8 Software Development KPIs You Need to Track for Outsourcing Projects

Imagine: you are starting a new development project, you chose the outsourcing company of your dream, and are excited about the results. But how do you make sure you get what you want?

Communication is certainly an important part of the development process, but another key to success is evaluation. Your ability to see the work and progress of the outsourcing partner ensures that you end up with the desired result. And by pinpointing the exact metrics and elements you want to evaluate, you avoid miscommunication and conflicts. That's where software development KPIs come into play.

Software development KPIs offer quantitative measures of performance, providing valuable insights into project progress and quality. Selecting the right software development KPIs enables you to effectively manage the software development process and ensure that your outsourcing partner is meeting expectations.

Key Performance Indicators (KPIs) are the lifeblood of the software development process, much like a compass guiding a ship through turbulent waters. They form an integral part of strategic planning and execution, ensuring teams consistently move towards achieving their objectives.

Software development KPIs provide a structured way to measure the success and efficiency of a project. They enable tracking and analyzing performance across different stages of the software development lifecycle, from requirement analysis to deployment and maintenance. They act as a quantifiable reflection of the development process, providing critical insights that enable data-driven decision-making.

One crucial aspect of using software development KPIs is ensuring accountability within the team. They serve as an objective record of individual and team performance, driving productivity, and fostering a sense of responsibility. When there's a quantifiable measure attached to performance, teams are incentivized to deliver their best, leading to improved productivity and quality of work.

However, the power of software development KPIs lies in their relevance and appropriateness to the specific context of a project. Picking the right KPIs is akin to choosing the correct measuring tools.

They should be Specific, honing in on particular aspects of the project. 
They need to be Measurable, providing quantifiable data that enables assessment. 
It's crucial for them to be Attainable, reflecting goals that are challenging yet achievable. 
Relevance is another important factor; the KPIs should align with the business objectives and the strategic vision of the project. 
Lastly, they should be Time-bound, and attached to a specific timeline for achieving the target.

When chosen correctly, software development KPIs can significantly enhance project outcomes, improve process efficiency, and lead to superior software products. Thus, they are not just performance indicators, but also powerful tools for driving growth and innovation in the software development process.

Now we'll see how specific software development KPIs can help manage and enhance the software development process, leading to better quality products and more efficient operations.

Delivery time is a software development KPI that measures the time it takes for a task to be completed and delivered by a vendor. It is closely related to the lead time metric, which measures the time from task initiation to completion.

Lead time in software development encompasses the total time from a feature's request to its delivery, including all stages like ideation, development, testing, and deployment. In contrast, delivery time focuses specifically on the time taken from when the development team starts working on a task until its delivery to the end-user, covering mainly the execution phase such as coding, testing, and deployment.

By focusing specifically on the delivery aspect, this metric provides insights into the efficiency and speed of the development process.

A shorter delivery time indicates that the task was completed and delivered quickly, which suggests an organized and efficient development process. It implies that the vendor was able to complete the task promptly and deliver it to the requester in a timely manner. This efficiency will have several positive effects on the overall workflow and project success.

One significant advantage of shorter delivery times is the ability to launch products faster. When tasks are completed and delivered quickly, it speeds up the overall development process, allowing for faster product launches. This can be crucial in highly competitive markets where being the first to market can give a significant advantage.

Additionally, shorter delivery times contribute to increased market responsiveness. By delivering tasks quickly, vendors can help their Clients swiftly respond to market demands and address any immediate needs or changes. This agility can help you stay ahead of your competitors and better meet customer expectations.

Monitoring and delivery time as a software development KPI can benefit you in various ways. It helps identify bottlenecks or inefficiencies in the development process that may be causing delays. By streamlining and optimizing these areas, delivery times can be reduced, leading to increased productivity and customer satisfaction.

These KPIs focus on evaluating the quality of the final product and the effectiveness of the testing process.

The Bug Rate measures the number of defects found in the product. A high bug rate suggests that there may be problems in the development process that need to be addressed.

Test Coverage, on the other hand, assesses the extent of testing performed on the software. It measures the percentage of total functions or lines of code that have been tested. High coverage indicates that a thorough QA process has been implemented, reducing the chances of unnoticed bugs or issues.

By tracking these software development KPIs, you can identify potential areas of improvement in their development and testing practices to enhance the quality of their final products. 

SCI is calculated by tracking the number and impact of scope changes throughout the duration of the project. The SCI can be measured on a scale of 0-100, with higher values indicating a higher frequency and significance of scope changes.

By monitoring the SCI, you can identify any patterns or trends in scope changes and take necessary actions to minimize their impact. This may involve conducting a thorough analysis of altering requirements, implementing more effective communication and collaboration strategies, or reassessing the project's overall feasibility.

A high SCI may indicate a need for better project planning, stakeholder engagement, or risk management processes. It can also highlight the need for more clearly defined project objectives and requirements, as well as stricter change control procedures.

Ultimately, keeping the SCI in check is essential for maintaining project efficiency, meeting deadlines, and delivering a high-quality end product. 

CFR is a measure of the proportion of changes made to a production system that result in failures or issues.
A high CFR indicates a higher likelihood of problems occurring when changes are made to the system. This can be a sign of potential issues in the development process, such as insufficient testing procedures.

Regularly tracking CFR is important as it allows teams to identify patterns and trends in change failures. By doing so, they can address underlying issues promptly and make improvements to the stability and reliability of the product.

These may include, for instance, enhancing quality assurance practices. It will help reduce the number of failures and increase the success rate of changes made to the production system.

Ultimately, the goal is to improve the product's stability, minimize downtime, and ensure a smooth and efficient deployment of changes to production.

This measures how well our company is adhering to the agreed-upon service levels. Typically expressed as a percentage, it helps assess the reliability of your partner and ensures that the quality of service agreed upon is being delivered and continuously upheld.

If you want to know how to design a fail-proof agreement, check out this article about essential clauses of an outsourcing contract.

The cost variance KPI is a quantitative measure that allows you to evaluate the financial performance of a project. It compares the actual costs to the budgeted costs of outsourcing, providing insights into how effectively the project is being managed from a financial perspective.

A positive variance means that the actual costs are lower than the budgeted ones, indicating that the project is under budget. This could be due to cost-saving measures, efficient resource allocation, or effective negotiation when conducting the agreement. It portrays good cost control and can be seen as a positive outcome.

On the other hand, a negative variance suggests that the actual costs are higher than the budgeted ones, indicating that the project is over budget. This may be due to unexpected expenses, inefficient processes, or scope creep. It highlights potential inefficiencies or issues in cost control that need to be addressed.

By monitoring cost variances throughout the project's lifecycle, you can identify areas where costs are veering off track and take corrective actions to bring them back within the planned budget. It helps in maintaining financial stability, meeting project objectives, and ensuring stakeholders' satisfaction.

The cost variance KPI enables you to track and manage costs effectively, ensuring that the project does not exceed the allocated budget.

This software development KPI is typically referred to as "Milestone Compliance" or "Milestone Achievement". It measures how successfully a project meets predetermined milestones within the established timeline. By monitoring this KPI, you can assess the progress and performance of a project, ensuring that key deliverables are being completed on time.

Tracking milestone compliance allows you to identify potential bottlenecks or obstacles that may be impeding the progress. It provides insights into the efficiency and effectiveness of teams and processes involved. Any delays or missed milestones serve as indicators that corrective measures must be taken to mitigate risks and maintain the overall project timeline.

Additionally, milestone compliance is crucial for stakeholders and decision-makers as it provides transparency and accountability. It helps them assess whether the project is on track and whether adjustments are required to ensure timely completion.

To monitor this software development KPI, our Clients typically create a milestone schedule that outlines key deliverables and their respective deadlines. Project management tools and software can be used to facilitate and automate this process.

Ultimately, keeping a close eye on milestone compliance is vital for successful project management, as it allows for proactive decision-making, timely adjustments, and the identification of potential risks and issues before they escalate.

Gathering and analyzing feedback from stakeholders and users can reveal how well the software meets the business requirements and user needs. This information can be collected through various methods such as surveys, interviews, or user testing.

The insights gained will help identify any gaps between the software's performance and the desired goals. This will uncover the areas for improvements, allowing our Clients to make informed decisions enhancing the software, and address any issues raised by stakeholders and users.

Additionally, this software development KPI provides a subjective measure of the perceived value and effectiveness of the software.

Understanding the perceived value and effectiveness of the software is crucial for long-term project success. It helps you determine whether the technological investment is justified and if it’s contributing to the overall success of the business. It also helps you prioritize future development efforts and allocate resources effectively.

KPIs serve as invaluable tools in measuring performance, identifying potential issues, and ensuring quality. They allow for effective management of outsourced software development, helping to align expectations and deliver superior results.
Monitoring the right software development KPIs can significantly enhance the success of your software development projects.

At SENLA, we discuss software development KPIs with our Сlients before the start to make sure we are on the same page. So, if you want to establish an effective software development strategy with relevant software development KPIs - reach out to us, and let’s create it together!