Calculating the ROI of Test Automation and Test Management Tools

Sep 28, 2023
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    In the drive towards adopting modern and agile approaches, organizations emphasize shorter development cycles, early-stage testing, enhanced staff collaboration, and so on. Gone are the days when testing was merely a phase preceding deployment, often seen as a bottleneck in the development cycle.

    Today, software quality has a significant effect on the entire company, turning it into a strategic activity. Test management tools possess remarkable capabilities for optimizing testing procedures and expediting software releases. However, there is no buying and utilizing a tool without understanding the value it generates.

    In essence, the question arises: what kind of ROI (Return on Investment) can be expected when adopting these platforms? Let’s explore their functions, advantages, and key considerations for gauging their value in a business context.

    Calculating the ROI of Test Automation and Test Management Tools

    What Are Test Automation Tools?

    To explain automation tools, let’s begin by defining test automation. According to the ISTQB glossary, test automation is “the use of software to perform or support test activities”. In order to execute an automation test, a QA tester writes a test script in a programming language such as Java or Python that will guide an automation tool throughout the test. The tool performs the test based on the script and then, depending on the tool’s capabilities, generates a report displaying the results.

    As there is a wide range of automation tools available today, they are spread across many organizations. In fact, only 7% of 2023 State of Testing™ report respondents claimed they don’t have automation. QA teams can use dedicated automation tools for different test types such as functional, performance, API, etc. While some automation tools can be costly, others are open source and free for use, such as Selenium.

    Benefits of Test Automation Tools

    Automation tools have many advantages that aim to improve the velocity and reliability of your software. Here are the main advantages:

    • Testing Velocity: Automated tests can be executed much faster than manual tests, significantly reducing testing time. This allows teams to complete more complex testing tasks faster than before and is even highly effective for tests with small code changes, such as regression testing. Additionally, it reduces the time for receiving feedback on newly developed features. The validation process is faster, allowing for quick identification of issues or bugs in the development cycle

    • Accuracy: The results that automation tools provide are considered highly accurate and reliable. While manual testers can inadvertently overlook steps or input incorrect data, automation tools follow the scripts precisely, eliminating the risk of human error..

    • Reusability: Test automation scripts, once created, can be reused across various testing cycles, projects, and even different software versions. This reusability saves valuable time and resources for testers in repeatedly rewriting the same test cases and scripts.

    • Agile and DevOps Environments: Automation testing aligns well with agile development methodologies. It allows for quick, comprehensive, and continuous testing, enabling teams to deliver software faster and with higher quality. For DevOps CI/CD practices, automated tests can be seamlessly integrated into CI/CD pipelines, providing rapid feedback on code changes and enabling frequent releases.

    What Are Test Management Tools?

    Test management platforms are software solutions crafted to aid organizations and teams in planning, organizing, executing, and tracking their testing processes.

    These platforms serve as a central hub for managing all testing artifacts, including test cases, requirements, executions, defects, and more. Consequently, testers and QA managers gain the ability to allocate their efforts with precision, prioritizing test cases or requirements based on urgency. This approach ensures alignment with business objectives and obtains optimal testing coverage.

    Since testing is no longer a back-office task carried out only by testers, test management tools allow integration with other systems. By integrating with third-party solutions, the connection between testers and other relevant staff members such as developers, product managers, and business users is strengthened. Among the most popular tools for integration are bug tracking, CI/CD, automation, and project management systems. Integration can shorten working cycles and enhance the day-to-day collaboration between all parties.

    Benefits of Test Management Tools

    Since test management platforms are specifically designed for QA work, they offer several benefits that contribute to increasing testing productivity. Some of the key benefits of using test management platforms include:

    • Centralized Test Repository: Consolidating test cases, requirements, executions, and defects in one easily accessible hub promotes a streamlined and organized testing ecosystem. This centralization ensures that all team members have a singular source of truth, reducing the likelihood of duplication, miscommunication, or missed tasks.

    • Improved Collaboration and Communication: Test management platforms provide a shared space where testers, developers, and managers can communicate with each other, assign tasks, and monitor progression. This can help break down silos between different teams, encourage real-time feedback, and accelerate working iterations.

    • Enhanced Visibility: With comprehensive reports and dashboards, these platforms give managers a clear and detailed overview of testing progress, results, and defect statuses. The result? Decision-makers can identify bottlenecks, allocate resources strategically, and make data-driven decisions that drive efficiency, prioritize tasks, and ensure that projects remain on track.

    • Integration Capabilities: Test management platforms offer integrations with a range of other software solutions, including automation, CI/CD, and defect tracking systems. These integrations foster a cohesive workflow, where crucial data is transferred seamlessly between multiple tools. Testing then becomes an integral part of the development process.

    Evaluating the ROI of Automation and Test Management Tools

    Once the decision to adopt and implement automation and test management tools has been made, it becomes imperative to ensure that valuable time and budget resources are not squandered on tools that fail to deliver substantial value.

    ROI is one of the most fundamental business calculations, painting a clear picture of the efficiency of a particular investment. While this metric is useful, in the realm of testing tools, you should evaluate some additional aspects in addition to basic financial figures.

    Cost - The Essentials of ROI Calculation

    At its core, calculating ROI involves comparing the initial investment made in acquiring and implementing automation and test management tools against the benefits gained. This calculation is represented as a ratio, expressing the percentage of return relative to the initial cost.

    The basic formula is: Basic ROI Formula

    Time - Translates Into Money

    As the well-known phrase says, “Time is money”. Automation and test management tools contribute not only to revenue generation, but to time savings, as well. Test automation tools help execute complex and time-consuming tests in less time than manual testing. Test management tools also allow users to easily manage and reuse tests as needed, saving critical time which can be used to focus on other areas or tasks.

    A viable approach to gauging this would involve assessing whether there has been a reduction in the duration of release cycles. For instance, evaluate whether teams are currently capable of expediting software releases faster than anticipated, or incorporating a greater number of deliverables than originally anticipated within a given sprint.

    Quality - Better Deliveries for Your Customers

    One of the primary purposes of testing tools is improving the quality of your software.

    While automation mitigates the risk of human error, test management platforms help increase testing coverage, resulting in better software quality. By conducting comprehensive testing, you can reduce the risk of functional bugs and security vulnerabilities across different areas of your software. This, in turn, minimizes the likelihood of critical defects slipping into live production environments, where fixing them is more costly. If the number of escaping defects is reduced after incorporating testing tools, it indicates the delivery of superior quality software.

    It’s important to bear in mind that software quality profoundly influences both customers and end-users. For businesses, the paramount goal is to increase customer satisfaction and deliver top-quality software that aligns with expectations and needs. To evaluate the impact of testing tools in elevating software quality, consider tapping into your customers’ perspectives. Using the NPS (Net Promoter Score) index can help ascertain whether customer satisfaction with your software has increased since the implementation of new testing tools.

    Test Management Tool ROI - A Real-Life Example

    Earlier this year, Forrester’s Total Economic Impact™ Study examined the potential ROI of deploying PractiTest’s test management platform. PractiTest is an end-to-end test management tool that helps businesses better control their testing practices and quality efforts. In order to fully grasp the benefits and costs associated with the investment, Forrester interviewed an existing PractiTest customer who managed testing across different teams and tools prior to using PractiTest.

    After implementing PractiTest’s centralized test management platform, the company increased visibility and achieved a more organized testing strategy. This helped increase their software quality and customer experience with 20% improved efficiency of manual testing. Leveraging its strong integration capabilities, the company has been able to enhance the orchestration of automated testing by 15% in a single year.

    Over a 3-year period, Forrester found that the ROI of using PractiTest was 312%, and the total benefits the company has made were $2.4 million. The net present value was $1.8 million, with less than 6 months of payback period.

    To Sum Up

    As companies are pushing through shorter software development cycles and testing becomes significant from the early stages, the need for faster release enablers exists. Hence, companies are turning to implementing various testing tools such as automation and test management platforms that allow to improve the efficiency of testing processes and increase collaboration among staff members, leading to faster and more quality software releases.

    When businesses invest valuable resources in such tools, it’s important to verify they generate value, or in other words, a decent return on investment. Organizations should consider three important factors for the evaluation: cost, time, and quality. Basic ROI calculation can provide an understanding of the cost factors, while shorter development and testing iterations can indicate on time savings. Fewer bugs escaped into production and improvement in the NPS score can demonstrate higher quality software deliveries and increased customer satisfaction.

    As revealed by Forrester’s Total Economic Impact study, the deployment of PractiTest test management system generated an ROI of 312% in a 3-year period. With significant improvement in managing both manual and automated testing, the alliance with test management tools is a strategic move to usher in a new era of software development — one marked by efficiency, innovation, and unwavering customer satisfaction.

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    Related resources


    Navigating Through Modern Software Testing Complexities


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    Taming the Chaos: How to Manage Testing in Complex & Robust Environments


    The 2024 State of Testing™ Report is now live!

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