The rising complexity of enterprise software is quietly siphoning millions from businesses, draining resources and bleeding employee productivity, all for a minimal return on investment, according to new research from Freshworks.

The cloud solutions firm’s latest report, The Cost of Complexity, found that software-induced complexity is now a leading factor undermining business performance, eroding around 7% of annual revenue, a loss roughly on par with the size of a typical R&D budget, according to figures from EY.

Polling more than 700 global IT, customer experience (CX) and finance pros, Freshworks found that failed implementations, underused tools, and unexpected costs mean companies are wasting $1 out of every $5, with software complexity costing nearly $1 trillion (£759.6m) every year.

Added to that, more than half (53%) of companies admitted they haven’t received the return on investment they planned from their software, while 43% of business leaders admit their software implementations have gone over budget in the last year.

As well as costing revenue, however, software inefficiencies are also costing growth, with 34% of companies seeing revenue slip through the cracks due to software-related delays and missed business opportunities. 

Making matters worse, the study found that employees lose nearly seven hours every week to complicated processes and fragmented tools, with the average worker contending with 15 software solutions and four communication channels.

Freshworks found that CX teams are bearing the brunt of these unwieldy systems, struggling most with uncustomisable workflows (42%), toggling between tools (36%), and routine tasks taking too long (33%). IT teams face similar challenges, particularly around system integration (36%), siloed tools (32%), and clunky UX (28%).

This could soon make the tech skills shortage worse, with the study finding that 60% of employees are at least somewhat likely to leave their organisations within the next year, driven away by organisational complexity (38%), complicated processes (30%), the threat of burnout (30%), and difficult software (17%).

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Poor software implementations are having a particularly negative impact on morale, with nearly one in five workers saying someone on their team has quit or burned out because of an implementation in the past year.

“Complexity not only erodes the employee experience, but ultimately the customer experience as well,” said Mika Yamamoto, chief customer officer at Freshworks. 

“Technology should empower people, not overwhelm them. When companies unify systems and processes, taking a people-first approach to eliminate complexity, teams can focus on what matters: building relationships that keep customers happy and businesses growing.”