The average productivity rate as well as the range of productivity is provided for each of the following industries.
Overall Industry Averages
Aerospace & Defense
Travel and Leisure
Finance & Banking
Software Development Companies
Question please contact David Longstreet (email@example.com).
Percent of Time By Phase
Time by Phase -
How do best in class and worst in class spend their development time. Additional industry data is provided outlining how time is spent by major phase.
Benefits of Benchmarking
- Increase profit margins
- Improve return on IT investments
- Reduces the unknowns
- Identify best practices and worst practices
- Pinpoint redundancies
- Quantifies the risks
By completing benchmark studies for a variety of software firms over the
past decade, we have learned some best practices for benchmarking.
in a variety of industries, we have learned some important concepts.
The first thing to understand is the software development industry is
broken down into three major categories.
- firms primarily engaged in developing software for in-house use.
Commercial Software - firms
engaged in developing software for commercial re-sale
Pre-Packaged - firms engaged
in developing software for retail sale and distribution.
While it should be obvious any analysis combining these
three categories will be way off the mark, in practice many combine this
Companies developing software in-house may have applications and projects
ranging from a few function points to an excess of 20,000.
It is unusual for companies to develop software applications in excess
of 20,000 function points for in-house use. It is common for
own accord projects in excess of 20,000 function points to be canceled.
On the other hand, some firms developing software for their own
accord which exceeds 20,000 function points have entering into commercial
Key Benchmarks for On Accord
The two major benchmarks for any IT organization developing software for
their own accord would be:
- Total IT employees relative to Total Employees (industry ranges from
2% - 12%)
- Total IT Budget relative to Total Corporate Earnings (industry ranges
from 1% - 7%)
Better yet, it is important to benchmark against firms in
similar lines of business as defined by the Standard
Industrial Classification Codes (SIC).
Commercial Software and Pre-Packaged
Understanding IT employees to total employees and other organizational
metrics is not useful for firms developing commercial software or pre-packaged
software. Instead they would want to know:
- Estimated Value of Software Developed
- Value of Software Developed per Employees
- Cost per Function Point
It is not uncommon for commercial software companies to create products
in excess of 50,000 function points and spend more than 200 million dollars.
The cost per function can range from $4,000 - $10,000. The range depends
on the size of the final product and the industry line of the commercial
software company. The larger the product the greater the cost per
Investors in commercial software firms should have a clear understanding
of the expected cost and value of the final product prior to investing
in a commercial software venture.
Firms involved in the acquisition of another firm should have clear understanding
of the value of software. In fact, some firms have acquired competitor
firms in hopes of using their "home grown software."
Since software applications continue to grow, there are more firms entering
into commercial software ventures. This is a trend we see in the
software industry as a whole - a movement to commercial software.
Firms using and relaying on software cannot afford or justify spending
100's millions of dollars on software projects; instead, they are looking
to commercial (or off the shelf) solutions.
Pre-packaged software is generally small as measured by function points.
The size of pre-packaged software is generally less than 2,000 function
points points. Pre-packaged software must adapt quickly to consumer
tastes and time to market is critical. There are approximately
40,000 prepackaged titles being sold today.
Step 1 - Determine your line of business (on accord, commercial,
Step 2 - Gather the appropriate metrics for your own firm
Step 3 - Compare against firms in similar line of business
Step 4 - Compare against firms in your same functional line of business
or SIC code.