Since 1994

Four ways

testing adds value.

Bugs fixed · bugs found · risks mitigated · projects guided · Rex Black, Inc.

Piet or Bonnie?


Piet says

"Testing is just a big black hole at the end of the project. The more money we throw at it, the more it consumes."

Bonnie says

"Testing is a value-adding activity that occurs throughout the project. By making smart test investments, we reap big rewards."


Most test managers want to work for Bonnie.
The hard part is convincing Piet — and Piet's CFO.

REX BLACK, INC. · FOUR WAYS TESTING ADDS VALUE
What this is about

In plain English.


Testing adds measurable value in four distinct ways. Quantify each separately. Sum them. You go into the budget conversation with a defensible ROI — not a request.


This talk answers:

  • What's the base ROI from bugs you find and fix?
  • What's the hidden value of bugs you find but don't fix?
  • How does testing act like insurance against quality risks?
  • What's testing's share of project-tracking value?

Written for test managers and QA directors who have to defend their program to finance. Useful for any senior tester who wants to connect their day-to-day work to the business case above it.

REX BLACK, INC. · FOUR WAYS TESTING ADDS VALUE

738%

Composite ROI in the worked example — four value categories stacked on the same testing investment.

REX BLACK, INC. · FOUR WAYS TESTING ADDS VALUE
Category 1 of 4

Bugs fixed.

REX BLACK, INC. · FOUR WAYS TESTING ADDS VALUE
The base case

Cost of (poor) quality.


Cost of quality = cost of conformance + cost of nonconformance.


  • Conformance — testing, quality assurance.
  • Nonconformance — fixing bugs, retesting, angry customers, reputation, lost business.

The classic escalation:

$1 to find a bug in review · $10 in programmer testing · $100 in tester testing · $1,000 in customer usage.

REX BLACK, INC. · FOUR WAYS TESTING ADDS VALUE
Stage 1 · Manual testing

ROI: 350%.


Add an independent test team.


  • Developers find 250 bugs pre-release.
  • Testers find 350 more.
  • Customers find roughly 40% fewer bugs.
  • Quality costs drop by roughly a third.

ROI = (benefit − cost) / cost. Denominator = cost of the team. Numerator = old quality cost minus new.

REX BLACK, INC. · FOUR WAYS TESTING ADDS VALUE
Stage 2 · + Automation

ROI: 445%.


Add $150,000 of tools — amortized over 12 quarterly releases.


Complement manual with automation where it pays: regression · load · performance · structural API checks.

Quality costs halved vs. baseline.
Customers find ~66% fewer bugs than baseline.

(Where the "Investing in Software Testing" argument ends.)

REX BLACK, INC. · FOUR WAYS TESTING ADDS VALUE
Stage 3 · + Static testing

ROI: 627%.


Layer static testing: testers review design and requirements specs, ask smart questions, prevent ~150 bugs from ever being built.


  • Customers find ~90% fewer bugs than baseline.
  • Quality costs down by two-thirds.

Static testing is the highest-leverage investment per dollar. Review-stage cost ($1/bug) versus customer-stage cost ($1,000/bug). The math moves sharply in its favor.

REX BLACK, INC. · FOUR WAYS TESTING ADDS VALUE
Category 2 of 4

Bugs *found

that don't get fixed.*

REX BLACK, INC. · FOUR WAYS TESTING ADDS VALUE
"What the heck good is that?"

Known-but-unfixed has real value.


If we know where a bug is — even if we don't fix it — we can:


  • Prevent the user from encountering it. Documentation, UI changes, sensible defaults.
  • Warn users in release notes so they can avoid it.
  • Provide workarounds to help/support so calls get shorter and users get answers.

The value is real. The trick is measuring it.

REX BLACK, INC. · FOUR WAYS TESTING ADDS VALUE
The support-call math

$50 saved per known bug.


Assume a call for a known bug is 15 minutes shorter than a call for an unknown one. Each bug generates 5 calls on average. Support person costs $40/hr fully loaded.


$40/hr × (15/60 hr) × 5 calls = $50 per known bug in support time alone.


Over 650 additional bugs documented in the same test cycle:
$32,500 of value at zero additional testing cost.

Composite ROI → 666%.

REX BLACK, INC. · FOUR WAYS TESTING ADDS VALUE
Category 3 of 4

Risks mitigated.

Testing as insurance.

REX BLACK, INC. · FOUR WAYS TESTING ADDS VALUE
Testing *is* quality-risk insurance

Expected payout = likelihood × cost.


Testing reduces cost of exposure. Structurally identical to what insurance does: a statistical mechanism for pooling risk.


Example "quality-risk premium":

  • Performance problems — $100,000 × 10% = $10,000
  • Functionality problems — $5,000 × 50% = $2,500
  • Security problems — $250,000 × 5% = $12,500
  • Other problems — $10,000 × 10% = $1,000

Total = $26,000 of insurance value — already provided by the existing test program.

Composite ROI → 698%.

REX BLACK, INC. · FOUR WAYS TESTING ADDS VALUE
Category 4 of 4

Projects guided.

REX BLACK, INC. · FOUR WAYS TESTING ADDS VALUE
Testing metrics *are* project tracking

Capers Jones' numbers.


Poor project tracking is a primary cause of project failure (Jones, Estimating Software Costs).


Failure rate

  • Very small, with tracking: 2%.
  • Medium, with tracking: ~20%.
  • Medium, without: ~40%.
  • Very large, without: 85%.

Testing's share

If good testing provides half of the tracking risk-reduction benefit, it claims 10% of the project's at-risk value.

On a project with $82,500 of testing + $247,500 of development budget:
10% × $330,000 = $33,000.

Composite ROI → 738%.

REX BLACK, INC. · FOUR WAYS TESTING ADDS VALUE
The ladder

350 · 445 · 627 · 666 · 698 · 738.

REX BLACK, INC. · FOUR WAYS TESTING ADDS VALUE
Composite

Four categories. One investment.

Bugs fixed

Stage 1 → 350%
Stage 2 → 445%
Stage 3 → 627%

Bugs found, not fixed

  • $32,500 (support-call savings)
    666%

Risks mitigated

  • $26,000 (quality-risk premium)
    698%

Projects guided

  • $33,000 (tracking share)
    738%

Industry analyst benchmarks: ~800% — same order of magnitude.

REX BLACK, INC. · FOUR WAYS TESTING ADDS VALUE
Do the math

Even a bad metric beats no metric.


Many testers are allergic to finance. That's a career-limiting instinct.


Without a measurement, we have no defensible sense of the work's value — and in most organizations managers will not fund work with no measurable ROI.

Start the calculation. Be conservative so the number survives scrutiny. Apply Gilb's Law: even a bad metric is better than no metric, because you can iteratively improve a bad metric into a good one. You cannot improve what you don't measure.

REX BLACK, INC. · FOUR WAYS TESTING ADDS VALUE
Takeaways

Four categories.

Quantifiable. Defensible.

REX BLACK, INC. · FOUR WAYS TESTING ADDS VALUE
Takeaways

Four to hold against.


  • Testing adds value in four distinct ways. Bugs fixed · bugs found-not-fixed · risks mitigated · projects guided. Quantify each separately and sum.
  • Static testing is the highest-leverage test investment. $1 in review vs. $1,000 at the customer.
  • Documented known bugs have measurable value. Support calls get shorter. Users get workarounds.
  • Testing metrics are project tracking. Defect trends, completed tests, coverage by risk — principal tracking signal for the project as a whole.

Without a measurement, we have no solid sense of our work's value. Learning to estimate testing ROI is a critical success factor for testers.

REX BLACK, INC. · FOUR WAYS TESTING ADDS VALUE
Since 1994

Thank you.

Rex Black, Inc. · rexblack.com/resources/talks/four-ways-testing-adds-value