In April 2020 McKinsey & Company published a report called “Developer Velocity: How software excellence fuels business performance”. The big finding of the report is that there is a clear correlation between higher Developer Velocity Index (DVI) and how good a company is doing from a financial perspective. But what is DVI, and why should I care?
The Developer Velocity Index (DVI) takes into account 46 different drivers across 13 capability areas (exhibit) of software developers. To develop and validate this list of drivers, McKinsey & Company conducted interviews with more than 100 chief technology officers, chief information officers, and other senior engineering leaders. They then asked technology executives at 440 large organizations across 12 industries in nine countries to rate their company’s performance. DVI scores are calculated as a weighted average of scores across the drivers, with equal weight given to the three broad categories: technology, working practices and organizational enablement.
McKinsey’s analysis examined the impact of DVI scores on revenue, total shareholder returns, and operating margin. It also looked at four nonfinancial business-performance indicators: innovation, customer satisfaction, brand perception, and talent management. Finally, they ran statistical correlations of business performance against the various dimensions of Developer Velocity. We used the Johnson’s Relative Weights analysis to quantify the relative importance of the correlated drivers of DVI scores.
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Link to the McKinsey article: Developer Velocity: How software excellence fuels business performance