Key Performance Indicator (KPI) is a value measurement system that indicates how effectively a company, department, or individual employee achieves the pre-determined key business goals. The KPIs depend on the focus point of a project or business. It is a crucial factor in ensuring the quality of the software and its alignment with the company goals.
One of the many usages of KPIs is in the software development sector. So the question comes, what is the importance of KPIs in software development? Let’s explore the significance of KPIs in the domain of software development.
What is the Role of KPIs in Software Development?
Like any other project management, KPIs can enhance software development several times. Let’s break it into small parts to make it easy to understand.
Engagement and Performance
According to a study by Gallup, the teams that use KPIs for tracking their goal achievement have 21% increased engagement. As a result, they are more productive, and their performance is far better than others who don’t use KPIs.
Success Rate
Another study comes as Standish Grpup’s 2020 CHAOS report states that projects that use KPIs for tracking progress have significantly higher success rates. The report says that projects that use well-defined KPIs have a success rate of 42%. On the other hand, projects that have no KPIs have a success rate of only 14%.
Productivity and Efficiency
Different studies show that actively monitoring a team’s achievement, development, and growth using KPIs can improve a team’s productivity by 30%. If you track the development of your project, you know how far you are from success, and it motivates you to work.
Reduced Bugs and Defects
Software teams that use quality-related KPIs like Defect Density or Code Coverage can reduce the number of bugs by 20-30%. For example, if you track and improve coverage using KPIs, you can find out and solve issues faster and earlier in the process of development. Ultimately, you will get a stable and reliable software release using KPIs.
Customer Satisfaction
According to a study by Harvard Business Review, if a company uses customer-focused KPIs like NPS (Net Promoter Score) ends up achieving around 25% higher customer satisfaction rate. And customer satisfaction is one of the prime goals of any business. The higher the customer satisfaction level, the bigger and better the company becomes.
Data-Driven Decision Making
A survey by McKinsey stated that when a company or organization makes data-driven decisions, they are 23% more likely to outperform its competitors. In the software development sector, it is highly important. Using KPIs will present you with all the crucial data you need to make sensitive decisions. The more data you have, the better data-driven decisions you can make, reducing the chances of failure.
Continuous Improvement
The use of KPIs in agile software development is very closely related to continuous improvement. According to the State of Agile Report, 90% of agile teams use KPIs to evaluate and improve their processes and working methods. Regular monitoring using KPIs allows them to maintain a consistent delivery and regularly evolve with the changing requirements.
What are the Types of KPIs in Software Development?
There is no exact number of KPIs since they are flexible and you can use any metric as a KPI as you need. However, they can be categorized under the aspects of development they measure. We have divided the software development KPIs into some major categories for a general overview.
Product KPIs
These KPIs are dedicated to monitoring the performance of the product or software itself. It measures how much the software is meeting the expectations and user requirements. Here is a list of some of the commonly used product KPIs.
- Customer Satisfaction
- Feature Adaption Rate
- User Retention Rate
- Time to Market
Process KPIs
These KPIs work in the development process of the software. They measure the development process’s efficiency, growth, and progress rate. This data helps the team to focus on key points, maintain consistency, and ensure a stable growth rate for business. Some major growth KPIs are:
- Cycle Time
- Lead Time
- Velocity
- Sprint Burndown
Quality KPIs
As the name suggests, the quality KPIs are used to measure the reliability and functioning of the product. In software development, these KPIs are used to measure bugs, test qualities, code qualities, and other metrics. The commonly used standard quality KPIs are listed below.
- Defect Density
- Test Coverage
- Code Quality Metrics
- Mean Time to Repair
Business KPIs
Business KPIs are commonly used to link the software development process to strategic business goals. This makes sure that the time and efforts invested in the software development contribute to the goal achievement and success of the business. Some key business KPIs are:
- Return on Investment (ROI)
- Customer Lifetime Value (CLV)
- Acquisition Cost
What is the Best Tool to Track KPIs?
It is not possible to use or track the KPIs of a whole project or company manually. You need a specialized and dedicated KPI tool that will do all the work for you and show you the results in the best possible format.
If you are looking for a KPI tool or software, ProKPI will be your best option. It has many useful and realistic features that will make the assignment, tracking, and evaluation easy. Let’s look at some of the core features of this employee KPI monitoring tool.
- You can set goals for different levels of employee designation, from groups to individuals.
- You can assign goals for yourself to boost your personal growth and achievements.
- There is an approval system where your superior will approve your KPIs.
- You can set unlimited KPIs as per your requirements.
- You can divide a project into little portions for the most optimal outcome based on a yearly, monthly, quarterly, or even weekly time limit.
- The tool is reasonably priced and subscription based payment system.
- User-friendly interface that you can easily adapt to.
There are also 3 major factors of project management that we focus on. These have a significant contribution to your business improvement.
- Tracking Every Detail: You can track everything regarding the project using ProKPI. This includes the project timeline, deadline, team members, and all other KPIs. It allows you to manage and monitor the whole project effortlessly.
- Smart Reporting: Reporting is important because there is no meaning or tracking anything if the reports are too complicated to understand. ProKPI will deliver the reports in simple, easy-to-understand formats like graphs or pie charts. It makes the achievement tracking and performance tracking fast and easy.
- Decision Making: Using the SMART goals system is the best decision to set KPIs. As mentioned earlier, the reports will be in a simple format. So, you can make well-informed decisions, reducing the risk and failure chances.
Overall, ProKPI will make using KPIs in software development fast, efficient, and easy. As a result, your and your team’s performance will increase with your achievements and contributions to the company.
Final Thoughts
Like any other business sector, software development is also highly influenced by the use of KPIs. It provides measurable insights of both the development process and the software product. KPIs also combine the development work with the core business goals.
So, you should start using KPIs for your software development project for consistent and efficient workflow.
FAQs
What is SMART KPI?
SMART KPI is a format for assigning KPIs to boost employee productivity and success. SMART stands for Specific, Measurable, Achievable, Relevant, and Time-bound. It is the most successful and efficient framework for setting KPI goals.
What is the meaning of the 4 P’s of KPI?
The 4 P’s is a term that identifies the most crucial aspects of a KPI that aligns with your business strategy. They are Product, Price, Place, and Promotion. These 4 P’s are key to business success.
Which is the best tool to track KPIs?
Tracking KPIs is not that hard if you use the proper tools and software. For example, you can use ProKPI, an easy and effective KPI management system to assign, track and report KPIs.
