Managers, practitioners, and agile teams have tried to justify and evaluate test automation for many years. Proving test automation ROI, or the commercial benefit of test automation is more crucial than ever since getting enough test automation coverage remains a significant problem.
Teams generally gauge the test automation by looking at the proportion of test cases that could be automated and the cost savings that came along with it. However, the value of the tests themselves and their capacity to mitigate and minimize quality risks should be taken into account when calculating the ROI of test automation when it is placed in a broader business context.
This blog will analyze several indicators and the formula for calculating the ROI of test automation.
Calculating ROI on Test Automation
When evaluating the test automation ROI, software leadership teams frequently make mistakes. Simply put, they are too ignorant. They know that testing contributes significantly to their product’s overall cost of ownership. Yet they view software testing as a cost center. You invest on resources in the QA division in hopes that you will receive better software and quality products. This mindset of quality products is true for many big established businesses that focus on quality and reputation. However, most smaller businesses choose to pay less attention to quality assurance entirely, which frequently has severe consequences and effects.
The Test Automation ROI will inevitably be constrained to cost-cutting when you look at QA as a cost center. How can our investment in QA produce more value if it only prevents errors rather than highlighting a few more benefits?
Let’s look at how we measure ROI, there is an ROI formula. Investment costs and benefits are the two elements used in this method. The same as the ROI of automated testing, they may differ from business to business. When calculating it for your business, deduct the investment expenses from the benefits, divide the result by the costs, and multiply the result by 100.
ROI, as you are already aware, is the ratio between the benefit of converting to test automation and the expense of making that investment: ROI, as you are already aware, is the ratio between the benefit of converting to test automation and the expense of making that investment:
ROI = (gain -investment) / investment*100%
When you examine this formula, you could wonder what motivates the gain and investment amounts. So, let’s take a closer look at everything.
We may simplify the computation by using minutes as the most common unit for all inputs because ROI just gives us a value expressed in numerical percentage. You can convert minutes to dollars if the calculation must include monetary values. To achieve that, you must divide the amount by the automation engineer’s hourly rate before changing the received hours to minutes.
Gain
The difference between the costs of doing the same tests manually and automatically over an extended time might be interpreted as the benefit in our calculation.
Gain = (time needed to execute one test manually – time needed to execute one test automatically) an average number of tests, several test runs
A breaking point and a good ROI may be reached faster and more frequently when automating testing.
Investment
Investment is the entire cost of all test automation expenditures such as tool costs, cost of resource, etc. More importantly, we should factor in the time required to develop and adjust test automation frameworks and create and maintain tests. As a result, we can calculate the investment amount as follows:
Investment = time needed to build a test automation framework + (time of one test coding * number of automated tests) + test maintenance costs
Important Metrics to Consider before calculating ROI Test Automation
When evaluating ROI for test automation, consider several key test automation metrics. You need to be aware of the key parameters affecting ROI before calculating it for your test automation journey. The following are the most crucial metrics to take into account when assessing test automation ROI:
Cost
One of the primary reasons for switching from a manual to an automated testing strategy is unquestionably business expense. Due to the setup and installation of automation systems, the cost advantage might not immediately become apparent. Nonetheless, the fact that it has a long-term declining trend makes it unquestionably an essential indicator.
Time
You have a group of knowledgeable testers, but they are mostly involved in developing and running manual test cases. The more time SMEs spend on extra duties, the less time they have to concentrate on business-critical processes, which is a significant loss for SMEs. It is obvious that ROI is not solely cost-based when you are creating a start-up from scratch and depends on the performance of your staff.
Quality
ROI must incorporate quality as one of the measures if test automation is producing the best, error-free products in a timely manner. Test automation raises product quality and boosts customer satisfaction overall since there is no chance for human error, and there is a strong likelihood that duplicate operations will be automated.
What may affect the accuracy of your ROI calculations?
Calculating the ROI of app testing cost wouldn’t need a lot of complication because of its simple formula. Nevertheless, automating the calculation presents several difficulties.
1. It isn’t easy to put a value on certain things.
2. Defining precisely how to quantify automated performance in terms of money could be challenging. Calculating the number of hours saved is simple, but the cost of maintaining new suites is more complex because it may increase over time.
3. Creating an internal test automation team involves varying expenditures for onboarding and training.
4. Not all software flaws will be found. You should still allocate money for troubleshooting expenditures since it would be unrealistic to anticipate that automation will provide 100% test coverage.
5. Testers must make up your QA team for all testing tasks. The truth is that human and automated testing isn’t exclusive.
As a result, precise ROI estimates call for considerably more research into your business than just substituting the formula with various figures.
Tests Have to Be Maintained
The fact that tests cannot be written once and then left for execution is arguably the most important overlooked factor in our fundamental calculation. Like any other piece of code, tests are a type of software. This implies that you must consider how the tests will vary over time when calculating your return on investment for testing. New features will contribute to some of that shift. We conducted 500 tests in our last example. The 500 tests are only the beginning. You’re not doing it right if, after a year of test automation, you still only have 500 tests. Instead, your test suite’s test count will increase when you incorporate new features.
Yet there are other factors at play as well besides new tests. Many aspects alter how something operates. As a result, developers must spend effort changing old tests to work with newly created code. When determining your ROI, you must consider this time.
It’s not easy to assess this time. It’s well known that developers find it challenging to estimate how long it takes them to evaluate a product. They also resist efforts to estimate that time more accurately. It would help if you collaborated with your developers to have the most accurate understanding of how much time they spend creating and updating tests to determine your test automation ROI. The cost calculations you make depend heavily on these measures.
Conclusion
Calculating test automation ROI may successfully show how it adds value to QA operations, even though developing an automation pipeline can appear difficult in terms of time, money, and efforts. Automated testing is here to stay, and stakeholders would do well to install them in advance and gain a leg up amongst the competition in the market.
