- 68% of software engineering organizations track zero economic metrics for teams.
- Average 10-engineer team costs $1.5 million USD annually.
- Top 10% of organizations cut costs 25% using allocation metrics.
Economics of Software Teams: Key Findings
- 68% of software engineering organizations track zero economic metrics for teams.
- Average 10-engineer team costs $1.5 million USD annually.
- Top 10% of organizations cut costs 25% using allocation metrics.
Google Cloud's 2026 State of DevOps report on the economics of software teams finds 68% of organizations track zero economic metrics for their teams. Released April 13, 2026, the study surveyed 2,500 firms across industries. An average 10-engineer team costs $1.5 million USD annually.
Nicole Forsgren, CTO at Google Cloud, presented the findings at a virtual DevOps summit. "Teams optimize code but ignore dollars," Forsgren said.
Traditional DORA Metrics Expanded
Traditional DORA metrics measure deployment frequency and lead time for changes. The 2026 report expands coverage to include cost per commit and allocation efficiency. Only 32% of elite performers track developer time allocation across projects, per the study.
"Speed without cost control burns cash," said Marty Cagan, founder of Silicon Valley Product Group. His team analyzed data from 150 tech firms. Untracked allocation wastes 22% of engineer hours, equivalent to $330,000 USD per team annually.
TechCrunch previously covered gaps in DORA economic tracking. New data indicates mid-tier organizations overspend 18% on idle capacity.
Software teams average 8.2 engineers. Salaries consume 62% of budgets, based on $180,000 USD mean compensation. Tools and infrastructure add 15%, or $225,000 USD yearly.
Team Costs Average $1.5 Million USD
The report calculates total cost of ownership at $1.5 million USD per team. This figure includes salaries, benefits, cloud bills, and training expenses. High performers limit costs to $1.2 million USD through metric-driven decisions.
Cloud spending averages $450,000 USD per team. Yet 55% of organizations lack per-team resource tagging, according to the study.
Will Larson, CTO at Carta, wrote on LinkedIn: "Tag everything or bleed cash." Carta saved $2.8 million USD last year with custom dashboards. Finance-engineering integration reduces cost variance by 30%.
Unallocated Time Averages 22%
Developers split time across 4.1 projects on average. Without tracking, 22% of time remains unallocated, equating to 1.8 full-time equivalents per team.
Forsgren's team tracked time allocation for 500 squads. Elite organizations allocate 92% of hours effectively. Laggards achieve only 68%.
Cagan recommends quarterly audits. "Finance owns P&L; engineering owns delivery," he said. Joint dashboards reveal project overlaps and inefficiencies.
Cloud and Tools Total $675,000 USD
Cloud services and SaaS tools total $675,000 USD per team yearly. Organizations overspend 41% on unused licenses. The report specifically cites Snowflake and Datadog examples.
Financial Times reported 32% enterprise cloud waste in 2025. The 2026 data confirms the issue persists.
Larson implemented FinOps practices at Carta. Cloud bills dropped 28%, saving $126,000 USD per team. Automation now assigns tags to resources dynamically.
Top Performers Save 25%
The top 10% of organizations save 25% on costs using four key metrics: cost per engineer, allocation rate, idle capacity utilization, and ROI per feature. Teams implement these metrics in an average of 90 days.
Forsgren outlined implementation steps: integrate GitHub Actions with finance APIs to link commits to costs. 78% of adopters report gains within six months.
Cagan's Silicon Valley Product Group provides free dashboard templates on GitHub. The playbook sees 15,000 downloads monthly.
Benchmarks by Organization Size
Startups with under 50 engineers average $900,000 USD per team. Scale-ups average $1.8 million USD. Enterprises hit $2.4 million USD per team.
The report segments benchmarks by revenue. Firms at $1 billion USD in revenue waste 12% of budgets. Sub-$100 million USD organizations waste 29%.
Google Cloud derived these figures from anonymized data across respondent firms.
Finance and Engineering Convergence
65% of S&P 500 tech firms merged engineering budgets into finance oversight last quarter. DORA metrics accelerated this trend.
Larson predicts standardized APIs by 2027. "Engineering ledgers will resemble blockchains," he said.
Adoption Hurdles
Cultural resistance impacts 47% of teams. Engineers often view tracking as surveillance. Training programs resolve 80% of resistance cases, per the report.
Forsgren advocates anonymized aggregate data. "Focus on systems, not individuals," she said.
Elite Teams' Practices
Elite teams review cost dashboards weekly. They reallocate 15% of budgets quarterly. Overall spending falls 25% as a result.
Cagan cites Uber as an example. Uber's metrics implementation cut $50 million USD firm-wide.
In the economics of software teams, crossing a 20% efficiency threshold separates growth from contraction. Q2 2026 earnings reports will test widespread adoption.
