What is the ROI of your test automation?

Test Automation is a strategic decision influenced by myths and facts. However, firms need to understand any test automation is an investment, which has its assumptions and a strategy, stressing the need to measure the ROI. But what are the factors that influence ROI? Are there any assumptions? Is there a formula to devise? Are there any tools like Test Automation ROI Calculator? Is there a range that dictates my test automation suite is healthy once ROI is calculated? To these questions and more @CloudQa is here to help you.

Test Automation

What is ROI of Test Automation?

Most of the ROI calculator available online uses a simple formula = hours saved via automation multiplied by an hourly rate.

But we haven’t included the expense to purchase automation tools, learn scripting language, or hire new resources, software, environments, etc.? Hence the above formula does not provide you with accurate results. So, let's list down all the factors that could affect an ROI of test automation suite.

Factors Affecting ROI of Test Automation

Some of the factors that influence the ROI of test automation are –

  • Test Automation Tool License cost
  • Number of test cases that could be automated
  • Time and Cost involved in initial designing of automation framework, feasibility and reskilling of team
  • Per hour cost of Automation Engineer
  • Number of builds/releases per year
  • Average number of test cases in each build
  • The configurations and regression cycle of each build.
  • Hardware, Software and other miscellaneous cost
  • Product Stability

Once we have these vital stats, ROI calculation would be easy. Let’s pick an example, based on a testing project here are some numbers –

Number of builds every week 1
Number of test cases per build 250
Cost of Automation tool [1-50 users] [One year validity] $10,000
Manual Tester hourly service rate 80$
Automation tester hourly service rate 100$
Manual Effort per week 8 hrs
Other hardware Cost [Machine/Mouse/etc] $500
Time to automate one test case 1.5 hrs
Miscellaneous Activity [Starting the script, maintenance, etc.]/per week 10 hrs
Test Case documentation [single test case] 45 minutes
Time to manually execute one test case 15 minutes
Costing in training $15,000

Considering a release every three months i.e. four test cycles.

1st Year[3 months /1st cycle]
Automation Manual
Tool Cost 26,000 0
Cost of designing 450000 180000
Cost of test execution 0 60000
Maintenance Cost 12000 0
Total 4,88,000 240000
ROI -3.33 %
1st Year[9 months /2nd/3rd/4thst cycle]
Automation Manual
Tool Cost 0 0
Cost of designing 0 0
Cost of test execution 0 180000
Maintenance Cost 36000 0
Total 36000 180000
ROI 180%

Please note that the figures above are just for illustration and may vary with each product, geography, and tool.

Advantages of ROI Calculation

  1. A firm knows if the effort and money used by the Automation team are paying off or not
  2. Efficient test coverage.
  3. Enhanced product quality
  4. Feasibility of Quick execution in multiple environments
  5. Focus on results and process improvements

ROI is not only about a long term investment reaping benefits, but it also assures quality and that should be the primary goal of any firm with ROI or without it.

Referrences:

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