No upgrades - a step back ;)

The lack of upgrades is justified by the already quite complex tactical phase. I believe that upgrades are a useful thing, enriching the game. But with the introduction of heroes on the battlefield, upgrades become somewhat less relevant.

Where?

Hero leveling. This is a very expensive undertaking. Leveling up 5-6 heroes at a waltz pace is extremely expensive (trees, magical and non-magical universities, veteran guilds, libraries, schools of war and magic, conservatories, seminaries, etc.). Often, leveling is the main expense, sometimes even higher than the cost of recruiting monsters.