What is ROI & How to Calculate ROI in Testing?

What is Automated Testing?

Automated testing is a type of software testing that allows you to test your software without manually touching it. Instead, you write tests that can be run by an automated testing tool. The results of which are used to improve your software. That’s a basic definition, but hopefully, it’s led you to some wonderings about why it exists and how it has evolved in recent years. In this article, you will know the importance of ROI test automation.

What is ROI in Automation Testing?

What is return-on-investment (ROI) in automated testing? Is it possible to get a return on investment from automated testing? Yes, you can. Automated testing can save time and money.

Testers have to run the regression test suite manually, which takes a lot of time. Every time they have to change the source code, they have to run the regression test. Every time they have to add/remove new features, they have to run the regression test. Automated testing will help them in that area.

Every dollar invested in automation will yield an average of $14-$100 in return for web site depending upon the type of application and business model.

A study by Software Quality Engineering showed that for every dollar spent on quality assurance, $6 is saved on the back end through reduced rework and debugging. Likewise, every dollar spent on unit testing will yield $10-$100 in savings within two years, according to various sources.

A study by Wipro Technologies showed that for each dollar spent on manual testing and QA processes, there's an average of $1-$4 in savings through streamlined processes and reduced defects found in production mode.

Why is it Important to Calculate the ROI?

ROI stands for Return on Investment and is a measure of the benefits gained from a business investment relative to the costs associated with that investment. It's one of the most important metrics used in business to determine if it's worth investing in a particular project or not.

The ROI gives you an idea as to how profitable your business will be and also helps you compare different projects and decide which one is more beneficial.

Why Calculate Your ROI?

The main purpose of calculating your ROI is so that you can determine whether a particular project is worth investing in or not. There are many factors that influence the return on investment, they include:

The amount invested. The more money you invest, the higher the potential returns. However, it could be a riskier move since there's more at stake and you could lose more if things don't go to plan. An example of this would be buying shares in a company, if you invest $100 and it goes bankrupt, then you lose all $100 whereas if you invest $1,000 then you stand to lose much more money. The chances of success. There's no point investing in something if it has little chance of success, so take into consideration how likely it is that your project will bring in

How to Calculate ROI of Test Automation:

The ROI of automation testing is the net profit you get from implementing automation testing. The ROI equation is usually written as:

ROI = (Gain From Implementation - Cost of Implementation) / Cost of Implementation

The gain from implementing automation testing is usually high, and the cost of implementation is usually low. The result is that most companies find automation testing to be very profitable.

How much profit a company makes on an automation project depends on how much money they save by not having to perform manual testing. For example, suppose a company has to hire five testers to manually test their software products. They spend $200,000 per year on salaries and benefits for the testers and have a net profit of $300,000 per year. Their ROI would be:

ROI = ($300,000 - $200,000) / $200,000 = 50%

If they automate one of their projects with Selenium WebDriver and get it down to one tester at a cost of $120,000 per year, then their new ROI would be:

ROI = ($300,000 - $120,000) / $120,000 = 75%

They've increased their net profit by 25%.

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