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Test Automation ROI: How to Calculate and Why It Matters

The simplest way to calculate ROI for your test automation project is to estimate how many manual QA hours it saves and how many human resources it frees for some other testing tasks a computer program can't handle, like usability tests.

In this article, I will tell you how to understand and analyze the ROI of test automation and evaluate the benefits ROI calculation may bring you.
By Leo Prada, Technical Project Manager
October 12, 2021
What ROI Is and Why It Matters
ROI or Return on Investment is a simple formula to calculate and understand if something you decide to implement will bring you more economic benefits than expenses.

No matter how large or small your business is, evaluating ROI is vital. Knowing the ROI of your next test automation project will let you make accurate business decisions and adjust your investment strategy if you see a performance lower than that you have planned.

Let's take a look at the possible approaches to calculating ROI.
How to Calculate Return On Investment in Test Automation
You should weigh many factors keeping in mind that linear calculation is not enough.

For example, you estimate how many hours a manual tester needs to execute a regression test. Then, you let test automation engineers do the automation of the regression suite and compare the amount of time invested into the same operation in each case.

You will get a direct linear result: 1 hour of manual testing is automated in 1.5 or 2 hours.

For some test automation implementation cases, the analysis and calculation of ROI will be a bit more complex.

Calculating the ROI for manual testing that you will use as the baseline, you need to realize that the costs will go up with time. A manual tester starts piling repetitive tasks but gains more experience with time, which leads to a price increase.

Unlike manual testing, test automation activities will require considerable investments from the start. You have to purchase the software and programmers well-versed in the QA and testing field. Besides, automating test cases will consume time. Be ready for a time period when you will have to pay 100% costs and receive no immediate return.

The breaking point is the moment of having your automation code polished enough to start working smoothly, saving you manual testing time. At that moment, you can start thinking about the ROI of your test automation project.
Increase ROI by Preventing Downtimes
The most common mistake you can make thinking over how to calculate the ROI of automation is focusing erroneously on how to cut costs compared to manual testing alone.

Instead, take a broader view: will test automation prevent probable expensive defects from happening and add up to the overall project success?

Gartner has estimated that the average cost of IT downtime is $5,600 per minute. Test automation may save you thousands of dollars by letting you reduce or eliminate the outage time. It is vital to help this consideration find its way into how ROI is calculated by you or your team.

The sooner your test engineers catch a defect, the better. Automation testing will allow your team to detect and fix errors as quickly as possible and avoid having production software down or broken over a long period.
Consider Training Period
Your manual and automation teams should know your project functionality inside and out to test it in a due manner. To achieve the necessary level of comfort on a project, plan allocating enough time for QA engineers. Make sure your ROI calculations factor in the costs of finding and training people to write tests matching a particular project.

Patricio Farrell, an engineering manager at one of the key fintech players in Argentina, believes that testers can have a much better understanding of the product and demonstrate better results if trained properly.

He also refers to test automation as a vital tool for improving the quality of deliveries. In his view, a QA team has to be involved from the beginning of a project.

Having a test strategy in place will allow your automation engineers to identify the best ways of optimizing the testing effort. As a result, few test cases will be needed to cover a large portion of a product.

Automation testers need some time to ponder about the best way to test one or another project part. During the planning period, there might be no visible productivity. But it is imperative to bring the test strategy to ripeness.

When analyzing how to calculate the ROI of a project for test automation, don't go biased by limiting everything to comparing the amount of manual and automation testing. Automated tests are not something engineers write once and run forever. They have to maintain the code hand in hand with the development and modification of features. That process is very dynamic.
Think About Non-tangible Aspects
There is an impact of test automation, which is hard to measure. It is how happy your manual testers will be once getting rid of repetitive regressions.

You should also factor in the value and usability of automation software your team is using. I'd recommend a high-quality test automation reporting tool Zebrunner. It will help your team monitor a project's automation status and facilitate analyzing the ROI.

The best path to the increased ROI of test automation is through comprehending your testing needs. Accurately define sections of the code ripe for automation, plan how automation can provide the broadest coverage, maintain your test case suite up-to-date, and regularly assign to your employees challenging tasks a computer can't do on its own.
Key Takeaways
If you know the ROI of your test automation project, you will understand the number of hours of manual testing you can save and human resources you can free up for tasks where human involvement is mandatory.

To get reliable calculation results, you should consider several factors: the length of the training period for test automation engineers, a team's early involvement in the project and its morale, costs of test automation tools, and capacities automation testing offers for preventing software downtimes.

The size of your business doesn't matter. By calculating the ROI of your test automation project, you may enhance decision-making, plan investments wisely, and keep up a healthy work environment due to adequate time and resource allocation.