ScanSource CEO Mike Baur 'Not in a Hurry' to Find New Intelisys Leaders
ScanSource confirmed the resignation of president John Eldh, who had been serving as the interim leader of Intelisys.
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Channel Futures: Do you think that the brand of Intelisys is going to stay for the long term, at least for the foreseeable future?
ScanSource’s Mike Baur: Absolutely. We have specifically decided, literally over the last 90 days, that the Intelisys brand is here to stay. We do things uniquely with Intelisys that don’t always translate into the normal ScanSource model, and we have decided that we have to invest more to make Intelisys not only the largest and most trusted technology services distributor (TSD), but the best. We believe we have been the best, but I’ll be honest, there’s more competition now, and some of our competitors have gotten better. That’s actually been better for the industry because the industry is growing. As we look at next year, we believe we’re going to extend our lead even greater in this industry — because the industry is growing faster than any other part of the ScanSource business, and we have to direct more investments there. And we have no hesitation at using Intelisys as the lead brand for our company.
CF: How do you break down that investment? You mentioned hiring.
MB: Something else that I learned when we bought Intelisys seven years ago was that the north star for Intelisys has always been their sales partner. It has always been the partners that drive results to the end user on behalf of the suppliers. I believe we need to restate that again, that our sales partners are first at Intelisys. They are our north star. So we’re going to start talking even more about what we can do for our partners, and we have to start with asking them what they need.
I believe the channel itself as a total channel has changed dramatically. As you know, a lot of consolidation has happened. There have been other private equity players come into it, and they’re coming into this channel as a group because of the growth opportunity. I think we’re just at the early stage of seeing some explosive growth over the next few years. And that’s why we’ve decided Intelisys is the right business model for ScanSource to benefit from this massive growth.
CF: As you’re talking about not being afraid to lead with Intelisys, what happens to the message of hybrid distribution?
MB: What we have learned since last year’s Channel Connect was that the hybrid model is exactly what end users want. End users want to buy hardware devices, if you will, and cloud connectivity and cloud applications. However, what we’ve learned is the Intelisys agency channel – the trusted advisors, the agents – they are much more skilled at selling the infrastructure, the UCaaS and CCaaS. They can do that even when they don’t have to sell the hardware.
On the other hand, we’ve learned that the VAR channel – the companies that grew up as VARs – they need to sell the Intelisys offerings to really round out their business model. Their business model has changed much more in the Intelisys traditional agent model. That’s really the difference.
The hybrid message is about how the end user wants to acquire technology. We think the VARs can provide hardware and solutions around cloud and connectivity. The agents are focused primarily on cloud and connectivity, which is OK. So we’re saying, “Take it the way you want it. If you want to just stay in the Intelisys traditional model, we think that business has double digit growth opportunities ahead, and it’s alive and well.” We just want to make sure that people understand you’re not in a business that’s going away if you’re an Intelisys partner. You’re in a business that’s growing dramatically. And it’s OK if you don’t sell hardware.
CF: I think that would resonate with some of the [agent] partners I talked to at Channel Connect last year, who weren’t that interested in doing hardware. Some of them would have the appetite for [adding hardware], but maybe they were just really small companies in the first place and lack the scale and resources to do that.
MB: You’re right. It’s a different business model. They have to either acquire some talent or in some cases they bought a VAR. Those strategies worked, but those are really the outliers, and we’ve got a special team that works with them. So we’re not pushing hardware on agents that aren’t ready. This is really a question of readiness, and maybe they will look at it next year. We’re not going to force that.
CF: What about referral plays, where the agent isn’t ready for a hardware opportunity but can cross-pollinate with other partners?
MB: We have always had some of that going on, and it does happen, but boy does it take a lot of work — because most channel partners already are working off of fairly small margins. I’ve told many of them this, and they all want to get their “unfair share” of the split. There’s a lot of tension over who did the most work and who should get the lion’s share of the margin, but that’s OK. That’s just normal. That’s what I love about this partner channel. They’re independent businesspeople. And thank goodness we have them. They work for themselves. And our job is to be their most trusted partner.
Five years ago we made a decision to really reinforce one of the things Intelisys was really known for [when] we acquired RPM, which is the gold standard for commission payments in the industry. Many of our competitors also use that RPM tool, and that is one of the most important things for a partner in this world — to make sure they get paid accurately and on time. We have a lot of people dedicated to making sure that our partners get their commission payments accurately and on time because many times the accuracy is a big part of our value-add. We work with the suppliers to make sure our partners got the appropriate commission amount, because it’s not always accurate from the supplier.
That’s the part of the back office that doesn’t get much publicity. It is absolutely critical for this business model to work. So you’re going to see us talk more about RPM and what we’re going to do to enhance its capabilities going forward. You asked earlier about investments. It is definitely people, but also technology like RPM.
CF: As you’re hiring, where might you be looking? Is that folks from the vendor community? From the partner community? From other TSDs? Where do you see those different streams of talent?
MB: We have 2,300 people to choose from. They’re not all here in the U.S. Seven hundred are in Brazil — I’ve got an amazingly talented group of leaders within ScanSource Inc. So I have the ability to choose and have people put their name in the hat across our company, because everyone in ScanSource Inc. sees the growth opportunity for Intelisys.
Really the most important opportunity in our company is to lead the Intelisys team going forward. So we’re going to be patient, but we’re also not going to lose any steps in making decisions and responding to our partners. We’ve got a team that’s reporting into me and my leadership team. They’re meeting with me every week to make sure we’re making decisions fast and we’re able to move very quickly on any opportunities ahead. Right now we’re running the company with this leadership team concept, but we have a very deep and talented pool to choose from for our future leader for Intelisys.
CF: Is there anything else you want to say about personnel appointments at the Intelisys level?
MB: We have a strategy today that is different from when we bought Intelisys seven years ago. Intelisys seven years ago was 100 people; we’re almost 300 now. You tend to build talent over time. It’s not easy to just ask people to step up on a monthly basis, but we have been nurturing our leadership team for a long time. And over the years, we’ve learned that sometimes bringing people in from the outside is positive, but not always. Sometimes they don’t have an instinctive feel for the business. And I can tell you, running the Intelisys business is dramatically different from running our hardware business. I’ve certainly learned that, and I’m excited about the team we have at Intelisys, because they understand what our customers and suppliers need. They really do. And so right now there’s no decision that we’re waiting on or slowing down for; we are full steam ahead.
CF: I appreciate that nuance between the hardware and the Intelisys side, as well as Intelisys in contrast to the world outside of Intelisys/ScanSource. There are intricacies of how a system works.
MB: And to your point, someone coming from a supplier has no idea how a TSD works. They have only seen it from the outside looking in. It is a dramatically different business because this business has to execute every day. The supplier businesses have execution, but it’s a different kind. And just because someone’s a great channel leader at a supplier does not make them a great executive at TSD. And vice versa.
CF: It makes sense to want to tap into the supplier community, because you are trying to be a friend to the ecosystem and maintain those ties to the ecosystem. But it’s a balance and a dance.
MB: You know what else the balance is? It’s time. For some companies, depending on their size, they have a tighter time frame where they have to make a decision. And we have – I’ll call it somewhat of a luxury – enough talent to run the business day-to-day. We are not in a hurry, and that’s the beauty and benefit that we have being part of this bigger ScanSource machine.
CF: I appreciate that nuance between the hardware and the Intelisys side, as well as Intelisys in contrast to the world outside of Intelisys/ScanSource. There are intricacies of how a system works.
MB: And to your point, someone coming from a supplier has no idea how a TSD works. They have only seen it from the outside looking in. It is a dramatically different business because this business has to execute every day. The supplier businesses have execution, but it’s a different kind. And just because someone’s a great channel leader at a supplier does not make them a great executive at TSD. And vice versa.
CF: It makes sense to want to tap into the supplier community, because you are trying to be a friend to the ecosystem and maintain those ties to the ecosystem. But it’s a balance and a dance.
MB: You know what else the balance is? It’s time. For some companies, depending on their size, they have a tighter time frame where they have to make a decision. And we have – I’ll call it somewhat of a luxury – enough talent to run the business day-to-day. We are not in a hurry, and that’s the beauty and benefit that we have being part of this bigger ScanSource machine.
ScanSource CEO Mike Baur says the hybrid distributor is taking a patient approach to identifying the people who lead the Intelisys tech services distributor (TSD) business in the long term.
Baur in an interview with Channel Futures said that ScanSource is making more investments into Intelisys and putting more emphasis on the TSD as ScanSource fills key Intelisys leadership positions.
Open positions include Intelisys president, which John DeLozier vacated in late August, and Intelisys sales leader, which Chandler Legarreta recently left. ScanSource president John Eldh was serving as the interim president, but he has also resigned, ScanSource confirmed to Channel Futures.
ScanSource’s Mike Baur
Baur said a team of leaders is overseeing the Intelisys business and reporting to Baur and the ScanSource leadership team.
“They’re meeting with me every week to make sure we’re making decisions fast and we’re able to move very quickly on any opportunities ahead. Right now we’re running the company with this leadership team concept, but we have a very deep and talented pool to choose from for our future leader for Intelisys,” Baur told Channel Futures.
Mike Baur: ScanSource, Intelisys Have Talent
But in the meantime, Baur said ScanSource and Intelisys possess both the talent and the time to keep the lights on.
“We are not in a hurry, and that’s the beauty and benefit that we have being part of this bigger ScanSource machine,” he said.
Baur in a candid interview with Channel Futures shared his perspective on the Intelisys business and what ScanSource needs to do to meet sales partners’ (technology advisors) needs. He also talked broadly about the process of finding new leaders and where his team may be looking.
The transcript has been edited for clarity.
Channel Futures: Is there anything you want to say to start?
Mike Baur: At Intelisys we are at an important time in the history of the company. We bought Intelisys seven years ago, and we couldn’t be more excited about the opportunity ahead. With Channel Connect coming up in a little less than three weeks, we’ve been planning for a lot of really cool things to talk about with our sales partners. That’s why there’s been a whole lot going on at Intelisys and ScanSource. We are getting ready to talk to our customers about the opportunities they have to grow. Really, this is about positioning our Intelisys business for growth, as I mentioned on our earnings call last quarter.
CF: So there are things to finalize before you go up in front of partners and customers?
MB: That’s right. We expect to have a couple thousand people, including suppliers and customers, and this is our annual opportunity to really position the company as a true, trusted partner for our customers and suppliers. And we believe ScanSource and Intelisys have a unique story to tell. I think it’s a growth story that our industry is not doing a great job telling. And so I wanted to share with you why I’m excited about the future and the growth opportunities at Intelisys.
CF: How would you describe that story?
MB: ScanSource bought Intelisys seven years ago, and ScanSource is a $3.8 billion public company. So a lot of the things we do are much more visible. And we’re not afraid of that. We are absolutely a company that’s committed to transparency and trust with our employees and our partners. What’s really been great for me is to see we have an incredibly strong, deep pool of talent. Today, running the Intelisys business is a team of leaders. And these leaders have been with the company in some cases 10 years or more. These leaders are working directly with my leadership team and [me]. So I’ve been meeting with the Intelisys leadership team weekly, for the last month, to make sure that they have everything they need to provide our partners opportunities to grow. We’re going to tell more of that story at Channel Connect coming up in a few weeks. But the big news is, we’re hiring: We’re actually looking to add people to the Intelisys team because of the massive growth opportunities ahead.
For everyone who historically knows the Intelisys story, they may have seen us in some cases de-emphasize the Intelisys brand. So we made a decision last quarter on our earnings call to specifically say that we’re going to be talking more about Intelisys in the future because it’s the highest-growth part of our company.
See our slideshow above for the rest of our Q&A with Baur, including his thoughts on the future of the Intelisys brand, the “hybrid distribution” message, and the qualities he’s looking for in new Intelisys leaders.
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