R&D is increasingly becoming a bigger line item in OpEx and a key differentiator for companies. However, unlike Finance or GTM updates, we have noticed there is not a standardized approach to reporting on engineering updates and how these tie to overall business outcomes.
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This guide can be used to frame engineering updates for various forums, such as engineering quarterly reviews, annual planning, or Board updates. While the reporting structure and focus will obviously vary based on the stage each company is at, we believe consistent quarterly reporting of key engineering metrics are extremely beneficial to management, the Board of Directors, and the engineering teams themselves for any companies spending more than $10M annually on R&D.
While these metrics are intended to solicit discussion around key topics like engineering spend, headcount, and efficiency, we also believe that just having quarterly reporting will force engineering teams to be more introspective as they prepare these metrics each quarter. Rather than tracking every metric under the sun, it is more important to get into a recurring motion of looking at and understanding longitudinal data.
Through more structured and consistent reporting, we hope this guide will facilitate thoughtful conversations to build a more productive and happy engineering organization (often your most expensive asset).
Tracking Developer Productivity
At its core, software development is a team-based activity. Rather than using developer productivity metrics to evaluate individual performance, we believe engineering leaders should track and understand various factors impacting developer productivity to improve overall team performance and allow them to be a better steward for dollars spent on engineering.
This means understanding both business outcomes and the factors affecting individual developer experience, such as how feature development is contributing to overall business outcomes, the timeliness and speed of development velocity, the performance and reliability of what is being shipped, opportunities to reduce friction in the development process via tools and processes, and overall developer satisfaction.
ICONIQ Growth Framework
The Essential R&D Scorecard
We believe there is not 1 single metric that encompasses developer productivity. Instead, it is important for leaders to monitor different leading and lagging indicators of engineering performance across factors like business impact, performance, developer effectiveness, and team health & culture. And rather than point in time reporting, it is essential to monitor the performance of these indicators over time.
Include the ICONIQ Growth Engineering Scorecard in board updates, with quarterly and annual details on actuals and progress vs. plan. Rather than tracking every metric under the sun, it is more important to get into the cadence of regularly monitoring and reporting on these metrics over time. Start with 1-2 metrics in each category below.
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The R&D Scorecard is illustrative and not a proxy for independent management decisions
What's included in this guide?
Part 1: R&D Reporting Best Practices
- Best practices for designing and operationalizing your engineering reporting engine based on learnings and perspectives from the ICONIQ Growth portfolio and network.
Part 2: The R&D Metrics Guide
- Includes definitions, calculations, and frameworks for key metrics, and best practices for operationalizing the engineering organization. Throughout this guide, preferred formulas are included; however, there are multiple ways to calculate various KPIs and other methods may be more relevant for your specific engineering organization or business model.
Companion Templates
- "Must-have" product and engineering board deck slides available here
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