Intelisys Gets a Cloud Marketplace. What Does It Mean for Partners?

INTELISYS CHANNEL CONNECT — ScanSource-owned Intelisys launched a new cloud marketplace.

Channel Exchange, a subsidiary of ScanSource and a revamped version of ScanSource's intY cloud solutions provider (CSP) platform, will go live December 9. intY has partnered closely with Microsoft in the past, but newly formed Channel Exchange will add to that line card with a "curated" list of vendors.

Many of these vendors are interested in working with technology advisors/agents but lack the desire or capacity to build an agent program. Intelisys will function as a reseller for these vendors, billing the end user customer and providing monthly commissions to the selling agent. Channel Exchange includes automated quoting and invoicing, real-time reporting, customer segmentation and self-service, and subscription management. Channel Exchange will also offer to technology advisors white-label storefronts and custom domains for its platform.

Intelisys executives and partners told Channel Futures the new platform can help partners expand wallet share with their customers by selling Microsoft and other SaaS providers. The launch of a cloud marketplace also backs up Intelisys' thesis of "flexible routes to market" by offering a new way for vendors and agents to transact with one another. It also represents an alternative for Intelisys sales partners who have turned to AppDirect, Pax8 and other cloud marketplaces for their SaaS licensing needs.

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

ScanSource's Katherine White

"What we're bringing to the table is a modern platform experience with a curated SaaS line card, and the experience will definitely help enhance the sales process for our channel partners who are interested in investing in pure play software offerings around the traditional technology stack that is near and dear to their heart," said Katherine White, vice president of advanced solutions.

A New Intelisys Cloud Marketplace

ScanSource sold the U.K. division of intY last year but has continued to operate the company in North America and Brazil. In North America, the intY business is now operating under Intelisys as Channel Exchange.

ScanSource executives told Channel Futures last week that they wanted to relaunch the platform with more capabilities for partners and the ability to hold more vendors beyond Microsoft. ScanSource continues to be a Microsoft indirect provider, and Channel Exchange will continue to highlight Microsoft.

White said Channel Exchange is taking a boutique approach to its vendor line card. She said the Intelisys cloud marketplace will take cues from partners on which suppliers to add.

Related:So You Want to Build a Microsoft Practice? Here's What It Will Take

"We're not in the business of turning on 500 tiles overnight. That's not who we are. That's not what we're going to do," White told Channel Futures. "We're here to service our channel partners where they are right now, and then expand from there. As they expand, we expand. As we expand, they expand. We're proud of that strategy."

Microsoft Licensing Heats up in the Channel

Microsoft SaaS offerings have grown more popular with technology advisors (agents) since ScanSource purchased intY in 2019. Many partners originally stayed away from the vendor because they had grown accustomed to much higher margins in telecom, cloud communications and IT services. But other advisors say Microsoft has proven strategic in helping them provide full-stack technology sourcing.

"We're trying not to say no to anybody. When a customer is procuring something, we want the ability to say yes to them," Mejeticks CEO Rob DeVita said. "If we can't say yes, someone else is going to come in, and you're going to start to get sprawl inside of the organization. So we're trying to cover as many bases as possible."

Joe Monaco, partner and managing director of The Monaco Group, an Upstack company, said his team was looking for new products that could offset pricing compression that he expected would happen in his traditional portfolio.

Related:Tech Advisors Get Hands on AppDirect Storefronts

"It would keep me up at night that this compression would eventually hit me, whether it was UC, circuits or traditional telco," Monaco said in a panel with White, DeVita and Intelisys central sales leader Eddie Acosta.

Other partners tell Channel Futures they've found an easy button selling Microsoft licensing through intY. One partner said intY has become her second largest biller out of all the Intelisys/ScanSource catalogue. In some cases, those accounts have grown without much effort on the advisor's part, with end customers using the platform to fire up new licenses. That has been the case with more businesses looking to add Copilot to their subscriptions.

"intY is an offering that everybody should at least know about, but I feel like nobody knows about," said Michael Agri, president of North Atlantic Consultants.

intY has played an important intermediary role for advisors and their customers. First, because Microsoft does not operate in the commission-based model that agents prefer, intY and now Channel Exchange has stepped into that gap. Channel Exchange resells the license from SaaS provider and commissions the agent.

The cloud marketplace has also filled in the expertise gap and allowed the end users to transact without needing to talk to Microsoft.

"Traditionally, you would need an advanced degree in Microsoft licensing to figure out what the hell these guys are doing," DeVita said. "The intY team is exceptional at this. They know what they're doing. Bring them in. You really just need to find out if there's an opportunity in there, and they do all the heavy lifting."

Supplier Expansion

Channel Exchange begins its expansion at a time when technology advisors are seeking to add cloud and software providers, particularly in the area of cybersecurity. Many partners have told Channel Futures that they searched outside the TSD portfolio to find these providers. In some cases, this is simply due to the intensive due diligence process of onboarding new suppliers. In other cases, the suppliers haven't built out the infrastructure to work with a TSD. Many managed security service providers (MSSPs) do exist in the TSD line card, but pure platform and software providers have proven more challenging for TSDs. As a result, many tech advisors have formed direct agreements with security platform providers.

"Those [MSSPs] are great companies, but it does really remove your ability to consult and advise on particular products, because the MSSP just chooses what the stack is," ChoiceTel Diane Smith told Channel Futures.

In some cases, those security and cloud providers do not want to transact in the agent model. That's where Channel Exchange's model may prove an important bridge.

"It gives us that opportunity to be more valuable to our supplier community and maybe suppliers that didn't want to play necessarily in the agency model, because maybe they didn't have the tools and the systems and the processes to support it, and they didn't want to make the investments to do that," said Paul Constantine, Intelisys' senior vice president of supplier services and marketing. "Now they can start engaging with us on the Exchange model, and then over time, as they work with us and get more familiar with our agent community, they might decide to make that investment."

Intelisys' Paul Constantine

Mills noted that in some deals the advisor may match an Intelisys service provider with a Channel Exchange-sourced license.

"Today, we have suppliers that are MSPs that have Microsoft practices, but we're working with them hand-in-hand with Channel Exchange, where some customers want to buy the Microsoft license but they also want to buy the services from that supplier, even though that supplier could, in theory, provide both. The customer wants to separate those two transactions and allows us to both take a deal down," Mills said.

Invoicing the Customer

Key to Channel Exchange is that Intelisy/intY invoices the end user on behalf of the advisor, as suppliers operating in the cloud marketplace prefer to not conduct billing. This is not an unfamiliar motion for ScanSource. CEO Mike Baur told Channel Futures that half of the company's revenue in Brazil stems from ScanSource billing the end user on behalf of the partner.

"We collect the money and then we pay the channel. They love it, and we have a tool that lets them see how many commissions they're due and when it's coming. And if the end user doesn't pay, then we're on the hook still, by the way," Baur said. "They're not on the hook, but they don't get paid until we get paid. But it also keeps these partners, especially small ones, from having to have a working capital line with the bank. We're the bank for that."

This function has been in place for upwards of a dozen years, teaching ScanSource many lessons along the way. One of the most important lessons, Baur said, was ensuring data protection and reliably paying commissions.

"You have to have huge trust. Because now we know the end user. We know how much the VAR charged, what their margin of profit is, and how much they're keeping. So we now know exactly how their financials are working. So there's a huge amount of trust they have to have in us not sharing their company's information with anybody else," Baur said.

Deepening Wallet Share

Intelisys president Ken Mills noted on Tuesday that 49% of Intelisys sales partners are selling two or fewer technologies. Another 46% have sold four or more, while just 5%have sold seven or more. However, average monthly recurring recurring revenue (MRR) consistently increased for advisors in correlation with the number of technologies sold.

President Ken Mills at Intelisys Channel Connect 2024, Nashville, Tennessee.

And embracing SaaS offerings will allow for further upsell and cross-sell.

"Microsoft licenses by themselves are interesting, but that's not the only thing you want to do with that customer. It's a great opportunity for that customers; it's a great opportunity for that agent. But you want to sell the 10 other things that you can bring along with it," Mills told Channel Futures.

While many technology advisors came out of telecom and carrier services, the modern technology advisor is dabbling in much more. The market has notably expanded into cybersecurity, unified communications as a service (UCaaS), contact center as a service (CCaaS), data center colocation and cloud infrastructure, but Agri said the line card goes even deeper. Fleet management, physical security, electricity and merchant services are just a few areas where more vendors are signing up with TSDs.

"All these new worlds are opening up everywhere to the point where we're true technology advisors," Agri told Channel Futures. "We're not telecom sales folks anymore. We're really, truly looking at a broad scope of services that we can help our clients with."