Towards innovation measurement in the software industry

► We perform and report on a systematic literature review in the field of software innovation measurement. ► We establish the current practices, mechanisms and challenges of innovation measurement in the software industry. ► We found a lack of comprehensive innovation measurement models covering all aspects of innovation. ► We found little information about the collection, processing and interpretation of innovation metrics. ► We found that while metrics have been proposed in literature, only a few have been dynamically validated in industry trials. In today's highly competitive business environments with shortened product and technology life cycle, it is critical for software industry to continuously innovate. This goal can be achieved by developing a better understanding and control of the activities and determinants of innovation. Innovation measurement initiatives assess innovation capability, output and performance to help develop such an understanding. This study explores various aspects relevant to innovation measurement ranging from definitions, measurement frameworks and metrics that have been proposed in literature and used in practice. A systematic literature review followed by an online questionnaire and interviews with practitioners and academics were employed to identify a comprehensive definition of innovation that can be used in software industry. The metrics for the evaluation of determinants, inputs, outputs and performance were also aggregated and categorised. Based on these findings, a conceptual model of the key measurable elements of innovation was constructed from the findings of the systematic review. The model was further refined after feedback from academia and industry through interviews.