Product Development Metrics

The old adage, You can only manage what you can measure, applies to product development. Metrics are needed to understand the level of process performance, project performance and product performance. They are needed to set goals and measure the trend and rate of improvement.

Proper metrics need to be selected. Improper metrics can optimize the performance of a product development sub-process at the expense of global sub-optimization. Improper metrics can require significant effort to collect data and develop without providing meaningful information of any real benefit. Criteria for effective metrics are:

• Keep them simple
• Keep them to a minimum
• Base them on business objectives and the business process – avoid those that cause dysfunctional behavior
• Keep them practical – avoid metrics that require significant additional data collection and effort

There are four basic types of metrics for product development:

1. Process metrics – short-term metrics that measure the effectiveness of the product development process and can be used to predict program and product performance

– Staffing (hours) vs. plan
– Turnover rate
– Errors per 1,000 lines of code (KSLOC)

2. Program/project metrics – medium-term metrics that measure effectiveness in executing the development program/project

– Schedule performance
– Program/project cost performance
– Balanced team scorecard

3. Product metrics – medium-term metrics that measure effectiveness in meeting product objectives – technical performance measures

– Weight
– Range
– Mean time between failure (MTBF)
– Unit production costs

4. Enterprise metrics – longer term metrics that measure the effectiveness of the enterprise in undertaking IR&D and developing new products

– Breakeven time
– Percent of revenue from products developed in last 4 years
– Proposal win %
– Development cycle time trend (normalized to program complexity)

See Product Development Metrics List for other potential metrics