Automated Testing Institute

Automation Return-on-Investment (ROI) is a calculation of automated testing benefits in terms of: Cost Savings, Increased Efficiency and Increased Software Quality (reduced risks). The formula for ROI is the total "return" (benefit) from an action divided by the cost of that action, where the total "return" is equal to the cost subtracted from the gain:

Using this formula, there are several methods for calculating ROI including:

• "Simple" ROI Calculation – Quantifies benefits in terms of cost savings
• Efficiency ROI Calculation – Quantifies benefits in terms of increased efficiency
• Risk Reduction ROI Calculation – Quantifies benefits in terms of increased quality (reduced risk)

No single measure is best for every environment, so it’s important to be aware of them all. If possible, multiple ROI calculation methods should be used in order to provide a more complete picture of test automation progress.

Each of these methods relies on a set of general factors, manual testing factors, and automated testing factors for the calculation of ROI.

For more information on ROI read the Test Automation ROI article by clicking here. In addition, you may use our ROI calculator by clicking here. Then for a video tutorial on ROI, be sure to register with the site, and visit the Video Tutorials section under the Resources menu (the Video Tutorials menu is only available to registered members of the site).