The systems integrator is 40 to 60% of what an ERP program costs to implement, so the SI proposal is the document where the budget is made or lost (ERP Research, an independent research firm). The number on the cover is not the thing to read. The hours behind it are. Ten questions pull those hours into the open: whether the price is split into work packages, what a blended rate hides, what the SI has assumed rather than scoped, and what triggers a change order. A proposal that answers all ten honestly often costs more on paper and less by go-live.
The SI is 40 to 60% of the bill, so the proposal is where you check the number
Implementation services run 1x to 3x your first-year software fee, and the SI takes 40 to 60% of that services spend, per ERP Research. On a $6M implementation, that is $2.4M to $3.6M flowing to one vendor on one document. The cost pillar shows how to rebuild the whole program budget from a software quote. This article goes one level down, into the proposal that commits the largest single line in it.
The unit of cost in that proposal is the hour. Everything else is derived. A price is a count of hours multiplied by a rate, adjusted for risk and margin. If you cannot see the hours and the rate separately, you cannot tell whether the price is high because the work is large or because the padding is. The ten questions below each expose one place padding hides.
Ten questions, with the weak answer and the strong answer
Read the proposal against this table. The weak answer is not always dishonest, but each one moves risk onto you. The strong answer is what to require before signing.
| Question | Weak answer (where padding hides) | Strong answer (what to require) |
|---|---|---|
| 1. Is the price split into hours by work package? | One lump sum, or three or four phase totals | A line per work package, each with hours, role mix, and rate |
| 2. What is the rate, blended or fully loaded? | A single blended rate, no mix shown | Rate by role, with the junior-senior mix that produces the blend |
| 3. Who owns data cleanup? | "Client provides clean data" in an assumption | A named owner, budgeted hours, and who pays if the data is not clean |
| 4. How many integrations are scoped? | "Integrations as required" | A counted list, each with a unit price (ERP Research: $10,000 to $50,000 each) |
| 5. How many test environments and cycles? | Not stated, or "as needed" | Environments and test cycles named, with who builds and refreshes them |
| 6. What triggers a change order? | Any new requirement, left undefined | A written list of triggers and a definition of what is in scope |
| 7. Fixed-fee, time-and-materials, or hybrid? | All T&M, or a fixed fee on vague scope | Fixed where scope is firm, T&M where it is not, with the line drawn |
| 8. Are the key people named? | Roles only ("a senior consultant") | Named individuals, with your approval required to replace them |
| 9. What assumptions sit behind the number? | Buried in a footnote, or absent | A listed assumptions page you can test and challenge line by line |
| 10. If AI savings are claimed, where are they? | In the sales deck as a percentage | As reduced hours in the work-package table |
The questions are ordered by how much money each one moves. The first two decide whether you can read the proposal at all.
A lump sum hides the hours, and a blended rate hides the mix
Question one is the gate. A proposal that gives a single number, or a handful of phase totals, has told you nothing you can check. Require a line for each work package: design, configuration, each integration, data migration, each test cycle, training, and cutover. Design and fit-gap analysis should run 10 to 20% of total implementation hours, per ERP Research. If the design line is below that, the SI plans to work out the requirements while billing you to build, which is where overruns start. If it is far above, you are paying for a discovery exercise you could scope more cheaply yourself.
Question two is where the rate hides. A blended rate is one average across all roles. A fully loaded rate names each role and its cost. The gap between them is the junior-senior mix, and that mix is the single largest rate lever the SI controls. KORE1, a staffing firm, puts 2026 boutique SI rates for SAP work at $200 to $325 an hour or more, for NetSuite at $150 to $275 or more, and for Dynamics 365 at $150 to $250, with one of its own pages showing less senior roles at $90 to $175. Treat these as directional; the ranges differ between KORE1's pages, and all are confidence C from a firm that sells staffing.
Consider a fixed fee of $4M built on 20,000 hours at a blended $200. That blend could be 30% senior at $300 and 70% junior at $130, which costs $181 an hour to deliver. The $19 gap across 20,000 hours is $380,000 of margin the blended rate never shows. The point is not that margin is wrong. It is that you cannot negotiate what you cannot see. Ask for the mix, then ask which named people sit in the senior rows.
Assumptions are where the change orders are born
Questions three through six and nine all test the same seam: the line between what the SI has scoped and what it has assumed. Scoped work is priced. Assumed work is your problem the moment the assumption fails, and it arrives as a change order at full rate.
Three assumptions cause most of the damage. The first is data cleanup. Costbench puts data migration and cleansing at 10 to 15% of the program budget, and the cleanup usually falls on your staff, not the SI's. A proposal that assumes "clean data provided by client" has moved that 10 to 15% off its own books and onto yours, uncounted. The second is integration count. ERP Research prices integrations at $10,000 to $50,000 each. A proposal scoped for eight integrations when you have fourteen carries $60,000 to $300,000 in change orders before any of the six extra ones is tested. The third is test environments and cycles, which go unstated because each environment the SI must build and refresh is billable time.
Suppose an SI quotes that $4M fixed fee on an assumptions page listing eight integrations, one test environment, and client-owned data cleanup. You have fourteen integrations, need three environments, and your data is not clean. None of that is in the $4M. Each gap is a change order at the blended rate, and together they can add 15 to 25% to a fee that looked fixed. This is why question six matters: require a written list of what triggers a change order and a definition of in scope, signed before work starts, not discovered after.
Fixed-fee, time-and-materials, and the named people who do the work
No single pricing model fits a whole program. Fixed-fee protects you where scope is firm and punishes you where it is not, because the SI prices the uncertainty into the fee or claws it back through change orders. Time-and-materials protects the SI and exposes you to open-ended hours. The hybrid that holds up draws the line at scope certainty.
| Model | Fits | Risk it creates | Where to use it |
|---|---|---|---|
| Fixed-fee | Firm, well-understood scope | Padding, or change orders when scope shifts | Standard configuration, training, a defined cutover |
| Time-and-materials | Genuinely uncertain work | Open-ended hours, weak cost control | Data cleanup, discovery, integrations to unknown systems |
| Hybrid | Most tier 1 and tier 2 programs | A blurred line between the two | Fixed on the firm parts, T&M with a cap on the rest |
The rule we recommend is fixed-fee on anything you can specify today, T&M with a not-to-exceed cap on anything you cannot, and the line between them written into the contract rather than left to the SI.
Question eight closes the loop. A proposal priced on senior rates should name the senior people. Require named key personnel for the lead roles, and require your written approval to replace them. The common pattern without that clause is that the named experts win the work and roll off within the first weeks after go-live, replaced by juniors you are still billed for at the blended rate. Program rescues run 30 to 50% of the original budget, per Deliberate Directions writing about NetSuite rescues, and a quiet team swap is one of the ways a program drifts toward needing one.
An AI saving belongs in the hours table, not the sales deck
SIs now claim AI cuts their effort. The claims are large and almost always sit in the prose, not the price. A saving that is real reduces the hours in a work package. A saving that is marketing stays a percentage on a slide. The rule we recommend is to treat any AI claim with no hours delta by work package as worth zero in your price comparison.
The math is simple. SI fees are 40 to 60% of implementation, so even a 50% cut in SI effort is worth 20 to 30% of the program budget at most, and only if it shows up as fewer billed hours. If the SI says AI halves its testing effort, the test lines in the table should fall, and the fixed fee with them. If the table does not move, the claim has not been priced and should not change your decision. Our companion work on AI-assisted implementation covers which claims are real, which are demos, and the contract language that makes an SI put the saving in the price rather than the pitch.