How To Calculate Test Automation ROI?

Automation is ruling the software development industry, especially the testing field where multiple automation tools are used for testing. But moving from manual to automated testing is a huge task; there are many pitfalls you might not have considered earlier. For instance, measuring the ROI for automation testing is very difficult.

Investing in test automation is a wise choice, as it is helpful, attractive, and easy but expensive too. Most organizations often don't analyze the value or ROI of automation testing for their product needs, which later becomes an obstacle. There are multiple queries related to calculating ROI for test automation, and it is crucial to address every issue in the process.

This article highlights the most common ways to calculate ROI on your automation testing while providing practical tips to improve it over time.

Factors to Consider for ROI on Test Automation

Product developers make a common mistake while measuring their test automation ROI; they consider testing an essential factor in their software's total cost of ownership. But, this approach only works for large and established businesses. For small businesses, considering software testing as a cost center is a big mistake.

When the QA section is considered the cost center, the ROI will be limited to cutting costs. For example, if you're not getting the desired results from the QA section, how can investing in them provide a better ROI.

The Basic Calculation

The simplest method to measure ROI on test automation is to calculate the total time saved by QA in testing. For instance, if it takes 400 hours to write multiple automated tests, which reduces the manual testing quantity by 25 hours each week, it's pretty simple to calculate the ROI. Although these calculations are pretty easy to understand, they don't provide better insights into your company's actual costs.

Automating All the Test Cases

Just because automation makes it easy and quick to test your products, it doesn't mean manual testing is no more helpful. In software testing, you can never ignore manual testing entirely. Some areas of an application always require manual testing, such as user acceptance testing or UI testing. Thus, to get a proper ROI on test automation, make sure you automate only the required testing scenarios of your product.

For example, tests performed only a couple of times a year don't provide a positive ROI. So, it will help if you ignore automating such test cases.

Maintaining the Test Cases

Test cases are like small software that needs continuous maintenance to provide the best ROI on your test automation. When you update an application with new features and functionalities to meet customer requirements, you also need to update the test cases to reflect those changes accordingly. That's why updating and maintaining your test cases is crucial for better ROI.

When you implement new features to make product improvements, the test cases and regression suites will grow as well. Ensure that the test cases are usable over the months and years with continuous maintenance.

Calculating ROI Efficiently

The ideal approach to calculate ROI for test automation is considering the days, as you can run automated tests for 24 hours continuously compared to manual testing, which can only be performed for 8-10 hours only. However, you can consider automation testing to run for 18 hours, as test cases are often interrupted.

The formula to calculate the ROI on test automation is:

ROI = Gain – Investment/Total Investment
Investment = Automated test script development time + Automated test script execution time + Automated test analyses time + Automated test maintenance time + Manual test case execution time

Gain = Manual test execution time or analyses time * Multiplied by the total number of test cases (automated & manual) * Multiplied by the period of ROI * Divided by 8

Now, let's have a look at each of the above parameters.

1. Automated test development time = (Hourly automation time per test * Number of automated test cases) / *
2. Automated test execution time = (Automated test execution time per test * Number of automated test cases * Period of ROI) / 18
3. Automated test analysis time = (Test analysis time * Period of ROI) / 8
4. Automated maintenance time = (Maintenance time * Period of ROI) / 8
5. Manual test execution time = (Manual test execution time * Total manual tests * Period of ROI) / 8

The period of ROI is termed as the total number of weeks to calculate the ROI. When manual tests are used, you need to divide them by 8. For automation testing, you need to divide it by 18.

In the efficient ROI calculation, the time investment is considered as compared to monetary gains. After calculating profits and investment costs, you can use these values to calculate ROI for test automation. Also, the focus is on the actual efficiency of the automation rather than the money factor.

There is another approach that can be used to calculate test automation ROI while reducing the risks associated with automation.

Calculating ROI with Risk Reduction

In this approach, the test automation benefits are independently calculated while addressing the ROI concerns associated with it. When using automated tests, you can free other resources and focus on other productive tasks, such as in-depth analysis of application, exclusive random and negative testing, test design/development, etc.

You can expand your test coverage with automation testing but cannot automate the test cases fully. Also, manual testing relies on it, which can lead to unidentified application bugs and post-delivery bug fixes. This can reduce the testing and product quality and put your organization at risk of paying the penalty or undergoing some loss. These losses should be incorporated in the ROI formula for test automation to measure the gain in terms of money.

The total ROI is monetary to your company's loss if automation testing is not implemented.

Maximize the ROI For Test Automation With LambdaTest

The above methods are indeed helpful to calculate ROI for test automation. As a leading company, your primary purpose should be improving the ROI. The best way to maximize your ROI is to minimize the time spent on writing and designing tests. This is where you need an automated testing tool like LambdaTest.

LambdaTest is an excellent cross browser testing tool that gives you the freedom to perform both manual and automation testing. It can help you identify the areas that require automation testing and manual testing individually. Besides, it can even help you minimize long-term costs associated with test automation while improving the test quality to meet your business requirements.

Conclusion

Calculating ROI on your test automation is crucial to analyze whether it is beneficial for your organization or not. However, there are many factors that affect the ROI calculation for test automation. Thus, it is recommended to improve your overall test automation strategy by using efficient test automation tools. Furthermore, there is no single formula to calculate the ROI on test automation; it changes as your product testing lifecycle improves. This article highlights the most efficient methods to measure the ROI of your product's test automation.