SOPs and KPIs….What’s the Difference?

Key Performance Indicators (KPIs) and Standard Operating Procedures (SOPs) are common terms in the business world, particularly in software development. To succeed in business, one must develop a robust understanding of the difference between KPIs and SOPs. KPIs are vital in monitoring the progress of a given task or operation. An assessment of key performance indicators aids in uncovering hidden strengths and weaknesses in a given process, thereby ensuring that the operation culminates in success.

What is an SOP?

A Standard Operating Procedure (SOP) constitutes a set of written instructions that outline the step-by-step process that must be followed to operate appropriately. To guarantee that the organization remains in compliance and consistent with business standards and regulations, there is a need to follow SOPs the same way every time.

SOPs deliver the standards, processes, and policies required for the company to succeed. The benefits of SOPs include increasing profitability and efficiencies, reducing errors, and establishing a safe working environment. On top of these, they also provide guidelines to overcome obstacles and resolve issues.

What Do KPIs Refer to?

According to Forbes magazine, a Key Performance Indicator (KPI) is a computable measure of performance over time for a given task or objective. KPIs highlight the targets for work groups and teams to accentuate their focus, provide insights that assist people within the company to excel in their tasks, and milestones to weigh progress.

Types of KPIs

While SOPs are standard and lack categorical classification, KPIs have different types depending on the measured objective. The common factor about KPIs is that they are all connected to strategic goals. The most common types of KPIs are outlined below:

1. Strategic: Strategic KPIs are used to assess the long-term progress of an organization. A typical example constitutes the computation of market share, revenue, and return on investment.

2. Operational: These are the exact opposite of strategic KPIs. They are relied on for the measurement of short-term goals. They typically heighten their focus on organizational efficiencies and processes. Examples include mobile application downloads per day, cost per acquisition, and monthly internet connectivity costs.

3. Functional Unit: These are KPIs that are tied to specific functions. An example includes a key performance indicator that analyzes new software development. In such a case, its functional unit will constitute the IT department. Functional KPIs can also be designated as operational or strategic.

4. Leading Vs. Lagging: Leading KPIs can enable a software developer to predict outcomes while lagging KPIs are essential in tracking events that have already transpired. Using these KPIs, software developers can identify strengths and weaknesses in their projects and utilize that knowledge to generate flawless programs.

SOPs in Software Development

Software development is a complex and lengthy process that requires careful planning and execution. Missing out on any crucial steps will fail and be a waste of resources. A sample standard operating procedure of any typical software development operation contains the following components:

1. Purpose: The purpose statement needs to be well-thought-out and terse. The question that should form the software development process is, “What purpose does your software intend to achieve?” In responding to this question, the developers should accentuate their focus on the market value of the program or application.

2. Scope: The scope of the operation outlines the entities involved in the software development process, the specific activities or tasks that will be carried out, and the milestone for each task.

3. Responsibility: This is concerned with the individual tasks that the software development team will execute. Key players could include technical writers, quality assurance officers, developers, development managers, and project managers. There is a need for tasks to be delegated alongside deadlines and quality expectations.

KPIs in Software Development

There are numerous KPIs that are best suited for software development. However, this section will only focus on a select few which we believe are the most critical in articulating the success of software development programs.

1. Velocity refers to the amount of time your software development team requires to complete specific tasks. Story points are suggested as the most effective measure of velocity. Story points are essentially the amount of effort directed toward executing an operation.

2. Sprint Burndown: By capitalizing on this metric, software development teams can adjust their performance if the measurement fails to resonate with the predictions. The measurement of story prints against time can be done using sprint burndown charts.

3. Release Burndown: This KPI is meaningful, given its potential to guide software development teams in releasing a new product. The scope of this metric is usually more extensive than that of sprint burndown. The determination of whether your team is behind or ahead of schedule can be achieved using a release burndown chart.

4. Cycle Time: This metric measures the time spent completing a task in the software development process. Its key advantage is that it lets your team objectively quantify their performance.

Benefits of US Businesses Working with Nearshore Software Development Companies

Nearshore outsourcing refers to getting services or work done by software development companies in countries near you. For instance, American companies can work with agencies in Mexico, Canada, or Colombia. The numerous benefits of embracing this practice often articulate the decision.

One of them constitutes a shared time zone. Working with an agency that shares the same time zone as your company can be beneficial, especially concerning software development methodologies such as Scrum and Agile. Furthermore, project managers in the US will incur fewer costs and spend less time traveling to nearshore agencies to conduct face-to-face meetings than traveling to Asia or Europe.

The second benefit constitutes the elimination of language and cultural barriers. Communication is vital if your team wants a high-quality project. Language and cultural barriers often pose critical hindrances to maintaining effective communication. Other benefits include; fewer hidden costs, potential savings on tax, and protected intellectual property.

Bottom Line

This article has delivered meaningful insights into the differences between KPIs and SOPs and front office vs back office functions. It also highlights the benefits of American companies working with nearshore software development companies. SOPs help ensures that proper steps are followed during the software development process. On the other hand, KPIs measure the entire operation’s success by identifying areas of strengths and weaknesses.