Articles
/
Choosing the right dynamics 365 partner: how to avoid overpriced services

Choosing the Right Dynamics 365 Partner: How to Avoid Overpriced Services

Bottom line up front: Most enterprise decision-makers overpay by $20,000 to $100,000 on Dynamics 365 implementations because they don't know how to properly vet Microsoft partners. Here's your roadmap to avoid that costly mistake.

I've been on both sides of this equation — implementing D365 for multinational operations and watching companies get absolutely fleeced by partners who charge premium rates for junior-level work. What frustrates me most? It's completely avoidable if you know what questions to ask.

The $150,000 Wake-Up Call

Last month, I had coffee with a CFO who'd just wrapped up their Dynamics 365 Finance implementation. "Paul," he said, looking genuinely pained, "we paid $280,000 for what should have been a $130,000 project. The worst part? We didn't find out until we brought in another consultant to fix their mess."

This happens more often than you'd think. The Dynamics 365 partner ecosystem is... well, let's just say it's a mixed bag. You've got genuinely excellent firms charging fair rates, and then you've got the ones that see "enterprise client" and immediately add a zero to their quote.

The thing is, most decision-makers don't have the technical background to spot the difference. They're evaluating partners based on marketing materials and sales presentations rather than actual capability and value.

What Actually Drives D365 Implementation Costs

Before we dive into partner selection, let me break down where your money actually goes in a typical implementation:

Discovery and Planning (15-20% of budget):

This is where good partners shine and bad ones fumble. A solid discovery process should feel almost invasive — they're digging deep into your current processes, data quality, integration requirements, and business objectives.

Configuration and Customization (40-50%):

Here's where the rubber meets the road. The best partners leverage out-of-the-box functionality wherever possible. The expensive ones? They love custom development because it justifies higher rates.

Data Migration (15-25%):

This is often underestimated by both clients and partners. Clean, well-structured data migrations are an art form. Messy ones become money pits.

Testing and Training (10-15%):

Good partners budget adequately for this. Cheap ones cut corners here, which inevitably leads to post-go-live issues.

Project Management and Change Management (5-10%):

Often overlooked but absolutely critical for enterprise implementations.

Now, here's what I've learned from reviewing dozens of D365 implementations: the partners who inflate costs typically do it in configuration and customization. They'll propose custom solutions for problems that standard functionality can solve, or they'll assign senior-rate resources to junior-level tasks.

Red Flags That Signal Overpriced Partners

The "flat rate" trap:

When a partner quotes you a flat fee without doing proper discovery, run. I've seen companies pay $200,000+ for implementations that needed maybe $80,000 worth of work, simply because the partner padded their estimate to cover unknowns rather than doing proper upfront analysis.

1
Junior resources at senior rates:

This one makes my blood boil. A partner quotes you $185/hour for "senior consultants," then shows up with fresh-out-of-college analysts doing the actual work. Always ask for specific resource allocation and billing rates by role.

2
Custom development as default:

Any partner who immediately starts talking about custom coding without fully exploring standard functionality is either inexperienced or looking to inflate the project scope. Dynamics 365 is incredibly flexible out of the box.

3
Vague project phases:

If their statement of work has phases like "System Configuration" without detailing specific deliverables, you're looking at a recipe for scope creep and budget overruns.

4
No fixed-price options:

While time-and-materials contracts have their place, a partner who won't consider any fixed-price components is either risk-averse to a fault or planning to maximize billable hours.

5

The Questions That Separate Good Partners from Expensive Ones

I've developed a set of questions over the years that quickly reveal whether you're dealing with a value-focused partner or one that's planning to maximize revenue at your expense:

The Real Cost Comparison Framework

Here's how I recommend evaluating partner pricing — and this framework has helped clients save substantial money:

Create an Apples-to-Apples Comparison Grid

Don't just compare total project costs. Break down proposals by:

Discovery hours and rates
Configuration hours by module
Custom development hours (if any)
Data migration approach and hours
Testing and training allocation
Project management overhead

Calculate True Hourly Rates

Many partners obscure their real rates through blended pricing or package deals. Divide their total proposed cost by total estimated hours to get the true blended rate. I've seen proposals where the "competitive" total price actually worked out to $220/hour when you did the math.

Factor in Risk Allocation

Fixed-price components reduce your risk but may increase the partner's pricing to cover contingencies. Time-and-materials gives you more flexibility but shifts risk to you. The best approaches often combine both — fixed-price for well-defined phases, T&M for areas with higher uncertainty.

Your Due Diligence Checklist

Based on my experience vetting dozens of D365 partners, here's your essential checklist:

Financial and Business Verification

➙ Microsoft Gold/Solution Partner status verification

➙ At least 3 years of D365 implementation experience

➙ Financial stability (check D&B rating if they're smaller)

➙ Professional liability insurance adequate for your project size

Technical Capability Assessment

➙ Team lead has minimum 5 D365 implementations in similar industry

➙ At least 2 certified D365 functional consultants assigned

➙ Demonstrated expertise in your specific modules (Finance, SCM, etc.)

➙ Clear methodology for data migration and system integration

Project Approach Evaluation

➙ Detailed discovery process (minimum 40 hours for enterprise implementations)

➙ Phased approach with clear go/no-go decision points

➙ Change management and training plan included

➙ Post-go-live support structure defined

Commercial Terms

➙ Detailed statement of work with specific deliverables

➙ Clear resource allocation with named individuals

➙ Billing rates by role, not just blended rates

➙ Change order process defined upfront

➙ Success criteria and acceptance criteria documented

Negotiation Strategies That Actually Work

1/ Bundle Discovery with Implementation:

Many partners will discount discovery if you commit to the full implementation. This can save 10-15% on total project costs while ensuring better project planning.

2/ Negotiate Resource Substitution Penalties:

If they switch out senior resources for junior ones mid-project, there should be rate adjustments. I typically negotiate a 25% rate reduction if they substitute without client approval.

3/ Structure Payment Terms to Your Advantage:

Front-load payments for discovery and planning, but tie larger payments to specific deliverables and milestones. This keeps partners motivated to deliver on time.

4/ Include Performance Incentives:

For larger implementations, consider bonus payments for early delivery or penalty clauses for significant delays. This aligns partner incentives with your timeline.

When to Walk Away

Sometimes the best decision is not choosing any of the initial partners you evaluate. Here are the deal-breakers I've learned to recognize:

They Can't Provide Specific References:

If they can't connect you with recent clients for confidential conversations, there's usually a reason. Good partners have clients who are happy to share their experiences.

Massive Variation in Estimates:

If Partner A quotes $150,000 and Partner B quotes $400,000 for the same scope, someone doesn't understand your requirements. Usually, it's worth getting a third opinion before proceeding.

Pushy Sales Tactics:

Partners who pressure you to sign quickly or offer "limited time" discounts are usually working from a position of desperation rather than confidence in their value proposition.

Inability to Explain Technical Decisions:

If they can't clearly explain why they're recommending specific approaches or configurations, they're either hiding something or don't understand the platform well enough.

The Hidden Costs Nobody Talks About

Even with a good partner, there are costs that often get overlooked in initial budgeting:

Internal resource allocation:

Your team will spend significant time supporting the implementation. Budget for this — typically 20-30% of one FTE for the project duration.

1
Third-party integrations:

If you're connecting D365 to other systems, integration costs can easily add $20,000-$50,000 per connection, depending on complexity.

2
Data cleanup:

If your current data isn't clean, you'll need to invest in cleanup before migration. This is often discovered during the discovery phase, leading to scope changes.

3
Training beyond go-live:

Initial training gets users functional, but ongoing training and support typically requires additional investment in months 3-6 post-implementation.

4
Customization maintenance:

Any custom code will require ongoing maintenance and updates as Microsoft releases new D365 versions.

5

Making the Final Decision

After all the analysis, proposals, and reference calls, the decision often comes down to gut feel about the partner's competence and alignment with your organization. Here's my framework for the final evaluation:

1/ Competence:

Do they demonstrate deep understanding of both the D365 platform and your business requirements? Can they articulate complex concepts clearly?

2/ Cultural Fit:

Will their team work well with your culture? Are they collaborative or dictatorial in their approach?

3/ Value Focus:

Are they optimizing for your success or their revenue? This usually becomes clear in how they structure the engagement and respond to your questions.

4/ Risk Management:

How do they handle unknowns and challenges? Do they have contingency plans and clear escalation processes?

The right D365 partner becomes an extension of your team, helping you achieve business objectives rather than just implementing software. They should be invested in your success, not just their billable hours.

Look, I've seen companies transform their operations with D365 implementations that came in on time and under budget. I've also seen implementations that dragged on for months past deadline, went 50% over budget, and still didn't meet business requirements. The difference almost always comes down to partner selection.

Take the time to do this evaluation properly. The few weeks you invest in thorough partner vetting will save you months of frustration and tens of thousands of dollars. And honestly? Your future self will thank you when you're celebrating a successful go-live instead of dealing with budget overruns and missed deadlines.

The D365 platform is powerful enough to drive real business transformation. Just make sure you're working with a partner who's focused on your transformation, not their profit margins.

Listen to podcast

Sources:

We help enterprise decision-makers evaluate implementation partners and avoid costly mistakes. Our partner evaluation process has helped clients save an average of $40,000 on their D365 implementations while ensuring better project outcomes.