How to Calculate ROI for Test Automation?

This very question crosses everyone’s minds every now and then. This article delineates on the various ROI calculation formulas on test automation. It is appealing, necessary and costly as well. The decision the test manager has to make is whether to invest in automated testing tools or continue with the manual testing. Have a look at ROI on test automation. The simplest one is the simple ROI calculation, then we have Efficiency ROI calculation and Risk Reduction ROI calculation as well.

  1. Efficiency ROI calculation

This 3x Faster Test Automation accelQ ROI analysis needs to be implemented in terms of days since the automated tests can be implemented on a continued basis for 24 hours, as contrary to 8 hours which are a must when it comes to manual testing. But 18 hours seem much more reasonable since sometimes these test cases are prone to be interrupted and do not operate for 24 hours. Read on for the formula which forms the basis of ROI calculation:

  1. a) Automated test script development time = (Hourly automation time per test * Number of automated test cases) / 8

(b) Automated test script execution time = (Automated test execution time per test * Number of automated test cases*Period of ROI) / 18

(c) Automated test analysis time = (Test Analysis time * Period of ROI) / 8

(d) Automated test maintenance time = (Maintenance time * Period of ROI) / 8

(e) Manual Execution Time = (Manual test execution time * Number of manual test cases * Period of ROI) / 8

Please note that the period of ROI is the total number of weeks for which we need to calculate the ROI. When it is divided by 8, the manual effort is needed and by 18 when automation is done.

  1. Risk Reduction ROI

In this method, automation advantages are ascertained individually and hence addressing the ROI concerns that were not addressed in the first place. When testing is done, resources are freed to implement more productive tasks like in-depth analysis of application, exclusive random and negative testing, test design/development etc. So, when test automation is in the process, increased coverage can be attained. But when manual testing is the only way, it can lead to undiscovered application bugs and post-delivery bug fixes. And this leads to reduction in quality of testing and the product. This loss is then included in the ROI to ascertain the gain when the bug is discovered post-delivery/implementation. Investment cost is the same, but the gain is the monetary loss that the company may have to face if automation testing has not occurred. Insert the values formula to know the ROI.

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