Effective measurement and reporting of IT performance is critical to effectively managing resources, making informed decisions and achieving strategic business goals. Let's take a look at key performance indicators and reporting best practices that support cost management, operational efficiency and strategic business goals.
IT metrics are specific indicators that enable accurate measurement of the performance of IT systems, processes and teams. They are an essential tool for IT managers to help monitor, analyze and optimize various aspects of an organization's technology operations. KPIs (Key Performance Indicators) play a key role in assessing an organization's performance. They measure the progress of key strategic goals, which allows assessing whether IT activities are in line with the company's vision and strategy.
For technology leaders, the challenge isn't just tracking data, but selecting metrics that demonstrate direct business impact. This article focuses on KPIs that bridge the gap between engineering velocity and financial outcomes.
Financial metrics play a key role in IT management, as they enable accurate cost monitoring and effective budgeting. For example, the Total Cost of Ownership (TCO) metric is often used in IT management to assess the actual costs associated with owning and maintaining IT infrastructure. Tracking TCO helps you decide whether to refactor your legacy system or build a new one from scratch.
The metrics help track expenses, identify areas for optimization and ensure that financial resources are used as efficiently as possible. With financial metrics, IT managers can make better informed budgetary and strategic decisions, contributing to the overall success of the organization.
Sample financial metrics:
It allows monitoring whether IT expenditures are in line with the established financial plan, which helps maintain control over the budget and prevents cost overruns. Regularly comparing expenses with the plan makes it possible to quickly detect deviations and take corrective action.
It enables accurate analysis of the costs associated with maintaining and developing IT applications and services. With this metric, you can identify the most costly elements of your IT environment and make decisions to optimize costs, such as by consolidating applications or renegotiating license agreements.
It helps assess an organization's adoption of cloud technologies and monitor the costs associated with migrating and maintaining cloud services. An increase in this indicator can point to a strategic shift toward the cloud, which often comes with the benefits of greater flexibility and scalability, but also requires close monitoring of costs to avoid unexpected expenses.
There are many benefits associated with moving to cloud solutions, including: cost reduction, where by moving infrastructure to the cloud, organizations can reduce costs associated with purchasing and maintaining hardware and software. Cloud service fees are typically lower than the cost of maintaining in-house data centers. Scalability is also an important aspect. Cloud solutions make it easy and quick to adapt resources to current business needs. As a result, companies can increase or decrease the use of IT resources depending on demand, which allows efficient cost management.
ROI allows assessing the financial viability of IT projects, enabling managers to compare different initiatives and select those that bring the most value to the organization. A high ROI indicates profitable investments, while a low ROI may suggest the need to reevaluate or modify the investment strategy.
ROI can also be used to determine a company's investment priorities. By analyzing ROIs for various IT projects, managers can identify the most profitable projects. Projects with the highest ROI should be prioritized because they bring the most value for money.
With ROI, companies can also better allocate financial, human and technological resources to those initiatives with the highest ROI.
Operational metrics are essential for assessing the effectiveness of daily IT operations. They enable you to monitor, analyze and optimize operational processes, which is key to ensuring the stability, reliability and quality of IT services. They allow you to quickly identify problems, minimize downtime and improve the overall performance of IT systems.
Incident response time - the average time it takes to respond to reported incidents, measuring how quickly the IT outsourcing team responds to problems reported by users.
Faster response times mean faster resolution of problems, which minimizes the impact of incidents on the business. Monitoring this metric allows you to assess the effectiveness of your support team and identify areas that need improvement.
Systems availability - the percentage of time that systems are available to users, usually expressed as an availability rate (e.g. 99.9%).
A high availability rate is key to ensuring business continuity. Monitoring the availability of your systems allows you to quickly detect problems, such as hardware failures, software bugs or network issues, so that you can eliminate them quickly. Regular availability reporting also helps maintain a high level of user satisfaction and meet SLA (Service Level Agreement) requirements.
Downtime - the total time that systems were unavailable due to failures or other technical problems, often expressed in hours or minutes.
Analyzing downtime is key to assessing the impact of failures on an organization's operations. Monitoring this metric also identifies patterns of failure so that preventive measures such as software upgrades, hardware patches or optimizing system configurations can be implemented.
KPIs are a fundamental tool in IT management to assess and forecast the performance of IT operations. They can be divided into two main categories: Guiding KPIs and Lagging KPIs. Each of these types plays a different role in analyzing the efficiency and effectiveness of IT operations. Understanding the difference between the two allows for more effective performance forecasting and retrospective analysis of activities, which is essential for continuous process improvement and achieving the organization's strategic goals.
Leading KPIs focus on forward-looking indicators that help predict future performance and potential risks before they impact business outcomes. Unlike lagging KPIs, which describe what has already happened, leading KPIs provide early signals of issues related to delivery speed, quality, cost efficiency, and operational stability.
For technology leaders, leading KPIs enable proactive decision-making. They help identify bottlenecks, capacity risks, and quality issues early enough to take corrective action before delays, budget overruns, or production incidents occur.
Examples of Leading KPIs in IT and custom software development:
Sprint Predictability – the percentage of committed sprint work that is completed as planned.
Low predictability may signal poor estimation, unclear requirements, or team overload, which often leads to delivery delays and higher project costs in the near future.
Automated Test Coverage – the share of automated tests compared to total test effort.
A declining level of test automation is an early warning sign of future stability issues, increased regression bugs, and slower release cycles.
Code Review Coverage – the percentage of code changes that go through a formal code review process.
Low code review coverage typically predicts a higher number of production defects and increased technical debt over time.
Deployment Frequency – how often new versions are deployed to production.
Regular, smaller deployments reduce delivery risk and accelerate time-to-market. A drop in deployment frequency often signals growing complexity, architectural constraints, or process inefficiencies.
Backlog Readiness – the percentage of backlog items that are clearly defined, prioritized, and ready for development.
Poor backlog quality is an early indicator of upcoming delivery delays, rework, and misalignment between business and engineering teams.
Leading KPIs help organizations move from reactive IT management to a proactive, outcome-driven approach, enabling teams to address risks early and continuously improve delivery performance.
Also known as lagging indicators, they measure past performance. With them, it is possible to assess the effectiveness of IT operations, analyze results and draw lessons for the future. These indicators are essential for retrospective analysis, allowing you to assess the effectiveness of your operations and identify trends and patterns. Examples of Lagging KPIs in IT:
Feature delivery time is a key performance indicator for a development team. Shorter execution time indicates higher efficiency and better organization of the team's work. Monitoring this indicator allows you to assess the efficiency of development processes and make improvements.
A high number of post-implementation errors can indicate code quality problems or inadequate testing. Analyzing this metric allows assessing the effectiveness of corrective actions and identifying areas for improvement in the software development process.
MTTR is a key indicator of the effectiveness of a technical support team. A shorter MTTR means faster restoration of systems functionality and minimizing the impact of failures on business operations. Regular monitoring of this metric allows you to assess the effectiveness of your incident management processes and improve those processes.
For executives and decision-makers, technical metrics only create real value when they are clearly linked to business outcomes. The key question is not whether IT is performing well in isolation, but how IT performance impacts revenue, costs, risk, and competitive advantage.
Effective IT reporting should translate technical KPIs into business language, showing how technology directly supports strategic objectives such as growth, efficiency, customer satisfaction, and risk reduction.
Examples of linking IT metrics to business outcomes:
Instead of: “MTTR decreased from 6 hours to 2 hours”
→ “We reduced operational downtime risk by 66%, significantly limiting potential revenue loss and SLA penalties.”
Linking IT metrics to business outcomes shifts the perception of IT from a cost center to a strategic business partner that actively drives growth, efficiency, and competitive advantage.
For example, in our cooperation with Verge Sport, implementing precise reporting significantly reduced delivery time and improved predictability of releases.
Effective metrics and reports are critical to managing IT departments and supporting strategic business goals. For IT managers and decision makers, understanding and implementing best practices for financial, operational metrics and KPIs is essential for making informed decisions, optimizing operations and ensuring quality IT services. Particularly in the context of custom software development, monitoring key metrics enables the delivery of high-quality products that meet customer expectations and stand out in the marketplace.
IT metrics are specific indicators used to measure the performance of IT systems, processes, and teams. They are essential for IT managers to monitor, analyze, and optimize technology operations, ensuring alignment with strategic business goals and improving decision-making.
Key financial metrics include Total Cost of Ownership (TCO), IT Spend vs. Plan, % IT Spend on Cloud, and Return on Investment (ROI). These metrics help monitor costs, optimize spending, evaluate investments, and support budgeting and strategic planning.
Leading KPIs (leading indicators) predict future performance and help anticipate potential problems or opportunities. Examples include automated test rate, resource utilization, and code review rate. Lagging KPIs (lagging indicators) measure past performance, assessing effectiveness and outcomes, such as lead time, number of post-release bugs, and MTTR (Mean Time to Repair). Understanding both types enables proactive management and retrospective analysis for continuous improvement.
Best practices include:
At SKM Group, we provide transparent and regular progress reporting based on Agile practices. Clients get ongoing visibility through Jira dashboards, sprint reviews, and weekly status reports covering delivery progress, risks, timelines, and next steps. This ensures full transparency, predictable delivery, and alignment between business goals and development teams.
Izabela is a Project Manager and Scrum Master with 6 years of experience in the IT industry. She has experience in leading diverse projects and effectively managing teams. She's a leader with the ability to create cohesive and efficient teams based on Scrum values. Regardless of the project's scale, she's able to establish a dynamic environment where collaboration, innovation, and delivering valuable products take precedence.
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Helpful advice on IT reporting. What tools do you prefer for tracking these metrics?