Application Development
AU G U S T 2 013
b u s i n e s s
t e c h n o l o g y
p r a c t i c e
Enhancing the efficiency and effectiveness of application development
Software has become critical for most large enterprises. They should adopt a reliable output metric that is integrated with the process for gathering application requirements.
Michael Huskins, James Kaplan, and Krish Krishnakanthan
Most large companies invest heavily in appli cation development, and they do so for a compelling reason: their future might depend on it. Software spending in the United States jumped from 32 percent of total IT corporate investment in 1990 to almost 60 percent in
the question: how much software functionality did a team deliver in a given time period? Or, put another way, how productive was the applicationdevelopment group?
1 “Private fixed investment
20111 as software gradually became critical for almost every company’s performance.
2
Flying blind
With big money and possibly the company’s competitiveness at stake, why do many applica tion-development organizations fly blind without a metric in place to measure productivity? First, with every metric comes some level of overhead to calculate and track that metric. With some metrics, the overhead has proved larger than the benefits afforded by them. The
in equipment and software by type,” table group 5.5.5, Concepts and Methods of the US National Income and Product Accounts, US Bureau of Economic Analysis, November 2011. 2For more information, see Hugo Sarrazin and Johnson Sikes, “Competing in a digital world: Four lessons from the software industry,” McKinsey on Business Technology, Number 28, Winter 2012, mckinsey.com.
Yet in our experience, few organizations have a viable means of measuring the output of their applicationdevelopment projects. Instead, they rely on inputbased metrics, such as the hourly cost of developers, variance to budget, or percent of delivery dates achieved. Although these metrics are
b u s i n e s s
t e c h n o l o g y
p r a c t i c e
Enhancing the efficiency and effectiveness of application development
Software has become critical for most large enterprises. They should adopt a reliable output metric that is integrated with the process for gathering application requirements.
Michael Huskins, James Kaplan, and Krish Krishnakanthan
Most large companies invest heavily in appli cation development, and they do so for a compelling reason: their future might depend on it. Software spending in the United States jumped from 32 percent of total IT corporate investment in 1990 to almost 60 percent in
the question: how much software functionality did a team deliver in a given time period? Or, put another way, how productive was the applicationdevelopment group?
1 “Private fixed investment
20111 as software gradually became critical for almost every company’s performance.
2
Flying blind
With big money and possibly the company’s competitiveness at stake, why do many applica tion-development organizations fly blind without a metric in place to measure productivity? First, with every metric comes some level of overhead to calculate and track that metric. With some metrics, the overhead has proved larger than the benefits afforded by them. The
in equipment and software by type,” table group 5.5.5, Concepts and Methods of the US National Income and Product Accounts, US Bureau of Economic Analysis, November 2011. 2For more information, see Hugo Sarrazin and Johnson Sikes, “Competing in a digital world: Four lessons from the software industry,” McKinsey on Business Technology, Number 28, Winter 2012, mckinsey.com.
Yet in our experience, few organizations have a viable means of measuring the output of their applicationdevelopment projects. Instead, they rely on inputbased metrics, such as the hourly cost of developers, variance to budget, or percent of delivery dates achieved. Although these metrics are