11 Essential KPIs for Software Development

Key performance indicators (KPIs) are essential in software development. They give you a view of your performance and enable you to identify whether or not you’re on track to reaching your goals.

Software development KPIs are a little different from standard KPIs and focus on software development metrics and goals. We’ve listed the top 11 software development KPIs to help you track your business goals, as well as how to develop and track them.

First up: cycle time.

1. Cycle time

Cycle time is one of the most important metrics in software development. It’s pretty simple—cycle time is the time from starting a project to finishing it.

How does it work

Cycle time is traditionally separated into four different phases:

1. Coding time: the time between the first commit to when a pull request or merge is created

2. Pickup time: the time between when the PR is created to when the review begins

3. Review time: the time from the start of the review to when the code is merged

4. Deploy time: the time from when the code is merged to when it is released

2. Sprint burndowns

A sprint burndown is a visual comparison of how much work has been completed during a sprint and how much is left to complete. It gives software developers an easy view of what adjustments—if any—are needed to complete the remaining work for the current iteration.

How does it work

The burndown chart had a y-axis and an x-axis.

  • The y-axis measures the total amount of work the team estimates it’ll complete during the current sprint

  • The x-axis shows the number of days remaining until the finish line

There are two lines over the burndown chart:

  • The actual work line, that represents the team’s progress

  • The ideal work line, that goes from the top of the y-axis to the end of the x-axis

The goal is for your actual work line to follow your ideal work line as accurately as possible. This indicates that your team is completing work at a rate that’ll get the job done by the deadline.

For example

Sprint burndowns example.png Source

3. Velocity

Velocity is a metric that estimates how much work a software development team can successfully complete within a time-boxed period—typically a two-week period. It’s a key metric for predicting how fast work can be completed and how long it’ll take to complete a project.

How does it work

Velocity is estimated by looking at previous projects and how long they took to complete. You can choose to measure work as suitable to your need, but a popular way to do this in agile software development is with stories—the smallest unit of product development work that can lead to a complete element of functionality.

For example

If the product backlog has 300 story points, and the team is averaging 30 story points per sprint, it can be estimated that team members will require 10 more sprints to complete the work. If each sprint lasts two weeks, then the project will last 20 more weeks. If a team member is moved to another project, however, or new members are added—the velocity must be recalculated.

4. Release burndown

Similar to the way sprint burndowns give a view of what’s left to do during a sprint, release burndowns look at how well your team is working towards a release. Release burndown is also typically displayed on a chart.

How does it work

A release burndown chart has a y-axis and an x-axis:

  • The y-axis refers to the remaining amount of work

  • The x-axis refers to the time remaining to get the work done

There’re then two lines to consider:

  • The ideal work remaining line that estimates how much work needs to be done in order to hit goals

  • The actual work remaining line that shows the work that’s actually been done in pursuit of these goals

It’s similar to the sprint burndown; it just works towards a different end goal.

For example

burndown chart.png Source

5. Deployment frequency

Deployment frequency refers to how often your team pushes code into production. It indicates how quickly your team works and how efficiently you can meet user needs.

How does it work

Deployment frequency is super easy to calculate and can be measured in a way that works best for you. Typically, deployment frequency is measured on a daily or weekly basis, but you can also choose to measure deployment frequency over a larger time period.

Simply count the number of deployments over the time period and divide it by the number of units in the time frame.

For example

Let’s measure weekly deployment frequency over a month.

  • Week one: seven deployments

  • Week two: four deployments

  • Week three: six deployments

  • Week four: seven deployments

Then sum these deployments and divide the result by four:

  • 7 + 4 + 6 + 7 = 24

  • 24 / 4 = 6

Your deployment frequency is six deployments per week. You can then compare this figure to other months to see how your performance compares.

6. Cumulative flow

The cumulative flow diagram gives you an estimate of your current tasks’ approximate cycle time. It’s a graphical representation of the progress of each of your tasks, as designated in your project management tool.

How does it work

The distance between the lines of a cumulative flow diagram shows you the problems in your workflow—where you’re excelling or being slowed down. This enables you to identify and rectify problem areas, reassign projects where capacity allows, and more.

For example

Cumulative flow example.png Source

Above is an example of a cumulative flow diagram.

  • If the bands are progressing in parallel, your workflow is stable, and output is consistent

  • If the bands are rapidly narrowing, you’re completing tasks faster than you’re receiving them (a sign you’ve got more capacity)

  • If the band is rapidly widening, you’re receiving new projects faster than you can complete existing ones (a sign you need to take action to resolve issues)

7. Change failure rate (CFR)

Change failure rate looks at the percentage of deployments that fail and require some sort of remediation. CFR is a view of the quality and stability of your software development teams’ releases. Your aim is to reduce your change failure rate.

How does it work

The formula for calculating the change failure rate is:

Number of deployments that caused incidents / total number of deployments x 100

You can then compare your CFR to industry benchmarks, such as those outlined in the Accelerate State of DevOps 2021 report.

For example

Let’s say your team deployed 105 times in the last month. 73 of those deployments were successful, but 32 of them required remediation.

  • CFR = 32 / 105 = 0.305

To get the percentage, times your answer by 100:

  • 0.305 x 100 = 30.5%

8. Code coverage

Code coverage helps you understand how much of your code is validated under a test procedure. It helps analyze how comprehensively your code is verified and ready to go.

How does it work

The formula for calculating code coverage is:

Code Coverage Percentage = Number of lines of code executed by a testing algorithm / Total number of lines of code in a system component x 100

For example

If the software you are testing contains a total of 100 lines of code and the number of lines of code that are actually validated in the same software is 70, then the code coverage percentage of this software will be 70%.

9. Lead time for changes

Lead time for changes calculates the time elapsed between the identification of a requirement and its fulfillment. It measures the amount of time needed to implement, test, and deliver changes to the codebase.

How does it work

It’s similar to cycle time, but there are a couple of key differences:

  • Lead time is measured from the customer’s perspective, whereas cycle time is measured from an internal perspective

  • Lead time for changes includes cycle time and depends on it, whereas cycle time does not have a lead time for changes

  • Lead time for changes is measured in elapsed time to complete a particular development task, while cycle time is measured in time per task

Lead time for changes is calculated by comparing the time each revision was started against the time at which the same revision was completed.

For example

Lead time for changes example.png Source

10. Defect rate

Defect rate measures the number of defects over the number of areas examined—whether that’s four lines of code or 400. You can also measure your defect rate in relation to the code released.

How does it work

The formula for calculating the defect rate is simple:

DR = total number of defects / amount of areas examined x 100

You’re aiming for a low defect rate.

For example

Let’s say software testing tests 200,000 lines of code and detects 47 errors.

  • DR = 47 / 200,000 = 0.000235

  • DR = 0.000235 x 100 = 0.0235%

Your defect rate is 0.0235%.

11. Net promoter score

Net promoter score is a metric used in a wide variety of disciplines, not just software development. The NPS survey asks users how likely they are to recommend your product to others on a scale of 1-10 and separates replies into three groups:

  • Detractors: answer 0 to 6

  • Passives: answer 7 or 8

  • Promoters: answer 9 or 10

How does it work

The results of your NPS survey help you identify the overall customer satisfaction of users with your product. Promoters are your number one fans, passives need some attention to be converted to promoters, and passive are at risk of churn.

The results of your NPS survey give you insight into how your users view your product. You can use the NPS score alongside qualitative insights to identify problems users have, in order to rectify them ASAP.

For example

Your NPS score comes from asking one simple question:

  • How likely are you to refer us to a friend or colleague?

You then count responses and convert them into a percentage of responses. Let’s say you get the following responses:

  • 130 promoters

  • 30 passives

  • 40 detractors

In total, you’ve received 200 responses. You want to convert these into percentages:

  • 65% promoters

  • 15% passives

  • 20% detractors

Passives don’t count towards your NPS score either way, so you detract your percentage of detractors from your percentage of promoters:

  • 65 - 20 = 40

Your NPS score is 40—needs some work!

How to develop KPIs for software development?

Developing KPIs for software development depends on your business and goals. Are you looking to get a view of your software development velocity? Maybe it’s the performance you’ve got an eye on? Perhaps you want to analyze the efficiency of your software testing process?

Whatever you want to measure, the key to developing KPIs for your software development process is to benchmark. You need a starting point to which you can compare and track progress. Without a benchmark, you’ll have no view over whether you’re improving operations or not—you’ll just have numbers that mean nothing without comparison.

How to track KPIs for software development?

You can track KPIs manually, but that’s time-consuming and error-prone. It involves manually checking key metrics month-on-month to see how they change over time.

It’s a lot simpler, easier, and more time-efficient to use a KPIs tracking tool.

KPI tracking tools and software offer software development businesses a number of benefits:

  • Intelligence: get greater insight into your software development metrics, including where you’re excelling and what needs work

  • Benchmarking: say goodbye to manual benchmarking. This software does it for you

  • Communication: easily pull and share KPI reports with your team and stakeholders

  • Motivation: set actionable goals that your team can focus on and achieve

  • Consistency: these tools offer a consistent, methodical approach to calculating KPIs so you can ensure you’re always getting accurate information

How to track KPIs for software development?.png

Find software developers that contribute to your KPIs

Knowing which KPIs to track is the easy part—it’s hitting these KPIs that’s tricky. You need a team of dedicated software engineers who understand their role in hitting goals.

Get in touch with Remotebase today if you’re looking to grow your software development team ASAP. Simply share details on what you’re looking for, and get connected with your ideal software developer in a matter of days.

KPIs for software development FAQs

Why are KPIs important for software development?

KPIs are important for software development because they help track progress and overall performance to ensure everything is running smoothly.

How many KPIs should a company have?

There’s no set amount of KPIs a company should track; it depends on your business and operations.

How often should KPIs for software development be measured?

It depends on the software development KPI, but it’s a good idea to check in on KPIs on a monthly basis. Some require more time in order to see progress, whereas others can change relatively quickly.