In the manufacturing industry, performance indicators are built based on expenses (equipments, supplies, salaries, etc.) and products.
In the software industry, the staff costs are the main expenses. But software is more intangible (or it seems like it) than manufactured products such as cars, tables, houses or mobile phones.
How to measure the performance of an IT division?
When it comes to making up non financial performance indicators, the question is: “Who are our main competitors?”.
The most common indicators allow to answer the following questions:
- What is our productivity regarding software development?
- How is our productivity rate compared to the industry’s?
- Is our productivity improving or worsening?
- What is our quality level?
- How good is our quality compared to the industry’s?
- How does the size of a project or a product impact productivity and quality?
- How do multisite developments impact productivity and quality?
- How do CMMI, Lean or Agile approaches help create better products faster?
- What is the ROI of such approaches?
Note that if you are able to answer all those questions, you are then able to make your project estimates, and your budgets, more reliable.
Also note that most of those indicators ask for the sizing of the generated volume of software. It is critical for the measurement of the IT division performance. It does not consist in measuring the quantity of hours, man.days nor incomes. The volume of software is the volume of produced software, no more no less.
How to measure the performance of projects?
In the software industry, it comes to be useful to measure the quantity of software to implement the following indicators:
- Definition of the project scope
- Evaluation of the impact of an application migration
- Evaluation of the replacement cost of an application
- Negotiation over the project scope
- Evaluation of the specification requirements
- Estimation of the project resources
- Allocation of the test resources
- Evaluation of the risks
- Breakdown of the development
- Implementation of an alert when the software size increases
- Generation of rework
- Planning of support resources
- Identification of best practices
- Planning of new releases
- Evaluation of application assets
- Negotiation of outsourcing contracts (development, production and support),
The challenge: How to simply size software?
The most famous and standard (ISO) measurement is the IFPUG Function Points method. That method is intricate and asks for the intervention of an expert. That is why IFPUG Function Points are widely promoted by consulting firms.
There are nonetheless other methods to size software. The also are standard and easier to implement (Simple Function Point, COSMIC Function Points, etc.)
Not sizing the volume of generated software and implementing indicators solely based on worked hours or man.days, is like paying for gas according to the time it takes to fill the tank rather than the quantity you get.
Software sizing allows to go from a man.day-based logic to a produced-quantity logic, just as in the manufacturing industry.