New Product-Service Revenue
This guideline describes how to measure New Product-Service Revenue to evaluate achievement of revenue targets through timely availability of new products or services within the fiscal period.
Main Description

Overview

The New Product-Service Revenue metric is used for the portion of the revenue derived from the introduction of new products or services, particularly those that require new software capabilities, whether they are significant enhancements (new features) to existing applications or entirely new applications. This key financial performance indicator provides a core basis for evaluating the incremental impact of timely delivery of software capabilities to the business.

Measurement Method

New Product-Service Revenue includes these types of revenue:

  • Actual Product-Service Revenue
  • Plan Product-Service Revenue

Actual Product-Service Revenue = Total actual revenue generated from new products or services during the target periods. Cost should be quantified in terms of currency (dollars, for example).

Plan Product-Service Revenue = Total planned revenue expected from new products or services during the target periods as reflected in business plans. Cost should be quantified in terms of currency (such as dollars).

Measurement Analysis

New Product-Service Revenue gives an indication of incremental business performance through delivery of new products and services. In a software delivery context, the products or services should include or be critically dependent upon software components for market readiness. Through the application of a least-squares regression on the actual revenue, this metric facilitates trend charting from period to period to determine performance over time.

The target New Product-Service Revenue is highly dependent upon market conditions and other business operational factors. However, it is generally desirable that the trend increases over time, as this graph shows, because that reflects both timely software delivery and higher software quality or value.

Graph showing New Product-Service Revenue over time