What is the right performance indicator for the scrum team

1. When I was discussing with some of my friends working in IT industries, they were discussing about
Productivity and Velocity tracked by management for the team’s performance. These are very familiar
metrics for the industries follows Agile.
Some questions came in mind.
1. Is it right to compare the teams with respect to the velocity they deliver?
2. Is productivity of the team adding value to the customer?
3. Anybody cares about Business Value delivered by the team?
PRODUCTIVITY
“Productivity is defined as the efficient use of resources, capital, land, materials, energy, information,in
the production of various goods and services. Higher productivity means accomplishing more with the
sameamountof resourcesorachieving higheroutputin termsof volumeand quality fromthesameinput.”
The productivitycanbe a more meaningful metricthanthe velocity.Velocitycanfluctuate dependingon
changes in resource availability (vacations, holidays, sick leave, loss or addition of team members).
However, the productivity should remain relatively constant, or ideally improve over time as the team
becomes more skilled and efficient and better at estimating the size of stories.
Most scrum teams recognize that a team member can only realistically contribute 4-6 hours per day
toward their iteration tasks. This number multipliedby the number of days that the team member is
available during the iteration (accounting for weekends, vacations, holidays, or any other leave time) is
the team member's capacity.

2. Productivity is calculated by dividing the total number of user story points by the available task hour
capacity of all team members.Forexample,if the total hourlycapacityof all developersinaniterationis
25, and the team completes 9 points of user story work, their productivity is 0.36 points per hour.
The productivitycanalsobe usedas a planningtool tocalculate the target numberof pointsthatshould
be scheduledforthe nextiteration.First,determine the team'stotal capacity in the nextiteration,then
multiply that by the average productivity rate. This target number of points can be assigned to the
Resources field when creating the next iteration.
VELOCITY
“Velocityis a measureof theamountof worka Teamcan tackleduring a singleSprint and isthekey metric
in Scrum.Velocity is calculated at the end of the Sprint by totaling the Points for all fully completed User
Stories and accepted by the Product Owner.”
The story pointssize isnotsame forall teamsworkingforthe same organization.Forexample,whenone
teamisinvolvedinbuildingawebpageandotherteamisworkingonperformanceaspectsof the product,
their reference Userstories for the story point estimation are not similar. During the sprint planningthe
reference baseline userstory used by the team has the dependency on the complexity of the product,
technologystackandenvironments,no.of workingdaysetc.These dependentfactorsimpactthe team’s
commitmentforthe sprint.Basedon the commitmentteamtriestodeliverthe Userstoryat the endthe
sprint. By totaling the Points for all fully completed User Stories and accepted by the Product Owner,
team’s velocity can be determined.
So Velocityisnot the right parameterto compare one team withother team and also it cannot usedbe
used as a performance indicator of the team. But it is very good indicator for the teams to plan their
activity for the future sprints.
Business Value
Business Value results from the intersection of three dimensions:
 What you can implement successfully and sustainably
 What your customers want and will buy (even if they don’t know it yet)
 What your team is excited about creating
The development team provides the points for size, because only they are qualified to judge how big a
feature/Userstory is, relative to another. Whereas the business value points should come from the
Product Owner/BusinessOwner. Aside of prioritization, putting a business value in points against every
itemon the backlogallowsyou to calculate 'BusinessValue'isdeliveredineachSprint. Thinkingoutside
the box, identifying businessvalue before writing the user storiesis much better than writing and then
trying to evaluate. Creating value can often require a change in perspective from the normal project’s
tasks and functions.
The firstprinciple of the Agile Manifestotalksaboutdeliveringvaluable software tothe customer,many
agile practitioners are constantly thoughtful of the value in each step of the software-development
lifecycle. Team having high velocity, highproductivitymay or may not have the high business value end
of the sprint.

3. So fromall of the above keymetricsBusinessValueisgivingreal valuetomanagementandcustomerand
this one should be used as key indicator for the performance of the team.