Although you can not use Velocity to measure the productivity of one team compared to another, you can use velocity to help track the relative productivity of the same team from one sprint to another assuming the value of a point stays the same over time.

“Velocity is more of a quantity of work completed metric. Useful and important, but not the sole measure of success. I think you would want a set of metrics that together help us understand our current capabilities to deliver as well as if those capabilities are changing from one point in time to another. I don’t believe there is one magic “agility number” to measure [productivity].”  – Paul Hodgetts, Agile Coach and Certified Scrum Master

As velocity measures the quantity of work being delivered by a team, if velocity increases, then the team is delivering more, which leads to increased productivity. One might argue that the team could be producing more work at lower quality – this is possible – however, this is somewhat protected by the fact that you only count Story Points towards a team’s velocity if they are accepted by the Product Owner.

For more information on how to calculate 1) the financial impact of increased velocity or 2) the financial impact of sprint disruptions/decreased productivity, read my post on Calculating the ROI of Implementing Agile Practices – Agile increases output and efficiency.

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