Welcome To the New Reality: Engineering Metrics are Business Metrics

According to a McKinsey study of over 400 large enterprises across 12 industries, companies with high-performance engineering teams best their competition in all areas, including revenue growth, customer satisfaction, and brand perception. The evidence is so clear that the study itself is called, “How software excellence fuels business performance,” and it concludes that software development is integral to business success in all industries — retail, financial services, manufacturing, and of course, software companies, all require a strong engineering department to succeed.

Yet, many executives view their engineering departments as a “black box.” While other departments report on their success with metrics like revenue, customer retention rate, or cost of new customer acquisition, engineering metrics don’t often make it into the board deck. But engineering metrics are essential to understanding how your company is doing. They convey critical information about your company’s ability to deliver value to your customers, and your company’s potential for future success.

Plus, engineering is expensive — it’s important to know whether that’s money well-spent.

For a holistic picture of how your engineering department — and your business — is doing, you need to start tracking engineering metrics.

What’s your Time to Market?

Time to Market is a measurement of how quickly your organization can deliver on an idea. It encompasses two phases of development: the design and planning done by the product and engineering teams, as well as the coding, testing, and implementation done by engineers.

The faster your organization can get a new product or feature to market, the faster it can start generating revenue for the business. A low Time to Market also makes it more likely that your organization will be able to out-innovate the competition and respond to customer feedback or changes in the marketplace. The more competitive your industry, the more essential innovation is to your company’s survival.

To understand your engineering department’s contribution to Time To Market, look at their Cycle Time.

Cycle Time tracks engineering work from the moment it’s started on a developer’s computer, to the time it’s shipped to customers. It’s the software development team’s speedometer — by eliminating the variable design and planning component of Lead Time, Cycle Time acts as a reliable end-to-end measure of how long it takes the engineering team to deliver value to an end user. As your engineering department works towards a predictably low Cycle Time, they will also be increasing their output and efficiency, enabling your organization to innovate faster.

Understanding Cycle Time can help you have more informed conversations about your engineering department’s speed and capacity. You’ll have concrete information about how consistently and quickly features are shipping, which will make it easier to support engineering and communicate with technical leaders about how their department is doing. You’ll also be able to track the impact of certain key business decisions — like a hiring push or a reorg — on the team’s ability to bring a product or feature to market.

How much product have you shipped?

For a more complete picture of your engineering department’s impact, you’ll also want to know how much the team is getting done. Speed is important, but it doesn’t paint a full picture — even teams with a low Cycle Time might be facing other obstacles to shipping product.

To get a better sense of the quantity of work being delivered to the end user, you may want to look at Deploy Volume, which is a count of the engineering team’s distinct deploys over a period of time. It can help quantify the engineering team’s capacity at a given moment, and it’s a powerful way to understand how much work engineering is getting done.

Deploy Volume is a great starting point for informed conversations about strategic roadmaps and resource allocation. When your company’s engineering department tracks and reports Deploy Volume, it can help you determine whether or not certain initiatives, like increased investment in the engineering department, are having a concrete impact on how much work is getting done.

An Essential Component of Business Success

Whether your product is software, or you employ software to add value for your customers, the success of your business depends on the success of its engineers. Don’t let the engineering department be your blindspot.

With the right metrics, a CEO can gain critical visibility into development activities, gleaning valuable insights about the often inscrutable “black box” of their company’s engineering department. Those insights will allow you to make data-driven, strategic decisions, and steer your business into the future.