Software Development KPIs Startup Should Target

Published in

Startup Stash

10 min readMay 9, 2024

Being a startup owner, you are intimately familiar with the process of selecting metrics. You decide on the appropriate key performance indicators that make the most sense for:
– your business,
– the specifics of your projects, and
– the chosen methodology.

Examples are Customer Acquisition Cost (CAC), revenue growth, lifetime customer value, and other key startup metrics. But when you think about the development team working on your project, are there any app development KPIs? In this blog, we’ll unveil the behind-the-scenes of your development team and how they measure their performance. We’ll talk specifically about engineering or software development KPIs.

KPI #1: Velocity

This software development KPI measures the amount of work / per sprint or iteration. Work reflects in:

user stories or features that your team is completing.
Any Product Backlog Item (PBI) has its story points (agile methodology).
Or simply in development hours.

Then, a sprint can last for a week / two weeks / a month. Depending on the project.

Project managers often estimate development hours or story points. If your development agency uses Jira, there is a designated column for it. Usually, 1 story point equals 4 to 12 hours. 2 story points 10 to 20 hours, etc.

The goal of this metric is to capture the amount of effort that a developer can complete. It is essential for planning. For the first few sprints, management observes this metric. Then, they watch that each developer maintains it.

In terms of achieving product development goals, velocity is instrumental as a software development KPI.

KPI #2: Sprint Burndown

This software KPI complements the velocity. It tracks the amount of effort completed per sprint or iteration. When management projects workload based on velocity, they cannot foresee everything. They don’t count in:

– reports,

bug fixes, or

code refactors.

But the team has to take this time to complete the work. So using sprint burndown as a software development KPI, management can visualize the workflow. They can foresee whether they will be able to make up for the time. Or make other decisions.

This software development KPI is important from a decision-making standpoint.

Let’s imagine a scenario when the team is already behind schedule. In a meeting, somebody offers yet another innovation. Then, looking at this metric, the management will decide to discard it. Sometimes, it is best to keep things simple as planned.

Overall, having the effort and time estimated with velocity, you can have a realistic view of the project timeline. If the sprint burndown doesn’t align, there is a need to search for the source of the problem.

It is especially important for startups under lean methodology. Startup Services often work with minimal products: MVP, MLP, or MMP. These focus on faster time-to-market and minimal functionality. For this, you have to have an efficient plan and a professional team.

If there is an inconsistency between planned and actual effort, someone has to detect the source and fix it. This is critical for the development agency as well as for the client.

KPI #3: Release Burndown

This metric extends the sprint burndown metric. It reflects the same idea: amount of work per unit of time. But it looks at a larger scope of things.

In sprints, the focus is to deliver features measured in story points.
In releases, the focus is to deliver packaged functionality measured in sprints.

So, one sort of zooms out to look at a bigger picture and higher-level timeline.

This KPI delivers the same value: to make sure the team is on track.

In the digital world, time is of the essence more than the quantity of features. If the team is behind the schedule, what is the reason?

Plus, it forces management to make decisions. If the team is seriously behind, then revise the release functionality. The idea is to implement what is necessary to deliver on time.

Sometimes, there can be talk of delaying the release date. But it is a much less desirable scenario for all stakeholders.

KPI #4: Cycle Time

With the previous software KPIs, we looked at workload in the form of product backlog items or features. Yet, forming a product backlog item takes effort too.

First, the development agency receives business requirements.
Then, it develops user stories.
From these, they form solution requirements and form technical (and non-technical) PBIs or development tasks.

This process of analysis, design, and discussion takes up time. Plus, sometimes bugs appear, or merge conflicts, or refactoring in response to a new requirement. This is what the Cycle Time metric is for. It measures the time from receiving a requirement to delivering a tested and working result.

After all, nobody plans to spend the entire solving a bug.

Nobody plans to have to redraw the architecture or information flow.

Nobody pre-plans to re-do some bits based on the received user feedback.

But these things happen. Yet they must happen within reason.

This KPI allows the vendor to streamline the processes.
Plus, it allows the vendor to make them more efficient and predictable.
Above all, the focus is always on the client of the development agency. The client needs to receive the most accurate estimate.
Then, the vendor should keep to it. Agency owner needs to know that their teams can work predictably.

This KPI is efficient in tracking this.

KPI #5: Cumulative Flow

It is another way to determine things are on track. This KPI breaks down all project tasks into different stages. It depends on the chosen methodology. But generally, they are: in backlog, in progress, in testing, ready for release, and released.

The graph below demonstrates this with slightly different names.

The idea is to have things progressing steadily from one stage to another. If bottlenecks form, the team must address them. In addition, having this metric calculated in a graphical form speeds up analysis and decision-making.

KPI #6: Flow Efficiency

This is a distinct metric. Thanks to it, development agency management can track active development time against non-active. Non-active development time is often inescapable. Everyone tries to minimize it as it doesn’t add value to the project.

So where does this non-active time come from? A task can be in progress but a developer might have to wait.

They might wait for feedback to continue.
They might wait until there is an agreement on certain dependencies.
There might be some information lacking to finalize the task. For example, if it relies on a blocked API or an unknown API response format.

Sometimes a developer cannot start a task at all. Reasons can be a few.

In short, the more complex the project is and the more collaboration there is, the higher the non-active time. Yet, agencies benchmark this KPI to meet industry standards. They also collect internal historical data. This allows them to improve this KPI further and set new goals.

KPI #7: Code Coverage

Development agencies must follow the latest industry trends. Some of them are: test-driven development and continuous delivery.

If you hired an agency using the lean startup methodology, they might use a continuous delivery approach. It is not always a requirement. But it does allow your vendor to iterate over MVPs/MMPs faster. Especially, if you Develop Custom MVP app. The shorter the cycles, the faster you get to the results.

The development team builds delivery pipelines, and all code passes through automatic testing. So here is where the Code Coverage is important as a software development KPI.

Generally, 100% code coverage is not possible and it is impractical. So teams focus on higher complete code coverage of functional parts. Some parts such as third-party libraries, code that runs rarely, extreme edge cases, etc make no sense to test. In addition, as the codebase grows, it really takes too much effort to cover.

That being said, there are benchmark values of this KPI that are essential for decision-making. For example, if we think about critical business logic on the backend — 90% or higher. If it is end-to-end testing or integration testing — even 30 to 60% are acceptable. Unit tests are often standard practice, so we should expect about 90% code coverage.

If code coverage is less than expected, a project manager should analyze the source. Sometimes, it is just because of the project requirements. After all, resource allocation depends on the estimation at the start.

In some projects, there are many individuals responsible for testing.

Developers are responsible for unit testing.
QA engineers for testing scenarios.
Automation testers — for integration and end-to-end tests.

Based on Code Coverage, as a software development KPI, the project manager will locate the source to deliver the best quality application.

KPI #8: Code Churn

This KPI is of relative importance.

If it comes to MVP development, the team often needs to discard some code. Or rewrite something based on feedback. Thus, high code churn will not be a big deal.

In MVP development, one would expect this. This would be even a good sign. Developers test hypotheses, tweak features, and integrate new features.

However, in the development of a fully-fledged solution, high code churn is a sign of poor professionalism. Especially, if the team needs to discard many lines of code to make even small changes. The initial architecture design should cater to scaling and extending the functionality without much change.

KPI #9: Code Simplicity

This metric is a sign of craftsmanship.

One can measure it in different ways, but cyclomatic complexity is the most popular one. The formula aims to grasp how many paths the code can take. The fewer paths, the better.

It means it will be easier to test code, read it, and maintain it.
Code simplicity ensures collaboration and extensibility.
In addition, less complex code is less error-prone.
Finally, the simpler the code, the less workaround there are in it. So it means developers really truly know what they are doing.

It is such an important KPI that there are different tools to measure it. For instance, VS Code linter can track the level of complexity for JavaScript developers. In addition, there is a special extension called Code Metrics for JS and TypeScript.For Java, there are tools too. For instance, a development tool called Checkstyle, or Jarchitect.

KPI #10: Code Stability

When developing an MVP under lean or agile methodology, the team often sacrifices this KPI. This is the point where a project manager says to develop faster and cheaper. While the developer argues that there will be bugs, mistakes, or unpredictable behavior under certain scenarios. Stability goes against fast development and shorter iterations to get results.

But this metric is important for the 1.0 version of your product. When it is a fully-fledged solution. This KPI mostly reflects the number of critical defects or downtime per unit of code. The less there is, the more stable the codebase.

In CI/CD processes, this is also a vital metric. Continuous integration / continuous delivery should ensure that critical defects are close to 0.

We would also recommend checking:
– Secure Software Development Life Cycle (SSDLC): What is it?
– The role of analytics tools in custom mobile apps;
– MVP in software development — Lean Startup method

Summing Up

Most of these metrics allow your vendor to predict workload and reliably deliver quality software. For instance, velocity is a direct measure of a developer’s productivity. Sprint and release burndown are synonymous with staying on schedule. It allows management to catch unexpected tasks, unnecessary improvements, or other inefficiencies. One cannot argue about the value of fast delivery in the digital world.

It is why not all of these software development KPIs are vital for MVP development. For example, code stability or code churn does not play a role in fast development. These software KPIs are primarily relevant for fully-fledged solutions mainly.

But code simplicity is a KPI that every development agency owner should cherish. It is a sign of true professionalism.

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