking how well the development process is handled from the perspective of bug tracking. When development mishaps and bugs occur, they can cause significant disruptions, impacting the overall quality of the product and user satisfaction. Businesses can track the duration between the identification and resolution of each bug to measure this KPI. 

 It’s worth mentioning that software development teams, including the ones using nearshoring consulting services, can use other metrics. Some alternatives include change failure rate, deployment frequency, pull request size, and defect detection ratio. Ultimately, the final choice of software and engineering-specific metrics should be handled on your side. For this purpose, review the project’s scope, domain nuances, and other relevant parameters for your development team. Ultimately, the outlined KPIs can become a decent addition to your existing assessment systems in your development practices. Final RemarksIn summary, the indicated metrics and KPIs are essential for measuring productivity and enhancing the effectiveness of software development processes. The metrics outlined in this article provide a solid foundation for businesses to measure and improve their software development processes. By tracking these metrics and using them to guide decision-making, companies can improve their development processes, reduce costs, increase productivity, and ultimately deliver more reliable products to end-users and stakeholders. Continuous improvement is essential in the software development industry, and tracking and analyzing these metrics can provide valuable insights and opportunities for optimization.