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How to Calculate ROI in Automation Testing

What is the value of my automated test?


In the age of Agile software development, automation of tests is now a must to have to an essential element of delivering high-quality software with speed.


Business decision-makers generally believe that automation of tests is a good idea but they might be reluctant to allocate the appropriate resources. Uncertainty about the cost of creating and maintaining a framework for testing in particular when deadlines and budgets are tight could cause questions regarding the value it can bring.


For many of the stakeholders, a quantitative description of how the increasing amount of manually-regression tests every cycle eventually puts a strain on the team's capacity to provide is enough to justify investing in automated testing. For other stakeholders, particularly those who are not part of the technology team A quantitative explanation could be beneficial to gain support.




In this article, I'll provide a way for you and your team to convey the benefits of automation for testing to decision-makers who are fiscally minded.


The stakeholder community will realize that although there are ongoing and upfront costs, the benefit of replacing manual regression testing over time will be worth the investment over the long term. In this article, we will discuss ROI in testing.


The Value of Test Automation:


A large portion of the value of automation for testing comes from running automated tests several times1.


If tests are run only just a handful of times, it could be more efficient and cost-effective to complete all tests manually instead of spending the initial cost of buying a test automation program or creating the framework from scratch, and programming tests.


But, when automated tests are repeated against new builds, a break-even threshold is attained. From then on every subsequent run will result in increasing positive ROI and typically greater test coverage and capacity (that refers to the capability to conduct tests that previously would have been unable to do manually).


In the following example, the break-even point is reached after 25 tests at the 50th test the test automation has achieved an ROI of approximately 1.75 which means that testing automation has provided 75 percent more value than what was invested in it.


Efficiency ROI calculation


An ROI calculation for automated testing must be calculated by days since automated tests are able to continuously run for 24 hours instead of 8 hours as is typical as manual testing. However, it seems that 18 hours are more sensible since there are times when test cases are interrupted and don't run for the full 24 hours.


The formula that forms the basis for ROI calculation is :


ROI on testing automation


(a) Test script development times for automation (b) Automated test script development time = (Hourly automatization time of test * a number of test cases that are automated) 8.


(b) Test scripts executed by automated means is (Automated testing time * of test cases that are automated*Period of ROI) 18


(c)Automated Test Analysis Time is (Test Analyse time * Time of ROI) 8


(d) Automated maintenance of test duration (d) Automated test maintenance time = (Maintenance time * Time of ROI) 8


(e) Manuel Execution Times (e) Manual Execution Time = (Manual testing execution times * the number of manual test instances * Period of ROI) * 8


Notes: The time period in ROI is the number of weeks during which ROI will be determined. Divided by 8 can be done whenever a manual effort is required. Divided by 18 is performed when automation is employed.


In this way, investment gains are regarded as more than financial gains. After the gains and costs of investment have been calculated, we are able to add the value in these parameters into the formula to calculate the efficiency ROI total.


When using the Efficiency ROI calculation process in test automation, the emphasis is on the effectiveness of the system and not only the financial aspect. This method doesn't require any sensitive information like how much time a tester works and so on. However, it does make certain assumptions, such as automated test cases replacing manual test cases (but in actuality, some automated tests may require manually supervised intervention) and the manual testing only counts one tester manual.


Risk Reduction ROI


When using the ROI Calculation for Risk Reduction technique to automate testing, automated benefits are calculated independently which addresses ROI issues that were not addressed in the previous method. If automated testing is implemented the resources will be liberated to focus on more productive work like the time-consuming analysis of applications as well as exclusive negative and random testing, development and design of tests as well as other tasks.


When automated testing is used more coverage can be achieved. But, if manual testing relies solely on the use of test automation, it could result in not being able to identify bugs in the application and bugs that are fixed after delivery. As a result, the quality of the testing process and product can be reduced, placing the company at risk of having to pay the cost or suffer a loss. This loss needs to be considered in the ROI formula for test automation so as to calculate the gain in terms of money if a bug is discovered post-delivery/implementation.


Therefore, the cost of investment remains identical, however, gains are derived from the financial loss that the company could confront if the automation test isn't implemented. The values will be added to the formula, which will give the ROI. The benefit of calculating ROI for automated testing is that the issues with the previous method are addressed, and it is able to deal with the positive effects of coverage. There is however a certain degree of subjectivity to this method and thorough risk analysis is needed along with difficulties in calculating the losses from not performing automated tests.


Conclusion


There are a variety of variables that affect the calculation of ROI for test automation, it is recommended to improve the overall automation testing process by creating efficient tools for automation of testing as well as spending more time on the initial testing phase with better reporting tools and more.


Additionally, there isn't one exact method to calculate the ROI of automation testing. It is up to the tester's/management's discretion to use the method that suits their needs and situation the best. If want to read more about automation testing solutions then visit bqurious.


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