UK businesses are wasting as much as one-fifth of their software budgets on unnecessary complexity, new research suggests, with tools that don’t deliver, implementations that fall short, and licenses no one uses.
Nearly one-fifth of software budgets go on unused tools, failed implementations, and hidden costs, which Freshworks said costs the UK economy nearly £32 billion per year.
In all, organizational and software complexity is draining an average of 7% of annual revenue.
Globally, the biggest element of this is worker fatigue, confusion, and inefficiency, accounting for 37%, followed by revenue leakage from delays and missed business opportunities (34%), and productivity loss from bloated tools and fragmented channels (29%).
“For years, companies have been conditioned to believe complexity signals sophistication. Our research confirms what I’ve long believed – the very tools meant to help businesses move faster are now holding them back,” said Dennis Woodside, CEO of Freshworks.
“Organizations are realizing that complexity is a choice to grow slower than they should and that to compete, they must uncomplicate with urgency. The future belongs to those who remove friction, restore focus, and move faster toward their customers.”
Software spending isn’t delivering value
More than half (53%) of companies admitted they haven’t received the return on investment (ROI) they planned from software purchases, with a third saying they've lost money through delays and missed business opportunities.
Similarly, more than four-in-ten said implementations have gone over budget in the last 12 months, with another 32% saying vendor support wasn’t helpful.
Software complexity is also hitting productivity, with employees losing nearly seven hours every week – almost a full workday – dealing with complicated processes and fragmented tools.
Contending with an average of 15 different software solutions and four communication channels, 45% said their team works in silos and 37% that their organization lacks a single source of truth.
Complexity is hurting morale
For CX teams, the research found top frustrations include un-customizable workflows, cited by 42%, toggling between too many tools, cited by 36%, and routine tasks taking too long at 33%.
IT teams, meanwhile, revealed their biggest issue was integrating with other systems at 36%, siloed tools, at 32%, and clunky or outdated UX at 28%.
All this is having an effect on morale, Freshworks found. Overall, six-in-ten of those surveyed said they were at least somewhat likely to leave their organizations within the next year due to frustration.
Their main reasons included organizational complexity at 38%, complicated processes at 30%, burnout at 30%, and poor or difficult software at 17%.
Meanwhile, 17% said that someone on their team had quit or burned out because of a software implementation in the past year.
“Complexity not only erodes the employee experience, but ultimately the customer experience as well. When people spend their energy managing systems instead of relationships, every customer interaction suffers,” said Mika Yamamoto, chief customer and marketing officer at Freshworks.
Tool sprawl is becoming a major barrier to productivity and efficiency, research shows. A report from Nintex earlier this year found that 86% of IT leaders are concerned about the financial strain and security implications of disparate tools.
A more recent study from Lokalise found software developers were losing nearly 20 full days each year due to poor software and tools, amounting to millions in losses annually.
Notably, the study from Nintex found software sprawl was forcing around four-in-ten workers into manual data entry and duplication, with a similar number reporting workflow and approval delays.
A quarter said it was causing poor customer experience, and a third that it presented challenges in scaling operations.
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