A Practical Guide to Calculating Test Automation ROI
According to BMC research, 90% of development managers believe that automating a large number of test cases may become the key to their success as the pressure on IT to accelerate innovation intensifies.
However, automating testing processes involves an initial investment, and the benefits can vary between teams driven by multiple forces including the application architecture, number of platforms, and the automation technology choices. It’s important to carefully assess the ROI of automated testing before implementing an automation framework.
This article will help simplify the process of calculating the ROI of test automation and explore key metrics and mistakes to help you make an informed decision.
Why Calculate ROI in Automated Testing
Return on investment (ROI) is a valuable indicator that accurately represents the potential benefit of incorporating an automation technique into your QA process.
Calculating ROI may be helpful in a variety of ways:
- Financial Effect: ROI calculation determines if automation will impact your business positively or negatively and prioritizes testing efforts to improve resource allocation and business success.
- Prediction Impact: ROI enables you to predict when you may expect to get a return on your investment, which helps you plan and establish reasonable goals.
- Prospective Profits and Losses: Calculating ROI provides insights into potential gains and risks, facilitating more informed decision-making by weighing the financial inputs against expected benefits.
- Sustainability: ROI enables teams to prioritize long-term goals by encouraging them to incorporate multiple scenarios today and in the years ahead.
How to Calculate Test Automation ROI
The return on investment (ROI) measures an initiative’s profitability by dividing net benefits by net Costs. The ROI is calculated as a percentage, making it easy for you to compare returns from different types of investments.
Understanding Automation Costs
Test automation tools can increase productivity, but ROI must be calculated accurately based on the total cost of ownership, which looks comprehensively across all people, process and technology dimensions. A number of factors are often overlooked when calculating this cost. An automated test can incur tangible expenses in four categories:
Technology Costs
Using a vendor-based automation framework requires license fees, which are influenced by the number of tester packages, automation agents, and hardware configurations. Additionally, costs related to installation, training, and initial setup before operational effectiveness are often considered license waste.
Technology costs may also include supporting technologies such as code repositories for managing automation scripts, CI/CD license costs associated with automatically triggering automated tests, and reporting tools required to deliver automation KPIs.
Hardware Costs
Hardware costs apply only to on-premises solutions that require the purchase and maintenance of necessary hardware. Cloud-based solutions generally include these costs in their licensing fees, eliminating separate hardware expenditures.
Training Expenses
Training is essential for effective onboarding. The cost of training varies based on tool complexity, organizational skill level, and the availability of community support. More complex tools require greater investment in training and retraining.
Implementation and Maintenance Expenses
Significant costs can be involved in integrating and maintaining automation platforms. Continuous updates to test scripts are necessary as application codes change, with costs scaling based on the complexity and number of assets automated.
Key Metrics for Measuring Automation Benefits
Testing automation is effective when a number of key metrics that impact both productivity and quality assurance are taken into account. Each of these metrics contributes to the overall QA process. The key metrics include:
Coverage
A well-automated QA process requires extensive test coverage. By automating tests, teams can execute a broader range of test cases, increasing the scope and depth of tests. As a result, risks are mitigated, and potential failure points and functionality are covered more comprehensively.
Time Saved
Automation testing significantly cuts down the time required for repetitive testing tasks. Thus, teams can devote their time and efforts to critical activities such as exploratory testing and new feature development, which makes them more productive and innovative.
Test Execution Time
For both manual and automated testing, test execution time indicates the length of time it takes to run specific test suites. Automation testing accelerates this process by enabling simultaneous test runs across various environments and devices, streamlining the testing phase and accelerating development cycles.
Release Frequency
Automating software releases allows organizations to release software more frequently. This benefit enables quicker adaptation to market changes and user feedback, which is key to competitive advantage and customer satisfaction.
Defect Prevention
Automation testing plays an essential role in the early detection of defects, which improves software stability and reliability. Defects can be identified early in the development lifecycle, reducing the cost and effort associated with addressing them later.
Addressed Issues
Automated testing can provide insights into the project’s health and effectiveness during implementation and resource allocation by tracking the number of issues resolved post-identification.
Defect Detection Rate
Defect Detection Rate refers to the percentage of defects or bugs identified during testing. A higher Defect Detection Rate achieved through automation testing means more defects are identified before the software reaches production. Moreover, automated tests tend to be more thorough and consistent than manual tests, making it easier to detect potential faults earlier.
Test Pass Rate
A high test pass rate correlates with efficient testing, which indicates fewer defects making their way into production. Therefore, it is critical to maintain a high pass rate to ensure that the deployed software operates as intended and causes no disruption to users.
False Negatives and False Positives
Test results need to be as accurate as possible, which means minimizing false negatives and false positives. A quality test can reduce unnecessary rework and ensure product quality, which contributes to customer satisfaction.
Resource Utilization
Automation testing optimizes the use of resources across development and QA teams. Automated tests can run during off-peak hours, allowing developers to concentrate on new features or issue resolution during the day. This not only improves team efficiency but also helps in reducing operational costs by leveraging existing resources more effectively.
Common Mistakes That Impact ROI in Test Automation
Organizations need to understand the common errors they make during the ROI calculation process. These mistakes help you figure out the risk-reward ratio of test automation. This section will explore several frequent mistakes that can affect ROI calculations.
Trying to Automate Everything
Not all tests are suitable for automation testing. Manual testing remains crucial, especially for scenarios that require precise human judgment. In some scenarios, fused software testing may prove helpful. The best candidates for automation testing are those tests that are run frequently, involve significant data, or cover critical functionalities that introduce high risks.
Choosing the Wrong Test Cases
The effectiveness of test automation heavily relies on selecting the right test cases. Choosing the wrong test cases can lead to inaccurate testing results and decreased efficiency, undermining automation efforts.
It’s crucial to adopt a strategic approach to selecting test cases for automation, considering factors such as the business impact, test coverage, and the required effort for automation. Engaging stakeholders and subject matter experts in the selection process can help prioritize high-impact business scenarios and focus on essential regression tests.
Not Leveraging Open, Standard Frameworks
Using open-source libraries can be a good starting point for building automated tests, but they often lack standardization, leading to inconsistencies and maintenance challenges. It’s important to establish a comprehensive automation framework strategy that standardizes the creation and maintenance of test scripts.
This strategy should include adapting open-source tools to fit organizational needs and maintaining coding standards to ensure consistency and reliability in automated testing.
Overlooking Test Maintenance
Automated tests must evolve along with your software. Neglecting test maintenance can result in outdated tests that provide unreliable results, leading to a false sense of security or overlooked defects.
Regular reviews and updates of test cases, prompt addressing of test failures, and version control systems are essential practices for effective test maintenance.
Lacking a Robust Governance Model
Test automation efforts require a robust governance model to ensure accountability and effectiveness. This model should define clear roles, responsibilities, and processes for managing and overseeing automation activities.
Without a strong governance framework, organizations may face challenges such as inconsistent test execution, difficulty in managing test results, and a lack of accountability among team members.
Selecting the Wrong Resourcing Models
Choosing the appropriate resourcing model is crucial for QA test automation success. Every model has its advantages and challenges, whether you build your own team, outsource to a specialized provider, or adopt a hybrid approach.
A successful model must align with the organization’s goals, capabilities, and long-term strategy to be efficient, cost-effective, and scalable.
Not Prioritizing Portability
Make sure that automation is implemented in a way that is inherently portable, allowing for movement to different runtime infrastructures as requirements change or alternatives become cheaper. Without portability, you’d risk having to invest significantly more resources than necessary to rebuild all your scripts and test suites.
Final Thoughts
An accurate ROI calculation is critical for justifying and optimizing test automation investments. The systematic assessment of ROI allows organizations to prioritize testing efforts effectively, ensuring that resources are allocated in a way that will boost performance and align with business objectives. A regular ROI analysis should be integrated into project reviews to ensure that testing strategies remain current with technological advancements and business requirements.
Partnering with a provider like Testlio can help organizations improve their test automation strategies and ROI calculations. Schedule a call with one of our experts to find out how our test automation services can streamline your business processes.