A performance measurement system for R&D activities in the software sector

Abstract

R&D activities in the software sector have a key role as they lead to sustainability of the sector and rapid development activities with shorter cycles. The importance of R&D activities in this sector requires an effective performance measurement system for companies to evaluate the performance of R&D activities. Hence, this study aims to establish a performance measurement system that is applicable to the software industry. The study consists of a sequential mixed method where first key performance indicator, drawn from preliminary interviews and then the data from 2012 to 2016 are collected and analysed. The results are interpreted by conducting in-depth interviews with performance management departments. This study uses various performance indicators for R&D oriented sectors combining them with the new KPIs that are specific to the software sector. The implemented method is used to rank the performance of a software company effectively. The study offers many performance-oriented interrelationships between financial, innovation, education, customer-oriented, and organisational factors. The study also offers interesting findings, related to the quality-versus-quantity measures indicating highly qualified employees lead to higher quality levels in research and patent applications rather than a higher number of outputs.