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Which engineering metrics prove that software development has a direct impact on business goals?
Engineering metrics rarely make the cut for a board deck. When gauging the health of their business, executives tend to look at sales or customer success metrics like revenue or customer retention rate. The engineering department is seen as a cost center, not a source of revenue; money goes in, but it’s difficult to put a value on the work developers are doing.
Companies that see engineering goals as distinct from business goals are making a critical mistake.
McKinsey studied over 400 large companies over 12 industries, and determined that ‘software excellence fuels business performance’. Their research shows that, across all industries, companies with high-performing engineering teams out-perform their competitors in revenue growth, customer satisfaction, and brand perception.
Simply put, businesses with excellent engineering teams are much more likely to succeed. Engineering leaders can make this case in their own organizations by tying engineering goals back to business goals, and by demonstrating that their team is innovating.
To do that, we recommend starting with two metrics that provide insight into how quickly your engineering team is working, and how much value it’s delivering: Cycle Time and Deploy Volume.
How fast is your engineering team?
Speed is a key component of business success. It’s not enough to deliver on an idea, you need to do it quickly enough to keep your customers happy and outrun your competition. Plus, the faster a new product or feature can get to market, the faster it can start making the business money.
Many businesses are concerned with their Time to Market, or the time it takes for an idea to go from conception to delivery. While it’s an important measurement, Time to Market is highly variable. It includes both phases of development: design and planning, and execution. The design and planning part of the process can vary widely depending on the scope and complexity of the idea, and it involves multiple teams working together to determine the specs of a project.
As an engineering leader, you can isolate the execution phase — the actual coding, testing, and implementation done by engineers — and measure your team’s contribution to the development process.
To do this, look at Cycle Time. This metric tracks the time that elapses between the first commit in a unit of work, and when that code is finally deployed. It takes the variable design and planning phase of development out of the equation, making it possible to reliably measure engineering speed.
If you can report on and measure your team’s speed, you can demonstrate how quickly your team is delivering value to an end-user. Teams that work to establish a consistently low Cycle Time are able to increase their output and efficiency, which will make it possible for the business to innovate and speed past its competition.
Reporting on your team’s Cycle Time will help you communicate with business leaders about how your department is doing. You’ll also be able to demonstrate the impact of certain key investments, like an increase in headcount or new tooling, or your team’s ability to bring a product or feature to market.
How much is engineering shipping?
Speed is important, but moving quickly doesn’t necessarily mean your team is getting a lot done. Pairing Cycle Time with another metric, Deploy Volume, can help you paint a more complete picture of your department’s impact. A team that’s moving quickly and delivering new value is a team that’s innovating and helping the business stay ahead of its competition.
Deploy Volume will help you demonstrate how much of your team’s work is actually being delivered to the end-user. It’s a count of the engineering team’s distinct deploys over a period of time, and it can quantify how much the team is actually getting done.
When you couple Deploy Volume with Cycle Time, you’ll be providing a concrete foundation for conversations about strategic roadmaps and resource allocation. You’ll also have the data to demonstrate just how much certain key business decisions are impacting how much work is getting done.
Engineering success is business success
To effectively advocate for your department, you need to prove that software development has a direct impact on business goals, and give executives concrete data that will help guide business decisions. With the right engineering metrics, you’ll be able to do just that.