Setting Up KPIs Of A Development Project

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Any software development project has the potential to evolve as good as the plan behind it. The quality of project management contributes drastically to the evolution and success of a project. Good project management should always involve clarity of direction for your team as well as transparency of progress for other stakeholders. One of the most important ways of achieving both of these is by using key performance indicators (KPIs) to monitor project progress.

We suggest all our customers define KPIs of their project that can clearly define the success or failure of engagement. Here are some things you need to consider when defining the KPIs. Additionally, I have also included sample KPIs that you can apply to your project.

Index

  • Why are KPIs important
  • How to create KPIs effectively
  • Sample KPIs that you can use today
  • How to make KPIs work for your team
  • Things to avoid when setting up KPIs

WHY ARE KPIs IMPORTANT?

KPIs are much more than just numbers you report out weekly. They enable you to understand the performance and health of your ongoing operation so that you can make critical adjustments in your execution to achieve your goals. Knowing and measuring the right KPIs will help you achieve results faster and with the highest quality.

Here are some of the reasons why KPIs can prove to be extremely important:

  • Increase the overall team orientation

KPIs are often linked to incentives. However, for this to work, it is critical that everyone on your team is in agreement on the goals you are setting out to achieve. Gaps in alignment within the team can result in individuals pulling in opposite directions, negating any progress. To avoid any such occurrences, the KPIs that are defined have to be clearly understood and quantifiable. The information provided by putting together the KPI reports over a period of time empowers people to improve their own personal performance along with that of the team and subsequently the whole organization.

  • Create a predictable path

If you measure the same KPIs every week/every month or quarter, you may begin to discover patterns in your data. There are countless ways these patterns can help you in your development process. You may be able to predict when your slowest or longest production phase will be and use that time to do a system update or company-wide training initiative. Maybe you can see that you have some team members who are habitually under-performing or over-performing on their KPIs and can use this data to course correct. Additionally, KPIs are a great way to take action proactively.

  • Match expectations

The ultimate advantage of any key performance indicators is the ability to measure the results of work and its outcome accurately. KPIs help you to gauge whether or not your actions have been able to deliver the expected results. KPIs help set parameters against which performances can be measured. Once the clarity in measurement is achieved, the team has a direction to follow.

  • Prioritize focus areas

In addition to your results, you also need leading indicators to let you know when you are in danger of missing those targets before it is too late. Leading indicator KPIs help you predict future results. They let you know if you are on track to achieve the results you want. Leading indicators usually have two characteristics; they are measurable, and you can directly influence them with your action. They are good KPIs to have on your dashboard to keep your development projects on track and prioritize focus areas.

  • Create a benchmark

Whilst targets are being met, the reality may be that initiatives or individuals may be falling short of averages across the organization. KPI benchmarks allow you to compare KPI performance across the organization, highlighting where teams or individuals need to raise their performance to match the benchmark. By setting benchmarks, you will also be adapting to a key framework of transformation such as the ability to quickly assess whether a goal is too unrealistic and adjust your process accordingly.

  • Reward for super performance

Making each employee feel like his or her contributions are valued can do wonders for morale and, as a result, your team’s overall productivity. This is where your KPIs can be helpful. A reward for excellent performance can be used as a tool to communicate progress towards individual, team, and company goals.

Once you have identified and implemented the KPIs that will drive your organization forward, you can easily make them a part of your employee reward and recognition programs. These programs are proven to improve retention and productivity, empower your employees, and increase innovation.

HOW TO CREATE KPIs EFFECTIVELY?

Whether you are establishing KPIs for the first time or re-evaluating your team’s key metrics, keep these essential characteristics in mind while creating KPIs:

  • Clear and concise language

For a KPI to be truly helpful it needs to be concise. It needs to be both easily comprehended and measured. For example, a KPI such as “Is the function achieved as per timeline” is concise and clear. If the goal is clear, the team can make proactive decisions to influence the outcome. Compartmentalizing and tracking just a few metrics within categories such as Speed, Accuracy, Quality, and Joy can help you focus without worrying too much and get the best out of data. This ultimately helps in increasing the overall team intelligence.

  • Should help with decisions

KPIs should trickle down from the overall strategic goals of an organization to the daily operations of the team working on a particular project. The KPIs must be aligned, always aiding the umbrella goals of the software project. It is also important that you don’t end up with a long list of things to measure in a KPI. Use the factors judiciously to make sure you are only monitoring aspects that would help the project. Limit the factors to 4-6.

  • Quantifiable

A KPI must be measurable to analyze the positive and negative variations of a goal. This does not always need to be a quantitative measurement such as “how many times a particular activity happened?,” but can also be qualitative such as “how good of a job are the employees doing at their particular tasks.” Qualitative aspects can be represented by, say colour codes or on a scale to make them quantitative. You just need to ensure that your KPI is based on a solid, focused goal.

  • Frequency of measuring

Effective KPIs are timely such that their results are reported on an appropriate timeline, and are analysed in a relevant time period. Some indicators can be measured more frequently than others. Setting the right measurement frequency for your indicators highly depends on how often accurate measurements are available and how quickly they change over time. If you have indicators with daily accurate measurements then daily measurements are a good way to monitor those indicators. This could be something like the number of bugs found each day by the testing team.

You need to find the right balance with reporting on KPI results. While infrequent reports will create difficulty in accurately identifying trends, reporting too frequently can diminish the value of the data.

SAMPLE KPIs THAT YOU CAN USE TODAY

Let’s assume you have a team of developers that is working on developing and deploying an application.

To set up the KPIs, set up your key objectives. Here are a few that we use commonly

  • Deliver quality software
  • Bring development to speed and avoid resource wastage
  • Quick turnaround on bugs
  • Ensure long term roadmap remains on track

The above goals are pretty common for development projects. Of Course you can tweak or add goals as per your priorities.

Once your goals are set you can plan on the KPIs accordingly. Here are some KPIs that you can use

  • Cycle Time

Cycle time measures the amount of time or the speed with which a product is completed from order to delivery. This KPI revolves around efficiency and tracks how effectively the development is managed to optimize output.

In a typical software development team, a lot happens between the start and the finish line. The following chart is an example of the usual development process.

Cycletime reflects the efficiency of the process and the tools that are being used. There is a chance that your cycle times are different in different stages of product development. In that case, you can define the parameter to be adherence to cycle time. In this parameter, you can measure how close to the timeline the project is moving at each sprint. Have there been substantial delays at each project? CycleTime can further be used to project the burndown chart where one can compare the sprint timeline estimated at the start of the project and the one achieved.

By measuring cycle time one can learn about

  • Is the project defined well in user stories
  • Are the estimates inline with practise
  • Are code reviews effective
  • Is there any issue in the CI/CD pipeline implementation
  • Is there a bottleneck in the process
  • Bugs Per Release

This metric quantifies the number of major bugs in a sprint that are found on the demo day. Performance for this KPI can be measured by setting a predefined benchmark to compare the results against. Bugs can be further divided into critical and major as well as minor. The priorities of these issues can be set in the scrum retro meeting.

By measuring bugs and errors one can

  • Improve the quality benchmark of the project
  • Increase ownership of work in the team
  • Increase happiness in the project once the bugs limit goes down

Performance Score

In a KPI report, a PSI provides a score that summarizes a webpage/ mobile app performance. Here is a list of different tools from which one can choose to be able to check performance. The best part is that plenty of these tools can be used by non-tech founders

The score from these tools can be determined and put into the KPI reporting.

For e.g: The page load speed can also be quantified using tools such as Google’s PageSpeed. While considering these numbers as a benchmark make sure to take into consideration the limitations of the tool and what would be considered as good performance. Like for Google Page Speed Insight, a score of 100 can never be achieved practically. Hence teams should mutually decide the score. PSI score above 80 can be considered as 100% achievement of the performance goal.

Google PSI

There can be multiple tools that can be used by the team to benchmark performance.

Download the list of 20+ tools that can be used by founders to benchmark performance.

Setting up a performance benchmark will help you to

  • 3rd party audit to the project
  • Have ready parameters to discuss about on quality and other feedback

Stakeholder Feedback

For an outsourced project, this metric quantifies the satisfaction of the customer or your client project manager at the release. This has to be measured and analysed within a week of completion of the final milestone.

The stakeholder satisfaction survey questions should be around the overall performance of the team in terms of communication, responsiveness, and timeliness and can be rated on a scale of 0 to 5.

This feedback benchmark would help you in

  • Keep stakeholders aligned
  • Proactively fix issues

User Satisfaction Survey

This metric quantifies the users’ perspective on the quality of your product. The user satisfaction survey questions should be around the overall performance of the product and should be rated on a scale of 0 to 5. This survey can be done with a set of end-users at the end of the pre-decided milestones of the project. With an end-user survey, ideas are bound to come. A word of caution would be to keep improvement and ideas separate from the issues reported. Extra time needs to be allocated to inculcate feedback.

User satisfaction survey KPI would help you in

  • Keep an alignment of user expectations with product as it evolves
  • Intermittent feedback can improve the product

Code Review Score

Using a static code analysis tool like codegrip.tech, quality of code can be quantified. Such tools automate code review and generate a report that can be used by the team to benchmark the quality of your code.

Code Score KPI would help you to

  • Keep a check on technical debt of the project
  • Assess the quality of development from a code viewpoint
  • Identify areas of improvement
  • Test coverage and health

There are many other parameters that you can measure but as I mentioned earlier, you may choose to use or not use the parameter as per the project. Choose what is important for your project.

 

 

Download Ready KPIs For All Departments Of A SaaS Company

HOW TO MAKE KPIs WORK FOR YOUR TEAM?

Thinking to set up KPIs for your team? Here are a few things to consider while making a plan that really works for you

  • Set KPIs at the start of the project
  • Make sure KPIs align with the objectives
  • Have your full team be part of the planning process
  • KPIs are an ever-evolving process. Create- Monitor- Tweak
  • Remove parameters that you do not use and replace them with other useful parameters
  • Set up a meeting going over the data captured and give the team a chance to improve over time
  • Generate a dashboard or a report where it is easy to capture your data points and makes it easy to understand for stakeholders. A simple Google Form can be pretty handy at most places
  • Set up a routine/calendar where the team can fill in the data rather than relying on last day data finding before the meeting
  • Once finalized, KPIs should remain fixed over a substantial period of time so that one can measure the performance over time. For example website traffic in January to website traffic in July.
  • KPI factors should be chosen in a way that allows a certain level of the forecast for you. Complex ratios are not required for this. Simple things like knowing that increased signups will lead to increase revenue, the sales KPI could focus on measuring the number of signups

THINGS TO AVOID WHEN SETTING UP KPIs

The most common KPI mistakes happen when KPIs are not clear enough. A simple way to set up KPIs is to make them SMART.- specific, measurable, assignable, realistic, and time-related. This is a sure way to avoid pitfalls in setting up KPIs.

  • Depending on gut feel in regard to KPIs

Do not take intuition as the way to define your KPI parameters. As mentioned above, set up a meeting with stakeholders, define objectives, and narrow down on measurable indicators that lead to those objectives.

  • Adopting vanity KPIs metrics blindly rather than creating your own

There are a lot of KPIs available over the internet but they may or may not suit you. You do not want to fall into the trap of KPIs that look beautiful but are no use for you. You need to ask “Can this metric lead me to a decision”. If the answer is yes, then only keep it.

  • Creating a mix of KPIs that confuse the outcome

Think about data that is consistent and real. You should not end up measuring both cause and effect. Capturing random events or lagging the understanding of cause and effect can end you up with a lot of data but very less action points

  • Bias towards recent information and underusing the fundamental information

Take into account those things that are repeatable occurrences and in line with your standard procedures. For e.g page views of a viral post may not be repeatable monthly. You cannot expand on its success.

coma

CONCLUSION

Any software project needs an execution plan. KPIs are a great way to collect the data that you require for a continuous improvement cycle. This cyclical process is designed to drive peak performance and to allow you and your team to make data-driven decisions with quantifiable results.

Of course, not everything can be quantified and some things take longer to measure effectively than others. The purpose of KPIs overall should be to reward the positive more than to penalize the negative. Hence, plan accordingly. Structure the metrics such that a minimally acceptable level of performance gets the team a pat on the back. Any performance above that level could be incentivized with a performance bonus.

Ayush Jain

CEO, Mindbowser

Ayush works closely with customers guiding them on their idea and execution.
Reach out to Ayush on ayush@mindbowser.com

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