KPIs to Measure Your Software Development Vendor

April 04, 2023 • 305 Views • 15 min read

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Bohdan Vasylkiv

CEO & Co-Founder

As well as in any other business, having your key performance indicators, or simply KPI is essential. However, while in most industries like commerce or industrial production, these metrics are apparent, what are KPIs for Software Development teams, when a few independent teams are working on the same app development process? Clearly, you won’t count the number of developer applications, or the number of implemented features. So, what shall you do then?

Types of KPIs for Software Development

First things first, we have to figure out what exactly you care about the most. It is hard to define the overall KPI for the software development process at once. So, instead, it is preferable to use another principle. As one famous saying says, “divide and conquer”, i.e. the best way to correctly choose KPIs, which will help you to measure the productivity of your in-house developers or outsourced dedicated team, is to set up individual KPIs for each of the departments or teams.

Key performance indicators never show the whole picture at once, at least while they are “raw”. At the same time, having the results of productivity in each direction, related to each team, which is somehow related to the development, allows you to make a final assumption: whether your company meets its goals and business objectives, or not. And if it doesn't meet its goals, then what is the specific reason for it, or which teams or aspects are causing it? So, for KPI works as supposed to, we need to choose the correct development metrics. Yet, before choosing these metrics and setting up the criteria for performance and success, we need to understand the main directions worth considering, the ones, which allow you to define whether there is any progress, and what this progress is.

Commonly, there are three main types of KPI metrics, which directly impact business growth:

  • Customer metrics are used to define customer satisfaction with the product, their retention status, etc. In other words, these metrics are essential for any product. Still, they are a must-have when it comes to software product development itself. Clearly, it is impossible to measure customer satisfaction with the app performance, which does not exist. Usually, these key metrics are implemented and taken care of during the testing stage and after the app was published online.
  • Financial metrics are as important as the previous ones. Still, they are more related to the administrative aspect of the software company. It means, that it includes various aspects, related to the financial aspects, and include other working processes, even the ones, unrelated to software development.
  • Performance metrics are more about the final results of different departments and even individual employees. Of course, software engineers' performance metrics are just a small part of this KPI type, yet we will pay more attention specifically to developers’ KPIs for a better illustration.

KPI for Development Team

So, we narrowed the list of performance indicators to KPIs for Software Development specialists. However, before naming the best such indicators, let’s briefly talk about other popular development metrics.

How not to Measure your Developer’s Performance

For example, it is a very common practice to measure the performance of a developer by counting the number of code lines, calculating the time, spend on coding, or summing up the number of deploys.

Frankly speaking, all the foregoing principles have a right to exist, yet the number of possible cases, when it is appropriate to consider them as great performance indicators, is very limited. Judging from our software development experience, in most cases, these metrics are useless due to the fact, that each of them shows no actual progress:

  • the number of code lines is a very subjective indicator due to the fact, that there are multiple ways to code the same task. To make it simple, the same feature may be coded in a few strings, or it can be stretched across dozens of individual lines of code. As a result, you will finish the same task in both scenarios, yet the second one seems more productive and efficient, judging from the number of lines of code.
  • Calculating the time is also an arguable KPI metric unless you have something to compare the final result with. The more complicated task is - the more time it will take to finish it. So, using such software development metrics in the wrong way will result in considering software engineers who take less responsible and are performing simple tasks more productive, than a senior developer, who is building a microservices architecture for your app solo. Clearly, it is a wrong judgment(even if there are questions to your senior dev, why is he/she performing such a complex task individually).
  • Summing up the number of deployments. One word - DevOps. Two more words - common sense. It is a very widespread practice to split a single complex deployment cycle into plural more simple and easier deployments. How are you going to count them then?

Summing up all the above, instead of simply integrating a common KPI metric because everyone uses it and it is popular, try to consider your choice more wisely. For instance, we recommend considering preset KPI metrics with formulas and logic, which are used in specific cases for different development teams, depending on the context of what they are doing, what is the nature or specialization of these developers, etc.

The Lists of Best Development Metrics

  • Cycle Time

It was created specifically for DevOps teams. Due to their working specifics, it aims to measure the time, spent on a single task, from the very beginning to the end. As a result, you will get a chance not only to observe the progress of a single task and the time it requires but will also be able to define how good your DevOps team performance results are. Yet, this will be possible only in case, when you have something to compare with, i.e. it is a long-term method, which requires a list of previous similar task reports.

Cycle time

  • Development Velocity or Sprint Reviewing

This is basically a SCRUM method, which is a common choice for agile development teams. A Sprint is a determined period of time, usually 2 weeks, during which your team is performing various tasks and gives an estimation for each of these tasks at the end, measuring how difficult the task was and how much time it took to be done.

The tasks are commonly referred to as tickets, and each of these tickets has story points. As in the previous scenario, the bigger your sprint history is, the easier it is to compare, make judgments on the team's performance and predict possible future results.

Development Velocity

  • Defect Detection Efficiency (DDE)

DDE is a great development metric, which helps to define the efficiency of your testing stage. To cut a long story short, DDE is a correlation between the defects or bugs, found in the testing stage to those, that were found after the new app version release. Clearly, this KPI is designed to measure the efficiency of the testing team and the overall testing success. Yet, it not only helps to evaluate your testers but to find potential issues, which may result in skipping some bugs, directly impacting your app's performance.


  • Code Stability

This KPI is used to measure the number of code changes and iterations during the development process. To be more precise, this usually happens when the app version is being updated, or new features are implemented. Code stability is a very common yet subjective criterion. Changes within the code are a very standard process, yet the fewer source code changes are performed - the better code stability is. A big number of implemented code changes can directly impact app performance, resulting in freezes and high maintenance.


  • Code Simplicity

Another important performance indicator you might find useful is the code simplicity level. Despite the fact, that simple code is quite a subjective concept, it is still possible to define whether you have a simple and clean code, or not by comparing it with other inputs. First and the most obvious way to define if it is simple enough is to test it. So, if during the testing stage, your software developers have no extra issues with testing and understanding the code during the code review - it is clean and simple. Alternatively, if it takes extra effort and time to clarify the code samples - may be, it is worth considering rewriting code units in another way. Additionally, there are also some other more factual ways to decide if the code is simple.

  • Change Failure Rate (CFR)

Eventually, one of the alternative ways to measure the code stability, simplicity, and overall code quality is to measure the change failure rate. In simple words, to measure the change failure rate, you will need to define the percentage of failed deployments or those, that resulted in some failures.

This development metric allows us to figure out how often bugs or mistakes are made on the code level, and by comparing these unsuccessful changes in code with the overall code-based changes, we can name the final percentage of success.

When KPIs are not the Best Solution

Finally, let’s talk about when we don’t need KPIs for Software Development. On the one hand, KPIs are a very powerful instrument, which allows for tracking progress, as well as evaluating the performance of different employees. But are there any drawbacks or scenarios, when there is no need of implementing numerous KPIs and other performance metrics?

Frankly speaking, these tools are essential, when it comes to a complex development process or huge development teams. However, in case you are considering hiring an outsourced dedicated team, which includes just a few members, you may find KPI unneeded. To rephrase it, small team productivity can be easily managed and tracked by simple communication.

For instance, here at Incora, we have our own view of a software development process that works. Due to the fact, that mostly our services are narrowed down to team extension and small outsourced team services, we strongly believe, that instead of implementing new technics and approaches, it is better to pay more attention to direct communication between our team and client. As a result, it is not only easier for both sides to simply keep up everyone with the recent progress, but a high level of communication allows us to make decisions much faster and give more balanced opinions on arguable topics like app performance optimization methods and as result can impact business growth.

So, our dedicated team option includes also a software development project manager position as a standard solution. Thus, these specialists are working as intermediaries between both sides, providing our clients with the latest updates and progress, while giving the client’s feedback to the developers. However, we are always open to discussions and alternative solutions. We have a personalized approach to each of our clients and are trying our best to create the most comfortable working environment, which will suit everyone. So, before contacting us, you may also like to check our case studies to learn about our experience and better understand the overall development process logic.

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