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Ihor
Feoktistov
Co-founder at Relevant

Doing the Math for Test Automation ROI: How to Calculate it Right

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Have you just spotted a bunch of crippling bugs that have spilled over into the release stage?

Again?

Now may be the right time to adopt automated testing to help your QA engineers detect things that often go unnoticed. We know you’ve been putting this off for a while, either because automation takes too much time or you thought you didn’t need it. But post-release backtracking isn’t fun, huh?

If you’re involved in the software industry, test automation is your moonshot goal.

Aside from the tangible benefits to the development lifecycle, software test automation pays off in monetary terms. Explore what they are for your business and what goes into the return on investment (ROI) of automating your tests.

Benefits of automated testing

There’s a misconception that test automation is only for medium-sized and large companies, as they have too many projects, builds, and resources to skip it.

But it doesn’t work that way. If you’re a startup with a single project to focus on, you don’t want to deliver bug-filled software to users or waste your development time any more than companies larger than yours do. Regressions happen, and things break, whether you run one or dozens of projects.

Implementing automated software testing boils down to whether you’re all for quality. You can’t afford to chug along with manual tests when automation offers so many benefits. Let’s take a look at the most crucial of these.

Making your software spotless

For testers, floundering through uncharted waters is as common as creating test scenarios. But when they write tests for something they aren’t good at, the likelihood of bugs in production increases astronomically.

Here comes the selling point of test automation vs. manual testing. When your software is tested automatically, modules are checked with unerring accuracy. So even if your engineers or testers have a bad day, there’s something that has their backs.

Spending fewer hours on repetitive testing

You don’t do backups manually, right? You’ve automated them to save time by not doing the same thing every evening for the rest of your life.

Test automation is also about saving time. It allows your quality assurance (QA) team to spend more hours checking for issues that can only be checked manually while taking the humdrum routine off their hands. Integration, regression, and web application penetration testing can all be automated to save your testers’ hours.

Getting to the release stage faster

Every bug, change, or software enhancement pushes your release date back.

While it can’t speed up the coding stage, test automation can help you get through change verification outside the restrictions of an 8-hour day. You can adopt multiple automated software testing methods to run checks simultaneously and roll out your product on time.

Ditching late bugs

What may seem a minor error at the design stage can be a disaster waiting to happen post-release. The cost of troubleshooting bugs is always higher as you move to the next development stage.

That’s where you can reap test automation cost savings by catching and fixing bugs early in your development process. Automated tests can cover larger chunks of code than manual ones, improving the way your QA team detects errors.

Avoiding losing talent

If you suspect your testers are exhausted because of the never-ending flow of projects and tasks, automation is your way to retain them.

Automation is a huge help for your QA team. It makes it easier for your testers to get the job done, stopping them from leaving due to burnout. What this means to your company is you won’t need to bear the cost of losing talent.

5 Key Benefits of Automated Testing

What is ROI in automation testing?

You can’t spend a single dollar of your business budget without knowing whether it’ll come in later. (Okay, you can, but that doesn’t make you a good decision-maker.)

Before any amount goes out, you need to have at least a ballpark figure supporting your decision to invest it. In other words, you should be clued in on the return you can expect.

Test automation ROI shows just that. It’s a metric that gives you a numerical representation of the return you can get by embedding an automation strategy into your QA workflows.

Why should you calculate automated testing ROI?

Having automated testing ROI figures at your fingertips helps determine whether investing in automation is financially feasible for your business. This involves weighing the gains and loss risks for your short-term and long-term software testing needs.

Here’s what else ROI means in automation testing:

  • It helps you estimate when your investment will start paying off (i.e., how many test cases you need to automate to get your money back in cost savings).
  • It shows whether automation is the best addition to manual testing for your company.
  • A positive ROI enables you to justify an automation strategy, allowing you to attract investments from other decision-makers.
3 Reasons to Calculate Your Automated Testing ROI

So how can you calculate it? Let’s look at the formula.

The formula for the calculation of test automation ROI 

The first thing to do is to make sense of the test automation ROI formula. To use it, you’ll need a couple of numbers:

  • Investment benefits
  • Investment costs

There’s no fixed amount of money you can feed into your calculations for investment benefits and costs. Even if you aren’t a math person, brace yourself for adding figures up on your own.

To calculate investment benefits, tally up all the savings and reduced risks associated with adopting automation. They include:

  • Hours saved by automating tasks your QA team used to perform manually
  • Money saved on salaries paid to too many manual testers on your team
  • Avoidable expenses (e.g., the cost of troubleshooting software post-release)

Investment costs are what you’ll need to pump into your QA processes to get started on automation. Think of:

  • The cost of building a test automation team or using third-party testing services
  • How long it’ll take to code and set up automated tests for all your projects
  • Maintenance expenses that go into automation frameworks and workflows

Once you’ve calculated investment benefits and costs, you can follow the formula to figure out automated testing ROI in three steps:

  1. Subtract the costs from the benefits
  2. Divide the remaining amount by the costs
  3. Multiply this by 100

You’ve just reckoned a percentage showing your expected return on embracing an automation strategy.

Calculation of Test Automation ROI: The Basic Formula

If you’re confused, you can get Relevant to do the calculations for your business. Just contact us, and we’ll discuss the details. 

Things to look at when doing a test automation cost-benefit analysis

It may seem easy to get your hands on your total payrolls and calculate how much you can save on salaries with test automation. For example, if you pay $23 per hour to have a manual tester hunt down regressions, you may think you can now spend $184 less per day to get the job done.

However, like with other test automation metrics, there’s more to ROI than meets the eye. When quantifying investment benefits and costs, you need to calculate all changes that automation may bring to your workflows. On top of that, it doesn’t mean you can give your manual testers the sack, as some test cases must still be handled manually.

To go beyond the obvious in testing ROI calculations, you need to factor in:

  • What tests you’re about to automate. Consider all new functional test cases across your projects, including how much time you can save by automating them and how time-consuming it is to implement them.
  • Essential test cases. Because automation allows you to run multiple test cases and reuse them for other projects, you can test more by doing less. That means no redundant tests across your builds, which is a safety net for your budget.
  • Regression tests. What if your QA specialists could avoid doing countless reruns? Tally up the savings you’d realize and compare them to the cost of coding automated regression tests and maintaining suites.
  • Missed bugs. Dig up the latest numbers on losses due to defects your QA team has overlooked. Now imagine you could address them well ahead of the release date. The resulting savings should be crunched among key test automation ROI metrics.
  • Testing environments. To calculate ROI accurately, never leave out investments you put into building testing environments. With automation, you can spend less on collecting test data or executing tests in different operating systems. This is something to add to the benefits column.
  • Dismissal spree. You can’t rely too heavily on any software engineer or QA tester. If they leave, you lose a wealth of technical knowledge, and it may cost a lot to heal the wounds. But automation can help prevent this by minimizing reliance on the manual skills of a single employee.

If your cost-benefit analysis shows you’re in the black after calculating all that, automation may be a rewarding long-term strategy for your business.

Parameters of ROI Calculations for Automated Testing

What may affect the accuracy of your ROI calculations?

Basic math skills should suffice to quantify the ROI of IT and software testing projects. Still, calculating it for automation isn’t without challenges because:

  1. Some things are impossible to assign a monetary value to (the cost of bugs that will never happen with automation, higher product quality, etc.).
  2. It may be hard to be financially specific about how to measure automated success. While calculating saved hours is a snap, this isn’t the case with the cost of keeping new suites running since it may go up over time.
  3. Building an in-house test automation team comes with variable onboarding and training costs.
  4. Some software defects may escape detection. It would be naive to expect 100% test coverage with automation, so you should still budget for troubleshooting costs.
  5. Your QA team must be made up of testers for all testing jobs. The thing is, automated and manual tests aren’t mutually exclusive. 

With that, accurate ROI calculations require a deeper dive into your company than just replacing formula components with your payroll numbers.

Conclusion

To wrap up, you don’t label automated testing ROI as a fact or fiction. It’s a proven metric for assessing the efficiency of automated tests in QA processes, although calculating it can be tricky. And putting a monetary value upon it is even harder when you build your own team of in-house automation testers.

The good news is that you can take the easy route with Relevant. As your remote team, our QA specialists can set up automated workflows and maximize test automation ROI for your business.

Whether you want to shift your testing to the left or hire remote developers, contact Relevant to move things further.

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Written by
Ihor Feoktistov
Co-founder at Relevant
I make sure our clients get the highest code quality and the best tech talent on the market. I am also a Software Engineering Advisor for startups. Let's connect.

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