Many companies have long made test automation a must-have practice. Nevertheless, its effectiveness must (and is important!) be calculated. In general in business, before investing money in something, it’s important to figure out when it will return and what profit it will bring. ROI is a metric that gives this insight. In this article, we find out what the test automation ROI is, why you need to calculate it, and what indicators the formula consists of. Moreover, we also tell you what conditions should be taken into account when calculating the return on investment.
The test automation ROI definition
Return on investment (ROI) is the ratio between net gain and an investment amount, that is, expenses. If the ratio exceeds one, you return your money. Knowing ROI allows you to evaluate the effectiveness of investments in general.
To paraphrase, the test automation ROI formula is the ratio of savings earned by replacing manual tests with automated tests to the amount of investment in test automation. The ROI of test automation helps you understand how justified the costs associated with implementing automation and its support are.
Briefly about why you need to consider ROI
Here are the main reasons why you should calculate your test automation ROI:
- It helps you understand whether you need automation in general. Preliminary calculations even may show that, in your particular case, it could be more profitable to leave only manual testing.
- Studying and summarizing the key conditions that directly affect the success of your particular test automation allows you to see different options for return on investment scenarios. After working through them, you can choose the most optimal one for the project.
- ROI calculation demonstrates the pros and cons of test automation to business decision-makers. Thus, it helps them to make a balanced resolution about switching to a certain automation toolkit, as well as increasing/decreasing the amount of investment in automation.
Top-7 conditions for precise ROI calculation
The simplest way to understand the approximate effectiveness of test automation and calculate its ROI is by measuring the amount of time saved. This is the time saved by replacing manual tests with automated ones, reducing the number of manual testers’ work hours, and improving the quality of the released product, which significantly reduces the time spent on fixing bugs.
The advantages of this calculation are that it is easy to understand and does not take much time. The main disadvantage is that this way you will not get an accurate calculation of ROI. Measuring the return on investment in automated testing must take into account a number of conditions.
Condition 1. Test maintenance costs
Automated tests are not something that can be written once and then remain working forever. As new functionality is added that needs to be tested, automated tests are added and existing ones need to be updated. This takes time, which must be taken into account in the calculation of ROI.
Condition 2. Expenses on test automation engineers hiring
Companies that implement test automation have a QA team. For this reason, it is generally believed that retraining existing specialists is enough. However, there are some difficulties. Firstly, retraining requires time and financial costs to pay for the work of mentors. Secondly, it may turn out that the QA team is not interested in learning or only some of the employees are interested. Thirdly, even if you have retrained your QA team to work with automated tests, they are still novice automation engineers. You will need to hire at least one experienced test automation specialist. Otherwise, all efforts and initial investments will burn out.
In general, the point about highly qualified test automation engineers can be considered mandatory. The quality of automated tests directly affects the success of the entire automation process in a company. So, in any case, it is reasonable to immediately hire a qualified employee who will ensure the creation of high-quality tests and help other team members in training.
Condition 3. Costs of possible human errors
It is generally accepted that automation minimizes the possibility of human error. However, automated tests are written by people, and they can make mistakes. Therefore, it is better to immediately take into account this risk and work it out, through an assessment of the cost of eliminating errors after the release of the software.
Condition 4: Increasing need for scaling
As the product grows, more and more automated tests need to be run. The more tests you run, the more powerful tools it requires to execute tests, and the more expensive it is for the company. Consider this nuance when calculating the return on investment.
Condition 5: Cost of automated testing tools
Test automation requires not only the cost of hiring new employees and training the QA team but also paying for the necessary tools. These are bug tracking tools, team communication solutions, CI/CD, SSO tools, test automation frameworks, and build & deploy tools. There are both paid and free tools for working with automated tests. Both of them have their advantages and disadvantages. As a rule, the optimal approach to automation includes a combination of both paid and free tools, it is only important to choose the solutions that suit your company and choose the best rates.
It is better to choose a reliable and feature-rich test automation management platform. One of the most user-friendly solutions on the market is Zebrunner. The platform facilitates the process of automated testing, collects information and analytics in one place, and has a flexible subscription model. The more tests you run, the lower the tariff for using the tool will be for you.
Condition 6. Costs for developing and configuring a test automation framework
A test automation framework is a set of rules and conditions that are used to create and develop test cases. The framework provides a standardized test language and structure, and a properly designed and configured framework helps reduce test support costs. However, at first, designing, developing, and setting up a framework will take time and require financial resources.
Condition 7. Frequency of releases per year
The frequency of releases affects the number of tests run, and the latter directly influences the return on investment. You could even say that the more tests you run, the sooner your investment in automation will pay off.
What else to consider
Some tests are ideal for automation, while others are better run manually. Therefore, the QA team must include manual testers, without their work it is impossible to ensure the high quality of the product.
Automated regression tests provide a double benefit. First, you save the time of the QA team, because manually executing such tests takes many hours. Second, automation of regression tests ensures the highest possible coverage and minimizes the possibility of hidden defects after the release.
Automated test cases can be reused. Thus, it saves time and project budget.
ROI formula (it’s not as complicated as it might seem!)
The formula for calculating the return on investment is based on two values: investment benefits (Savings) and investment costs (Investment).
Investment benefits are those savings that a company receives by switching to automation. It includes:
- The amount of time you save by automating previously manual tests.
- Money that would have gone to pay a large team of manual testers.
- Savings on the cost of troubleshooting the application after its release. Well-established test automation prevents these expenses.
Investment costs are the amount of money required to switch to automation and set up all related processes. It includes:
- The cost of hiring, salaries, and onboarding of test automation engineers.
- Expenses for training an existing QA team. It should be understood that these are not mutually exclusive positions. It is impossible to automate absolutely all tests.
- Subscription or license cost for using test automation tools.
- The cost of maintaining automated tests.
In cases where we are talking about time expenses, we consider the cost of an employee’s working hours.
The ROI formula looks like this:
Test automation ROI = (Savings – Investment) / Investment * 100
As a result, you get a percentage of the expected efficiency from automation. The higher it is, the more effective your QA processes are.
Resume
The ROI of test automation is difficult to calculate due to several conditions that vary by company. At the same time, in the end, the efforts spent will pay off. With a return of investment forecast in hand and all the factors that affect this indicator, you can optimize processes so that automation can bring maximum benefit to the business.