When ScanSource last week announced it had made some significant changes in the executive ranks at  ScanSource and Intelisys, and also reported disappointing second-quarter financial results, it called attention to the big undertaking to fulfill the company’s vision of its One ScanSource strategy.

The One ScanSource strategy is to increase customer value by cross-selling and growing recurring revenue.

So, Channel Partners caught up with Mike Baur, chairman and CEO, ScanSource, and Mark Morgan, the newly appointed president of Intelisys, to get the latest update on the ScanSource-Intelisys alignment.

Channel Partners: It’s a good time to give ScanSource/Intelisys partners and agents feedback about where you are on aligning the business.

ScanSource’s Mike Baur

Mike Baur: For me, where we are today is where we’d thought we’d be back in 2016, actually the end of 2015, when the idea of acquiring a master agent came about. Now, with Mark [Morgan] in his new role, Paul Constantine in his new role, it gives me the opportunity to spend more time with [former president] Jay [Bradley] and [former VP] Carol [Beering, now advisers] – and I still meet regularly with Rick, Rick and Dana (Rick Sheldon, Rick Dellar, and Dana Topping, who co-founded Intelisys in 1994) – working on what is Intelisys 2.0, now that ScanSource has owned this business for almost four years.

CP: Describe Intelisys 2.0 and the road map to getting there.

Mark Morgan: I was involved early on with Mike and the team on the decision to acquire a master agent. One of the key things that we were focused on back then was, how do we leverage our ability to scale to expand our partner base in our core VAR channel? But also, as we learn more about the agent channel, how can we help do that?

Since the acquisition, we made other investments, a little over $100 million — we acquired RPM Software, which we did for a couple of reasons: to further support the agent community and to expand our ability to support the IT channel; we acquired Canpango, a Salesforce consulting and implementation company, to drive cloud contact speed to market; and most recently, we acquired intY, a cloud provisioning and billing platform that gives us Microsoft CSP status in North America, the U.K, and EU. That acquisition extends the partners’ ability to visualize data.

So, after we acquired Intelisys, we didn’t stop, and the next phase of that is that we’ll continue to invest in headcount and tools.

CP: Can you be more specific about upcoming investments

Intelisys’ Mark Morgan

MM: From a directions perspective, it’s taking the tools that Intelisys already has in place – back-office tools, for example, which helps us instill trust in the partner base – bringing partners on, getting them trained, helping them stay on top of the latest technologies and trends – but also ensuring them that they’ll be able to manage their commissions, get paid on time and get paid accurately. We continue to invest in these types of tools.

We also invest in headcount, such as software developers, expanding to support the rapid growth that we continue to have at Intelisys, and investing further in our core VAR channel.

MB: I can add to what Mark is saying — when we bought Intelisys there were 105 employees and now we’re up to 250, a massive increase.

CP: Where there challenges you encountered along the way? 

MB: No, not really. The biggest successes we’ve had were around bringing VARs and agents together and figuring out when and how they want to work together, or not. What we learned …

… from what was being done for years at Intelisys, is that what you present in terms of content, training, education, and information for agents is different for VARs. That was a big aha moment for us — it was obvious for the folks that worked in the ScanSource business but less obvious for the folks in the master-agent business, including the suppliers. We had to create new tools and new programs.

That’s something Mark and Constantine will be more focused on, tailoring existing agency program and tools for VARs.

CP: What are you seeing in the way of convergence of agents and VARs?

MM: We came into the acquisition believing that we could build a bridge. One of my ideas five years ago was, how can we invest in tools and resources to enable our core VAR partners to transition to a recurring revenue model. We realized that some of the complexities of some of the transactions were impeding them.

If you look at our acquisitions – RPM and the intY Cascade platform – it’s all about putting tools in the hands of our partners that truly enable them to cross that bridge to a recurring revenue practice. Now that we have those tools in place, we’re seeing a lot of our hardware guys start to make that transition.

I think it’s going to happen.

MB: I think the end-user convergence has happened. Now what’s happening is that you have different types of partners in that same user account, both of them, say, a traditional telecom agent and a traditional telecom premise-based agent such as an Avaya partner. That’s what’s happening; those two partners both in there and they’re both able to offer this new cloud offering, which is still fairly new.

What we said on our earnings call last quarter was that we saw an acceleration of premises to cloud faster than we had expected. The end users are ready. They want to understand how to buy telecom in this new world of subscription and cloud, and they want better information and to talk to as many partners as they can.

We don’t believe that the partners have to converge. They have to both do what they do to offer solutions.

CF: How about some insight into 2020?

MB: What we’re working on is looking at the go-to-market tools that partners need. We have more suppliers than ever, 40-50 more now than when we acquired Intelisys. One of the challenges, as a partner, is to know when you offer a new supplier that is in SD-WAN or unified communications, or data recovery or security? We’re having to add more technology to assist our partners to make sure they’re offering the best solutions to the end user. That’s where you’re going to see changes in 2020 and 2021.

You’ll see us offer new tools and enhancements to help partners grow their business faster and offer their customers the best solutions.

The fastest growing part of ScanSource is Intelisys, exceeding our expectations.