The software industry has grown exponentially over the past decades, becoming one of the most critical sectors in this digital era. Gartner projected that IT spending would reach $1.4 trillion in 2023. Agencies must ensure their processes are efficient to stay competitive.
This affirmation gains relevance because around 70% of projects don't survive the product development process. Due to it, 80% of business leaders think that speed in software product development is crucial. Given that, on average, launching a new product can take over a year, I will have to agree with them. Development speed and productivity are crucial.
How can you tell if the development team meets the project growth requirements? How do you know if commitments and delivery are timely? You guessed it: by defining and implementing Product Development KPIs! These give you a solid understanding of progress and the weak points your team needs to work on. So, this blog post will cover the essential Product Development KPIs you should track. Plus, we'll go deeper into why these are critical by providing an overview of how they work and how you can implement them.
What is a Product Development KPI?
KPI stands for Key Performance Indicator. This business term encloses meaningful performance measurements. These metrics will tell you how well they're doing and the areas that need improvement. You can think of KPIs as a scoreboard for your product development team. Without them, adjusting your product strategy as required would be pretty hard.
Product Development KPIs are one of the Agile Methodology's cornerstones. These allow Project Managers (PMs) to set specific goals for each iteration and make informed decisions to improve performance. You can also think of them as business performance metrics that show how well your team uses business resources. That's why they're so important!
How to Use Product Development KPIs?
IT agencies may have some Product Development KPIs in common, but they can adjust them as required. In fact, most of them vary depending on business criteria, so you must select the right ones depending on your team's capabilities and goals.
The first step is to identify product goals. Identifying business growth opportunities is essential because KPIs aim to let you know if you have achieved them. Once you've done that, there are a few characteristics you want your KPIs to have. Your Performance Indicators should be Simple, Aligned, Measurable, Relevant, and Actionable.
You must ensure your KPIs cover all the aspects needed to achieve product goals, focusing on efficiency, speed, resources, quality, and feasibility. Nonetheless, there are a few more things you must consider. You must review your Product Development KPIs regularly and update them if needed. Lastly, informing your team how to track them properly is fundamental. These days, multiple productivity apps can help you do that easily.
Examples of Product Development KPIs
Product Development KPIs can vary depending on business criteria and goals. Here we'll show you some that you'll want to consider.
1. On-Time Delivery KPI
This metric reflects whether the development team meets expected deadlines or not. As a result, this KPI is critical to building trust and business relationships with clients and users. Combining this KPI with feasible goals will help developers organize their workflow correctly. This way, they can improve productivity and efficiency. Once again, depending on business criteria, you can measure this KPI on days, weeks, or months.
On top of that, you can consider every small GitHub Push to every big release. It's a common practice to present delivery on a time frame as a percentage value. A practical example of a goal could be "Keep Delivery On-Time above 95% by the end of every month." It's also very simple to calculate! (On-time deliveries / Total deliveries) * 100 = On-Time Delivery Percentage.
2. Team Velocity KPI
Delivering every release before deadlines is excellent! Yet, you need more data to see what the team can improve. Knowing that the team finished the work isn't enough. The idea is to aim for continuous improvement. You also need to measure the units of work they completed in every iteration or sprint. Product team velocity is the foundation of Scrum and Agile Methodologies.
Product Owners or Managers present this KPI as an average and check how it evolves. The work units receive the name of story points or stories. Tracking team velocity is also perfect for seeing how data-driven decisions affect performance. Plus, you can use it to forecast how long it will take to complete a project or an additional feature launch for a product.
3. Burndown Charts KPI
Product Managers use burndown charts to evaluate team progress toward work completion. This KPI plots the remaining work against the deadline. The Y-axis shows the sprint or project scope, and the X-axis shows the remaining story points. Based on that, you can adjust the process or strategy accordingly to your deadlines. This KPI is so popular that Agile platforms like Jira, Asana, and Monday have them built-in. Here's an example of a burndown chart from Jira that even shows non-working days.
4. Resource Utilization KPI
It gives Project Managers detailed information about how effectively developers use their time. This way, it typically measures working hours and operational tasks completed. Taking meetings out of the equation is a common practice and highly recommended. Yet, it's up to you to decide the principal or core tasks that are convenient to consider. Resource utilization also helps with planning and forecasting the time to complete projects.
Why are Product Development KPIs Important?
Based on what we have seen, it's clear that KPIs are strongly related to a product's outcome. You can only have a competitive advantage only by optimizing the use of your resources. Even if your business survives that way, you'll miss many opportunities. Delivering a product slightly sooner than your competitors constitutes a massive advantage. Let alone if the development team goes the extra mile thanks to KPI's meaningful insights.
Giving the development team KPIs with attainable goals conveys a sense of responsibility. You make them more aware of their obligations. Plus, you can use them to celebrate their accomplishments. This way, product development KPIs also promote healthy competitiveness in your team. That keeps them motivated to give their very best. All in all, Product Development KPIs are one of the most critical aspects of the Product Development Lifecycle. Using KPIs translates into increased user satisfaction, productivity, and profitability.
Final Thoughts
Product Development KPIs are vital to achieving productivity and profitability in Product Development. However, tracking and updating them regularly based on performance is also critical. Ultimately, you must ensure you set the right goals for the development team to work at its best. Also, remember that overworking leads to a drop in quality. Thus, using KPIs to ensure they're always at maximum capacity is counter-intuitive.
At Capicua, we know the importance of product management KPIs for delivering seamless products. Our software development team view is critical to achieving top quality, productivity, and competitiveness. We always strive to give the best possible results to our clients. Therefore, we implement, analyze, and update KPIs during the Product Lifecycle. We also implement Business KPIs to ensure we operate as efficiently as possible.
