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Essential Agile Metrics for Business

December 16, 2019
4 minute read
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Companies have been using metrics for quite some time.

Businesses use all kinds of measurements to understand what’s happening in the organization and how well they are satisfying their customers. This is seen especially in organizations with high volumes of information, production or deliveries.

Metrics are useful if you’re doing a marketing experiment, production analysis, lead time evaluation and others. It’s a way to evaluate if the adoption of different methodologies within the company are bearing fruit and producing the expected outcomes.

On one hand, some people might see this as a way to control what’s going on but on the other hand, others understand metrics as an opportunity to have conversations so that they can understand what’s happening and then implement the necessary changes to seek their expected outcomes.

Business Metrics

Metrics for business are very consolidated nowadays. They usually reflect the company’s ability to generate profit.

Revenue, expenses and cash flow are important in this scenario but are not the only ones available.

Venture capital and other institutions might evaluate return on equity (ROE), profit margin, asset turnover, financial leverage and others.

An interesting framework to use is the DuPont Analysis. It was created in the 1920s and essentially evaluates how the organization creates value for its shareholders.

Performance Metrics

These metrics are commonly referred to as Key Performance Indicators (KPIs). KPIs provide a perspective on how the organization is doing its work.

Good KPIs are the ones that can relate to the business metrics to either monitor if we’re performing as expected or to provide insights for better decision making.

These indicators can support the evaluation of new technology, a new process, a new method or a newly adopted framework.

Agile, like other frameworks, when adopted in the organization can leverage business results but the question is usually how do you evaluate if you’re doing it well?

There are some metrics that can be used to answer that question. Some of them have their origin in other methodologies but still very useful for this evaluation

  • Story Points Delivery Rate: it measures how many story points are delivered on each sprint. A burndown chart can help you identify it.
  • Work in Progress: it’s the remaining work to be finished.
  • Lead Time: this is the time passing between two milestones. It can measure the necessary time to develop a story or the elapsed time between two stages. It can be calculated with the division of Work in Progress by Story Points Delivery Rate.
  • Cycle Time: it’s a subset of the Lead Time that focuses on one specific step. Lead time can be the sum of many steps of cycle time.
  • Velocity: it provides an average of how many story points were completed over the previous sprints.
  • Number of Defects: it provides information on how many defects were found in the development process. It’s useful metric for the team to gauge the complexity of their work.
  • Availability: it provides an overview of how much time was used to work divided by the available time.
  • Performance: it provides a ratio between what was delivered and what was expected.
  • Quality Rate: it provides a ratio between the non-defective developed stories between what was delivered.
  • Overall System Effectiveness (OSE): it is the ratio between the non-defective developed stories by expected stories in the sprint.

Pro Tip

It is important to note that having all of these metrics can be useless if there’s no trust in the environment that you’re in.

Make sure you use the metrics as a support to improve the system and not to punish the teams.

Comparing the evolution for each indicator over time and connecting them to the business metrics will help you empower the teams and achieve the expected outcome.


 
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