Every IT organization is curious whether the performance delivered meets the goals and expectations which had been set in advance. We regularly receive questions about this from the business and development teams themselves. For example, they want to measure the productivity of software development to monitor KPIs. Or to gain insight and to determine a direction for the priorities to be set, to take measures or to put impediments on the management’s agenda.
But what is productivity? Is someone who starts his office job every day at 6 a.m. and switches off the lights at 6 p.m. more productive than a colleague who enters at 9 a.m. and leaves at 4 p.m.? Maybe so, but it’s not just about the hours that are put in, but also what is produced during these hours. For many organizations, the output is much more important than the input! A modern trend is to shorten the working week, whereby the input becomes less (4 working days instead of 5 days a week) and the delivered output remains at least the same.
In the economy, productivity is the relationship between efficiency and effectiveness with which an organization or an entire economy can convert production resources (sacrifices) into results. Productivity is a key figure that clarifies the relationship between efforts and results.
The universal definition is output divided by the input. In software development, for example, this is an X number of units of output produced divided by a Y number of hours of effort.
In many industries, this is one of the most important metrics to measure. In IT, however, people usually do not know how the productivity of software development, management or DevOps teams can be measured objectively and in a standardized way. People often want it, but don’t know how. The reason for this is that it is often relatively easy to measure the input of the teams (the hours spent on the different activities), but it is considered difficult to measure the output of software development in a standardized, objective way. The output of software development teams should preferably be “Business Value”. But what is Business Value, and how do you measure it?
Business Value is an elusive concept. For example, Mark Schwartz, a leading American CIO, stated in his presentation on “IT Leadership: What Does it Mean to Deliver Business Value?” That he wanted to get rid of the 20% least profitable customers. He wanted to do this by giving that group less functionality so that they would switch to the competitor. He called that a legitimate business strategy. This strategy would not be followed quickly by a product owner. This is an extreme case, but it does indicate that functionality (more or less) is an important indicator of Business Value!
Metri is an expert in the field of measuring and benchmarking productivity: delivering as much Business Value (output) in as few hours as possible (input), but with sufficient quality so that the user does not drop out due to lack of non-functional requirements (security, efficiency, usability, etc.).
Harold van Heeringen, a Principal Consultant at Metri, states: “Measuring Business Value is the holy grail in the market. However, this is not possible in practice, because there are too many aspects that are part of Business Value. Functionality, if properly prioritized and compliant with all non-functional requirements, is a good proxy for Business Value. With this approach, Metri comes very close to that “holy grail”.”
In this white paper, we want to share our vision with you on measuring the productivity of software development teams, focusing in particular on those working with an agile methodology.