Test automation is often seen as a way to reduce the costs of testing, increase test coverage and effectiveness, and shorten testing cycles. While automation does help in all of this, it is not a silver bullet for all your testing problems and can never completely eliminate manual testing. It is but one means to ensure better quality software.
However, many software organizations consider automation as a vital step in establishing a mature QA program and it certainly has a lot of value if it can be effectively leveraged. If you are seriously looking at automation though, there are few things that you should start with. One of the most important things is to understand the initial costs involved in test automation.
Automated testing involves higher upfront costs and should be looked at as a long-term investment where the pay-offs come anywhere between 2-4 years down the road. One has to also keep in mind that there are various intangible benefits associated with automation. Performing a return on investment (ROI) for your planned automation can however help you understand right at the beginning the autual returns that you will get from your investments and you can weigh those against the benefits you will gain from automation.
An ROI analysis will not only help you determine the various elements associated in calculating the ROI and the approximate cost and benefit involved but it can also help you decide on the types of automation you want, the areas that you can potentially automate, the tools and the skill-levels of the testing resources that will be required.
Therefore, determining the ROI for your test automation should be a necessary part of your planning process. It will give you better clarity and direction on how you proceed with your actual automation efforts and prepare you upfront on the costs and true benefits involved.
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"Online communities, iterative methodologies and software scalability" with Andres Camacho - Vice President of Engineering at Vinfolio 
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