How do you measure the ROI of test automation?

Identify Costs: List all expenses related to implementing and maintaining test automation. Define Metrics: Determine key performance indicators (KPIs) to measure the impact of automation. Quantify Benefits: Calculate the advantages gained from automation, such as time saved and improved quality. Calculate ROI: Use a formula to compare benefits to costs and determine the return on investment. Consider Intangible Benefits: Take into account non-quantifiable benefits like team morale and customer satisfaction. Regular Evaluation: Continuously assess automation ROI and adjust strategies as needed.

I think it is important to consider that automated tests are more reliable and consistent than manual tests, which can result in higher software quality and reduced time to market, which can lead to better customer satisfaction and increased revenue.

When writing test automation, it is important to select a framework that will allow test cases to run as part of a CI/CD pipeline, and on the developer's machine. To get the maximum amount of benefit, the framework needs to allow running test cases in batches and individually. This is important because the benefit of automation increases with eh frequency with which it is run. Test results need to accessible and easy to investigate by developers.

Test automation ROI has multiple aspects to consider, 1. Automation scripts creation productivity 2. Automation Speed 3. Maintenance of scripts. 4. Manual test cases creation productivity 5. Manual Test cases speed of execution 6. Maintenance of Manual test cases. Calculation of Productivity gain: 7. Productivity gain/ loss from point 4 and 1 8. Productivity gain/loss from point 5 and 2 9. Productivity gain/ loss from point 6 and 4 10 Sum of 7,8,9, 11. calculation on number of runs/ test executions to achieve breakeven or start seeing gains. 12 . Once breakeven or gains in time is achieved or realised after certain number of runs, translate the time gains with cost multiplication per unit time per run/ execution.

In order to minimize the downside of test automation, it is important that the test collateral be as tightly coupled as possible with the functionality tested. Ideally the test collateral is in the same repository as the functionality it tests and changes to it are coupled to the changes in the functionality. Test cases are code and should be subject to the same code review process as functional code. It is also important to write tests as low in the stack as possible. API tests generate less false positives than their UX counterparts. Component tests are also more reliable than integration tests. QA Managers should evaluate the ROI of their automation at each layer and type of the testing collateral.

Before using any formula for calculating the ROI, understand the cost and time benefits associated with test automation. And before any calculations, be aware that it is quite challenging to arrive at quantifiable metrics. You must approach test automation ROI as an estimation rather than an exact number. For example, a significant aspect of ROI is how test automation contributes to faster time-to-market. There are multiple factors that contribute to this, some of which are quantifiable, some are not, yet are significant enough to be considered. Furthermore, it’s important to account for all expenses related to automation. By assessing the potential cost savings, teams can make informed decisions about implementing the test?automation.

When measuring the ROI of test automation, it is important to consider several key metrics, including the reduction in testing time and costs, improvement in test coverage, reduction in defect rate, and increase in software quality. Careful planning, tracking, and analysis are required to determine the effectiveness of test automation efforts, and results achieved through manual testing versus automated testing should be compared. By measuring the ROI of test automation, teams can identify areas for improvement, make data-driven decisions about testing processes, and track their progress over time.

One thing we should not forget is to go beyond the typical metrics of cost savings, reduction in defect rate etc. and looking at the Business Impact of the Test Automations such as Faster release cycles, improving product quality, and increasing customer satisfaction. This would really help to determine the overall effectiveness of the investment in test automations.

ROI is typically expressed as a percentage, and a positive ROI indicates that the benefits outweigh the costs. formula to calculate the ROI of test automation: ROI (%) = (Net Benefits / Total Costs) * 100 Net Benefits = Total Benefits - Total Costs Benefits can be: Reduced manual testing efforts Faster test execution Increased test coverage Improved test repeatability and consistency Early defect detection and reduced bug-fixing costs Enhanced software quality Reduced time-to-market

Important conversation. My comments run longer than this box will hold so, you can read them here: https://www.dhirubhai.net/pulse/roi-automated-product-testing-shel-t-randall/

We should also note that this article covers ROI for automating traditional software. Automating AI model validation is out of scope for this article but should be considered as part of a modern product test strategy.