[wciu]

Most performance indicators are imprecise. P/E ratio is one of the stupidest measure of value, but it is widely use in finance. No one(at least no value investor) would invest based on P/E ratio alone though, there is a lot more due diligence that's done before investors put their money into a stock. (At least that's what you hope happens.)

The problem with productivity measures, is not how they are measured but what they are used for. Most managers want to use productivity measures to evaluate individual or team performance, however, performance is tied to incentives, so you always end up with a lot of push back from the team or someone gaming the system. (IMO, this is because of lazy managers wanting to "manage by numbers", without really understanding how to manage by numbers.)

Rather than using it as a performance management tool, productivity measures, however imprecise, can be used alongside other yardsticks as signals of potential issues. For example, if productivity measure is dropping with a particular module/subsystem, and defect rate is increasing, then one might want to find out if the code needs to be rearchitected or refactored. In these cases, it is okay to be imprecise, because the data are pointers not the end goal. When used correctly, even imprecise data can be very useful.