Calculating Test Automation ROI: A Guide

As Agile software development has become the default for devs and QAs, automation testing has gone from a desirable addition to QA pipelines to a must-have element. It simply is not possible to release software fast enough to keep customers satisfied with the automation elements, not to mention the regular updates required for the software to keep up with the latest innovations and expectations. 

While business stakeholders do not usually question the efficacy of automation, they may be hesitant due to uncertainties about initial investment – both financial and in terms of human resources.  Delivering more quantitative numbers on building and maintaining a test automation framework may be more helpful to get them on board.

By calculating and demonstrating Test Automation’s Return on Investment (ROI), stakeholders can be better convinced that the investment will be worthwhile in the long run.

How to calculate test automation ROI

The most straightforward method of calculating test automation ROI is the formula below:

ROI = Savings ÷ Investment

• Savings: The amount gained by replacing manual tests with automated tests.
• Investment: The costs funneled into setting up test automation pipelines.

ROI can denote any unit for savings or investment – usually pertaining to money or time.

Savings

Savings refers to the difference between the costs of running tests manually as opposed to running those same tests automatically a certain number of times over a certain period. In simpler terms:

Savings = (time to run a single manual test – time to run the same test in automation) X number of tests X number of test runs

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In the above formula, the ‘number of tests’ must be an average over the specified duration. Additionally, if tests are faster, there’s a much higher likelihood of attaining positive ROI.

Investment

Investment refers to the total sum of fixed and ongoing expenses that go into test automation. This includes time and money spent while actually setting up and configuring the automation framework, as well as time and effort that goes into writing tests scripts and maintaining tests.

Investment = time required to build frameworks + maintenance cost + (time to code one tests X number of tests)

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Maintenance costs also take into account the expenses of identifying, analyzing, and resolving failed tests. This includes false positive, flaky tests, development bugs, and actual failed tests.

Maintenance costs = maintenance time for one failed test case X % of failed tests per test run X number of test cases X number of test runs

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Remember that frequent test failures make it harder and take longer to attain positive ROI.

Bear in mind that tests change over time. Software expands, new features are added, developers and QAs may choose to code in newer programming languages, etc. All of this needs to be accounted for in the ROI, in particular the maintenance costs. If a team starts out with 500 tests, it will probably grow to 1000 tests (a conservative estimate) by the end of the year. Otherwise, something is going awry.

Efficiency ROI Calculation

In this case, ROI needs to be calculated in hours. Automated tests can be run for 24 hours continuously, but manual testers can’t be expected to work more than 8 hours a day. Lower 24 hours to 18 or 20, because it is reasonable to expect that test cases may be interrupted or paused for myriad reasons. 

Formula for Efficiency ROI calculation: 

1. Automated test script development time = (Hourly automation time per test * Number of automated test cases) / 8
2. Automated test script 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 test maintenance time = (Maintenance time * Period of ROI) / 8
5. Manual Execution Time = (Manual test execution time * Number of manual test cases * Period of ROI) / 8

In the formulae above, the Period of ROI refers to the time (usually weeks) for which the ROI is to be calculated. It is divided by 8 in cases of manual effort and by 18 or 20 where automation comes into the picture.

This mode of calculation focuses on total efficiency rather than just monetary profit. However, it does make assumptions such as a scenario in which automated test cases have fully replaced manual testing (which is never the case) and that manual testing requires only a single tester (something almost impossible). Use this calculation as a rough guide rather than the final estimate.

Outside of the equations discussed above, calculation of test automation ROI must also consider the following factors:

• Once manual testers are freed from having to run repetitive tests, they can focus on more productive tasks – more analysis of test case design, upgrades of test design and development, random and negative tests, etc.
• Incorporating automation testing helps expand test coverage. Manual testers cannot be expected to test more than a certain hours a day. Being human, they can only work at human speeds and are prone to natural human errors. This reduces the quality and efficiency of testing. Automation resolves these problems and eliminates the losses an organization may suffer from the above factors.
  
  
  Read More: How do you ensure maximum test coverage?

While automation costs can be high when it is first implemented, organizations will lose money if they do not take it on. While their competitors will be pushing products and updates faster to market, they will lag behind by not being able to expand operations and provide positive user experiences.

Of course, calculating the costs of not implementing automation is a lot trickier, and varies from organization to organization. It especially requires research about competitor methods, the latest innovations in test automation, and related factors.

The Role of Real Devices

When calculating test automation ROI, take into consideration that tests must be run on real browsers and devices, not emulators and simulators.  Remember that device fragmentation is a major concern for every developer and tester. Every website has to work seamlessly on multiple device-browser-OS combinations. With 9000+ distinct devices being used to access the internet globally, all software has to be optimized for different configurations, viewports, and screen resolutions.

In this state, no emulator or simulator can replicate real user conditions. Software needs to be tested on real devices so that they can work in real-world circumstances such as a low battery, incoming calls, weak network strength, and so on. If an in-house lab is not accessible, opt for a cloud-based testing option that offers real devices. BrowserStack’s cloud Selenium grid offers 2000+ real devices and browsers for automated testing. That means users can run tests on multiple real devices and browsers by simply signing up, logging in, and selecting the required combinations. Testers can also conduct Cypress testing on 30+ real browser versions across Windows and macOS. Detect bugs before users do by testing software in real user conditions with BrowserStack.

Try Testing on Real Device Cloud for Free

While establishing an automation pipeline can seem daunting in terms of initial time, money, and effort, calculating test automation ROI can effectively demonstrate how it adds value to QA operations. With agility taking priority among digital customers and software users, automated testing is here to stay, and stakeholders would do well to implement them ahead of time and get a head start on their market competition.