At Intelisys Channel Connect, Flexibility Is the Name of the Game

INTELISYS CHANNEL CONNECT — ScanSource tech services distributor subsidiary Intelisys is preaching flexibility and choice as it works with its increasingly diverse partner community.

Intelisys kicked off its annual Channel Connect conference in Nashville Monday with a message of "flexible routes to market" in its morning keynote. That concept emerged as part of a two-year plan the TSD shared, including business value programs and partner segmentation programs.

"You're going to hear a lot about the future over the next two days, because our commitment to all of you is about participating in your journey the way you want us to participate," ScanSource CEO Mike Baur told the audience. "You choose the pieces and parts and services of Intelisys that you need, and we want to fill the gaps. We want to help you accomplish your journey, accomplish your business goals, accomplish your life goals."

ScanSource's Mike Baur

ScanSource's acquisition of Intelisys in 2016 rocked the agent world and created the first publicly traded TSD, then known as a master agent. Baur noted that Intelisys has retained its brand since the deal in a tech world where many acquired companies eventually disappear. Moreover, the TSD appears to be increasing in its visibility and autonomy within ScanSource's portfolio, evidenced in part by ScanSource establishing "Intelisys & Advisory" as its own financial reporting segment in the company.

Related:Intelisys Has Doubled Net Sales Since 2018

In addition, each of ScanSource's two segments now contain two presidents – four in total – who will report into Baur while receiving an increasing amount of corporate resources, Baur said. He said the transfer of more corporate resources into the segments will allow those groups to move faster and with less red tape. For example, longtime Intelisys employee Justin Kelley moved from ScanSource's director of product management to Intelisys vice president of digital tools. Kelley now reports into Intelisys president Ken Mills with a more dedicated technology budget. That change helped Intelisys announce a simplified, mobile-friendly version of its quoting function on Monday.

Onward's Tricia Ward

Tricia Ward, president of longtime Intelisys partner Onward Communications, said feedback from Intelisys partners has motivated ScanSource to instill more autonomy within Intelisys.

"When you first do an acquisition, you're not really sure about everybody's capabilities, and you're sort of holding things close in some ways. And what I've seen over time is that they've really taken in feedback and seem to be empowering people more, which I think has made things a lot better," Ward told Channel Futures.

Related:New Intelisys President Makes Big Plans, Bullish for TSD's Future

The goal is to meet partners where they are, Baur said.

"They just need to tell us. What do you need? What are you looking for? We just have to be convinced that we need to be willing to do some things for a subset of partners, and then we have to make sure we can make money doing it," he said.

Intelisys tallied $2.67 billion in end-user billings in its fiscal year 2024 (which ended June 30), up from $2.47 billion the year prior. Moreover, Intelisys is currently paying monthly commissions to about 4,200 partners.

Flexibility and Choice

ScanSource bills itself as a hybrid distributor, meaning that it operates a resale-based hardware distribution business and a commissions-based agency model (Intelisys). ScanSource in previous years envisioned that "hybrid partners" would leverage both units to sell a mix of hardware, software and carrier services. That entailed traditionally hardware and resale-focused VARs dipping into the Intelisys portfolio to sell software and services from Intelisys vendors (with the Intelisys vendors billing and managing the end user) and for the traditionally residual commission-based agents dipping into the ScanSource hardware/device portfolio. Baur said hybrid partners have emerged, but the majority of partners are looking to chart a different, more customized course.

Related:ScanSource Reveals Cash Spent on M&A, CSP Refresh

"Out of 25,000 channel partners we have in the U.S., there are probably 500 that have done both [resale and agency] successfully. [Partners] all seem to want to growth their business in a different way. We're trying to help them do things that are specific to what they need. It's almost like every partner needs a special version, and that's why we're saying we want to be flexible," Baur told Channel Futures. "They need a special version of this go-to-market model, because they all come from slightly different perspectives, and they're in different markets or at slightly different stages."

Even within Intelisys' base of technology advisors (agents), president Ken Mills sees a wide range of backgrounds and capabilities. Take, for instance, "national partners" such as private equity-backed Bluewave, E78, Upstack and Amplix who are significantly larger than a one- or two-person shop. Mills told Channel Futures that that partner segmentation will increase at Intelisys to give partners the value they're asking for.

Intelisys' Ken Mills

The same need for flexibility also goes for vendor partners of Intelisys, Mills said. That's one of the reasons ScanSource is revamping its intY cloud marketplace business under Intelisys with the moniker Channel Exchange. That model will pair Intelisys with cloud software vendors who want to sell through agent partners but don't want to directly provide a residual commission or invoice the end customer (as is traditional in the advisor/agent model). Intelisys will resell the SaaS products from the supplier, invoice the end customer and provide monthly commissions to the agent.

"My belief is that not every supplier is going to be able to figure out how to be successful in the advisory market, but they all want access to the advisors because they represent wallet share expansion for their products and new opportunity for their products, and new channel that they're not necessarily selling effectively in today," Mills told Channel Futures. "So I believe Intelisys with ScanSource can bridge the gap in a unique way that our competitors can't. This flexible route to market concept is how we're going to do that."

Market Expansion

Mills noted in his keynote that 45% of new Intelisys orders are coming from CX, cloud and security. That represents a big shift for an advisor channel that holds roots in the carrier services world. However, Mills said connectivity will always play an important role for advisors as they move up the technology stack.

"Our foundation was circuits, and you can't do AI if you can't connect to the data. You can't do IoT unless you connect to the sensors. You can't do CX unless you connect to the call center where that call can be placed. None of those technologies exist without the foundation of the circuit. But what's amazing is the circuit isn't where the opportunity stops; it's where the opportunity begins. The circuit is the first place to land, but it is the best place to expand from," Mills said.

Mills cited a projection that $720 billion in global IT spending will go through the channel by 2026. Mills said the advisor model faces the opportunity to tap into a "bigger channel opportunity" that companies like managed services providers (MSPs), value-added resellers (VARs) and global systems integrators (GSIs) currently have access to.

"If you look at the size of the advisory channel as a whole and you look at the Ciscos and the Dells, there's like a 10-times difference," he said. "So the more that we help the advisor channel take down deals that may traditionally go through the core IT channel, the bigger their opportunity becomes. I believe we can expand their addressable market meaningfully by some of the programs that we're doing around flexible routes to market and other things."