Automation ROI

This topic describes the added value of automation, how to measure this value (Automation ROI), and how to track the effectiveness of your automation.

The benefits of Automation ROI analytics

Setting up automation requires resources, and you need a way to show the results of this investment, and determine which areas are most worthy of investing more resources.

When implementing automation in a certain area, you expect to see improvements through several aspects such as:

A reduction in the development cycle
A reduction in the regression cost by shortening the regression cycle time
Improve QA efficiency by eliminating the need to execute repetitive manual testing efforts
Lower the risk level and improve the system's stability

Another benefit of automation is the early detection of defects. Tests that are part of an automated pipeline can detect defects at an earlier stage than manual or production tests. The earlier a defect is detected, the lower the development cost and the better return on investment (ROI) for your automation.

Using Automation ROI analytics, you can also understand in what areas should you invest efforts to obtain the highest ROI, and how you can determine its effectiveness.

How automation ROI is measured

In order to understand the ROI for test automation, let us examine the objectives of automation:

Automate manual regression tests in order to save repetitive manual execution of these tests every sprint or release
Release software versions faster and more frequently
Detect defects earlier in the software development lifecycle
Increase coverage and as a result reduce risk level and defects leakage

ALM Octane's widgets and insight graphs address these objectives to help you determine the ROI of your automation. The ROI trend analytics reflect the automation ROI by measuring

Investment in automation vs. the release speed
Regression savings (saved manpower days over manual testing)
Defect cost
Escaped defects

How do I calculate automation coverage per area?

The widget configuration enables you to select a specific area in the product and define a filter for both manual and automated tests that you want to be included in this calculation.

To calculate the automation coverage, ALM Octane shows the automation coverage percentage increase/decrease for each release or sprint using the following formula:

The Automation ROI widget

The Automation ROI widget provides a graph with several metrics that can help you determine the ROI: development speed, regression cost, defect cost, and escaped defects. These metrics are not intended to serve as a one-time score for a specific release or sprint, but rather reflect a trend of improvement, or ROI, by tracking the cost of defects over time.

Development cycle time metric

Good automation should help increase the development speed. This manifests itself in several areas, such as:

Faster test cycles
Immediate detection of defects
Lower defect reopening ratio

The Automation ROI widget shows the trend of development speed by measuring the feature cycle time, and, if defined in the filter, per application module. For details on cycle time calculation, see Determine the cycle time.

Regression cost metric

By investing in automation, you can reduce repetitive execution of manual regression tests and improve your testing strategy by allowing QA to focus on other essential tasks.

The Regression Cost metric shows the number of manual runs done per release compared with automation coverage in this area for the current release.

Defect cost metric

By comparing the number of defects detected early by automation (low cost defects) vs. defects submitted after manual runs (high cost defects), you can determine the cost of defects by examining the following factors. This metric is calculated using ALM Octane analytics.

Defects detected by automation
Code issues detected during automation. This value reflects code issues for which defects were not opened. If this metric has a high value, it may significantly affect your cycle time.
Defects detected by manual runs
% of defects with high detection time

Escaped defects metric

The Escaped defect metric reflects how many defects were missed by your testing activities. It also indicates whether your testing strategy is improving when you reduce the number of escaped defects that reach production. You can also configure the way in which to track escaped defects, for example, by the environment on which the defect was detected.

Sample Automation ROI graph

The Automation ROI graph allows you to see trends that affect your ROI.

The x-axis is the selected time frame, such as release or sprint.

The y-axis represents the percentage change of automated tests in a release, compared to the first selected release/time frame. This allows you to see the investment vs. value since you began automating your tests.

The coverage bar indicates the number of automated tests out of the total number of tests.

In the following example, as the percentage of automated tests increased, the key indicators improved.

The percentages of the changes shown in the tooltip, compare the releases from the base point—the first release in which the key indicators had non-zero values.

For information about ROI insights and how to drill down further into the data, see Automation ROI insights.

The following metrics showed improvement in the later releases:

Metric	Cause of improvement
Development cycle time	As the automation increased, there was an improvement in the development cycle time. Features were closed in less time since issues were detected at an early stage. Hover over a release to see the actual number of development days, as shown in this example.
Regression cost	As the automation increased, the regression cost decreased. This metric shows the number of manual runs (based on the manual tests filter) executed per release. Hover over a release to see the actual number of manual runs, as shown in this example.
Defect cost	As the automation increased, the defect cost decreased since defects were detected at an earlier stage.
Escaped defect	As the automation increased, there was a reduction in the number of escaped defects.

Set the scope

To show an ROI graph on your dashboard, choose the Automation ROI widget from the widget gallery. To customize your graph, click the vertical ellipsis and select Configure.

In the General Scope area, you indicate the application module, pipeline, and time frame, such as release and sprint, that you want to include in the calculation.

In the Test Definition area, you should include regression tests that are candidates for automation. We recommend not including acceptance tests, as they are not of primary relevance this calculation.

For example, you could apply the following filters:

Automated Tests: Include in the Test level the System Test and Functional Test levels, but exclude Unit Test.
Manual Tests: Set the Test type to End to End, Sanity, and Regression.

Descendant inclusion

To include all of the application module's descendants in the calculations, toggle the Descendants button:

	Include only direct descendants
	Include all descendants

The shortcut for switching between these options is Alt+i.

Configure the metrics

To customize and filter the metrics to be displayed b y the graph, click the vertical ellipsis and select Configure. Click Metrics.

In the Escaped Defects area, you set the filter for defects that escaped being reported as defects. For example, you can filter this metric by users.

In the Development Cycle Time area, you indicate the start and end phase for which to collect data. The defaults are In Progress and Done.

In the Defect Cost area, filter the test runs. For example, you can filter automated runs coming from a specific pipeline job or package.

Next steps: