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R O I = Return On Investment
00:00 Intro
00:17 Topics
00:40 What is ROI
03:22 Areas to consider in the ROI calculation
06:35 Why do we need to calculate ROI
08:56 Examples with downloadable spreadsheet templates
13:27 Tips for ROI Calculation


What is ROI
Cost - Benefit analysis

It measures the return or gain on an investment relative to its cost

ROI = (Profit - Costs) / Costs * 100 %
E.g. an investment with a cost of $100 and a profit of $100 would have an ROI of 1, or 100% when expressed as a percentage

This process does not only gives us information and metrics on profits and gains, but also in a way covers a feasibility check for automation. I gives idea on what all tools, platforms, resources we will need
How much time will it take
What this we should take care, risks

What to include in ROI Calculation for Automation Testing

Costs
Tooling Costs
Staffing Costs
Maintenance Costs
Time & Efforts
Risks

Other Factors
Complexity of software to be tested
No of Test Cases to be automated
Frequency of releases
Level of automation maturity in the organization

Benefits
Reduced test execution time
Increased test coverage
Reduced risk of defects
Improved speed & efficiency
Increased quality & productivity
Efficient use of human resources

Why do we need to calculate ROI
To ensure we know what will it take for Automation Testing
We understand the investment in terms of tools, time, effort, cost, man-hours
To justify the investment
Evidence-Based Decision-Making
To know the goals and outcome of the process
Resource allocation
Budget planning
Risk assessment
Project prioritization
Business Alignment
Stakeholder communication

It helps organizations make data-driven decisions, allocate resources effectively, and ensure that automation efforts align with business priorities

Examples with downloadable spreadsheets

As some people have done a very good work on this topic and also provided templates online, I will mention some of them that you can readily use
  / automation-testing-roi-estimation-tool  

https://www.nagarro.com/en/services/a...


Tips for ROI Calculation

Consider and measure the cost and benefits for a long period
1 month
2 months
3 months
….

Generally the returns will go in -ve in the initial few months as we invest on automation tools, platforms, people, training, etc, but as we go along the cost decreases and returns on investment increase


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Calculating the return on investment (ROI) for automation testing is essential for assessing the cost-effectiveness of your testing efforts

Measuring the ROI of automation testing involves evaluating the time and cost savings compared to manual testing methods

To determine the ROI of automation testing, you need to consider factors such as initial setup costs, maintenance expenses, and productivity improvements

Automation testing can deliver significant efficiency gains, and understanding the ROI helps justify the investment in automation tools.

Evaluating the benefits of automation testing and calculating its ROI can assist in making informed decisions about resource allocation and tool selection

By measuring ROI metrics for test automation, you can demonstrate the value automation brings to your software development process


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