Industry by Industry
The industry with the highest productivity rate for software development is the health care industry with a mean of 15 hours per function point. There are a lot of factors impacting this productivity rate. The first factor is the health care industry and health care technology industry is growing and growing rapidly. Secondly there are companies which specialize just in software development for the health care industry. The third factor the health care industry has the highest qualitative score of any industry with a mean of three1. One reason why the healthcare industry has high qualitative scores is because regulatory agencies enforce best practices.
Those companies that are software development companies without a specialization have the lowest productivity rates. The mean productivity rates for software development ranges from 10 hours per function point to 65 hours per function point. The average software productivity rate is somewhere in the range of 45 hours per function point2. This means the range3 of productivity is about 55 hours per function point.
The ranking of productivity by industry is as follows:
| Industry | Ranking |
|---|---|
| Health Care | 15 |
| Aerospace & Defense | 20 |
| Manufacturing | 20 |
| Travel & Leisure | 20 |
| Retail | 25 |
| Finance & Banking | 25 |
| Education | 30 |
| Telecommunications | 35 |
| Government | 40 |
| Software Development Companies | 45 |
It surprises some people to see software development companies have the lowest productivity rates. The further away the software development organization is away from the core business, the lower the productivity rate. Another way to look at this is the less software developers know about the core business, the lower the productivity rates. Not only do software companies have the worst productivity rates, they have the highest range of productivity which means they are the least consistent. I devote a lot of my book to exploring this specific issue.
While software development is part of every industry, some industries rely heavily upon software. Telecommunications is perhaps one of the largest users of software. It relies on software to manage networks, route calls, bill, and manage customers. Most of the software applications developed for the telephone industry are large (in excess of 10,000 function points), and they process incredibly huge volumes of data (several billions of transactions per year). For this reason, software development productivity in the telephone industry tends to be lower than other industries. It would be silly for an organization in the travel and leisure industry to compare its levels of productivity with software organizations supporting the telecommunications industry.
1Over the years I have expermineted with scales of 1 to 4 and 1 to 10 and I have determined that 1 to 5 seems to be the measure most individuals can easily grasp. The range of scale is not important
2The numerical average is around 30 hours per function; the standard deviation is 10 hours per function point. The range of productivity I include in the body of the chapter is a 95% confidence interval. This means 95% of software development will have productivity in the range of 15 to 45 hours per function point.
3The range is simple: the high minus the low. In this case, it is 65 hours per function point minus 10 hours per function point.