Answering 10 Burning Questions About ScanSource 'NewCo'
How would "NewCo" be different from what other tech services distributors are doing? And is NewCo an "RPM moment" for the channel?
![Scansource NewCo Reaction Scansource NewCo Reaction](https://eu-images.contentstack.com/v3/assets/blt10e444bce2d36aa8/blt39eb097fd70eb4e0/659c37cd0966ec040a1637da/1_-_PC_Question_Marks.jpg?width=700&auto=webp&quality=80&disable=upscale)
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NewCo will be a ScanSource subsidiary that will operate as an exclusive agent of Intelisys.
Channel Futures' original article featured the headline, "Intelisys Launching Agent Subsidiary." It is more accurate to say that NewCo will function as a subsidiary of ScanSource, just as Intelisys is a subsidiary of ScanSource. NewCo and Intelisys' leadership teams will be separate.
According to ScanSource CEO Mike Baur, NewCo will be comprised of books of business NewCo acquires from agents, as well as as a platform geared toward developing that base of customers and adding new customers. In addition to bringing on books of business from agents who are retiring or "taking chips off the table," NewCo through ScanSource will acquire a management team that has experience working as a customer-facing agency.
Partners have been asking for clarification about NewCo's go-to-market motion – and indeed, asking if NewCo will go to market.
Baur said Intelisys agents have demanded a place to offload their business. But would NewCo only exist as a safe harbor for those landed accounts? Or would the company pursue new logos?
That's a "yes" to the second question, according to Baur. He described a mix of cross-selling and new logo acquisition in an interview with Channel Futures. He reiterated concerns Intelisys suppliers have relayed to him about private equity-backed "superagencies" not driving enough bookings after acquiring numerous agencies.
"When we take that book of business, we can't just farm it. The suppliers don't want us to farm it to zero," Baur told Channel Futures. "We need to invest in it and grow it. So it's farm, but grow; not farm, but hunt. Having said that, will there be some hunting done? Yes."
Baur told Channel Futures that agents have been navigating varying forms of channel conflict with their suppliers for years, as well as with their own subagent partners.
But NewCo's new logo pursuit will come with boundaries, according to Baur.
"And what I've said also is, if we hunt in the woods where one of our partners is, we will back off. We will not compete. You've got to tell us. We've got to hear about it, but it would not be our goal to compete with any of our partners."
![Effortless CX Consultants' Skip Picciano Effortless CX Consultants' Skip Picciano](https://eu-images.contentstack.com/v3/assets/blt10e444bce2d36aa8/blt0de3653615af12b8/6570a1eb0906d1040a10da99/Picciano_Skip_Effortless_CX_Consultants_2023.jpg?width=700&auto=webp&quality=80&disable=upscale)
Effortless CX Consultants' Skip Picciano
Different Intelisys agents said they're looking to see how those protections emerge.
"Intelisys stating that they will 'back off' and 'not compete' is not enough," said Skip Picciano, chief technology officer at Effortless CX Consultants. "Stating that Intelisys competitors 'have been doing this for years' is not enough. There’s a reason why partners trust Intelisys and will continue to trust Intelisys as this sh**storm continues to make noise. We trust Intelisys, but Mike Baur needs to fine-tune his approach with NewCo."
The second biggest concern from partners surrounds potential access NewCo might have to their customer data in Intelisys systems. The most alarmed partners said they envisioned a situation where NewCo tapped into their customer data for its own leads.
Others simply said they're looking to see how ScanSource establishes its rules of engagement.
"I think there needs to be some definitive language around the protection of data and the separation of data and how they're going to ensure that happens," said Richard Rodriguez, CEO of Intelisys partner ClearSync Solutions.
![ClearSync's Richard Rodriguez ClearSync's Richard Rodriguez](https://eu-images.contentstack.com/v3/assets/blt10e444bce2d36aa8/blt885a6f3104f9f2e0/65fb123e549b1d040a591ca3/Rodriguez_Richard_ClearSync_2024.jpg?width=700&auto=webp&quality=80&disable=upscale)
ClearSync's Richard Rodriguez
Baur and several Intelisys partners have given multiple pieces of evidence to assure concerned agents.
Baur emphasized last week that a separate management team will handle NewCo. And a channel leader from a prominent Intelisys vendor said ScanSource can very easily ensure that digital silos exist between Intelisys and NewCo systems.
“It’s 2024. Suppliers have been forced to manage channel conflict for years, when we’ve had direct sales, channel sales and wholesale. Vendors have had multiple business units for years, and the technology is there to support it," said the leader, who asked to not be named. "If companies have the right technology, people should not feel threatened. ScanSource should be able to prove that they have gates and only the right teams see the right data.”
Some sources close to Intelisys said the TSD's market reputation should also be considered. Tricia Ward, president of Onward Communications, Intelisys' first-ever platinum partner, said she sees no example of Intelisys ever engaging in underhanded tactics.
"You're dealing with a highly ethical company. Everything I know about them is that they're highly ethical, and they tout that within their company. Also, they are a public company, so they have to be even more careful," Ward told Channel Futures.
Baur gave the example of commissions management platform RPM Telco, which ScanSource bought in 2018. Many of Intelisys' rival TSDs were using RPM at the time and continue to do so without any reported disruption.
"Even today, we have gates that don't allow us to share information across competitors. I have the best answer already. We've been doing this for six years already," Baur told Channel Futures. "So I'm prepared to go on record as saying, 'We understand the concerns about data privacy. We will ensure that all of our partners, whether they're agents or suppliers or even competitors, have their data privacy maintained and secured.' We've been doing it; we will continue doing it; that has not changed with the creation of NewCo."
Adam Edwards, CEO of Intelisys competitor Telarus, cited RPM as well.
"When Intelisys purchased RPM there was an uproar over access to commission data, but I don’t think advisor sales patterns changed much. Time will tell if this decision by Intelisys is an ‘RPM moment’ or something different," he told Channel Futures.
Baur explained on stage at the Channel Partners Conference & Expo that NewCo will help Intelisys match what other technology service distributors are doing with capital investments in partners. Comments on social media have suggested that NewCo is no different from other initiatives in the industry.
Programs for upfront liquidity – beyond mere loans – do exist at other TSDs. Notably, AppDirect's Investprogram has divvied out hundreds of millions of dollars to technology advisors. Companies such as Telarus and Avant have publicly outlined more formal processes for sourcing a buyer for agents' books of businesses.
Interviews with the different TSD stakeholders show, however, significant distinctions in how these programs operate.
In many cases, TSDs say they are buying a percentage of the agent's residual commissions rather than the actual customers from which those commissions come. They are functionally buying the right to receive some portion of a partner's future residual commissions.
For example, a large consultancy bought a technology advisor with the stipulation that it wasn't interested in the recurring revenue. It was more interested in the services revenue it would generate from consulting opportunities with the advisor's customers. A TSD forged an agreement to take on the advisor's monthly recurring revenue, offering the advisor an upfront payment in return.
Sources from Telarus and Avant told Channel Futures that in the case of an advisor selling its total collection of residuals, the TSD brokers the sale to another advisor.
The stark contrast to NewCo comes down to equity in the actual customer base, said a source familiar with different capital programs at the TSDs.
“Telarus and Avant don’t want to own the end-customer relationship," our source said. "Their core business is distribution, and that’s where they’re investing. They have these great businesses; why would they go direct to their agents' customers and blow up their whole model?”
![Avant's Ian Kieninger Avant's Ian Kieninger](https://eu-images.contentstack.com/v3/assets/blt10e444bce2d36aa8/bltfaa9d36dd1284202/6556978011f5be040a8bc0a6/Ian-Kieninger-PROFILE-e1698246213977.jpg?width=700&auto=webp&quality=80&disable=upscale)
Avant's Ian Kieninger
Avant CEO Ian Kieninger said clear differences are emerging between the TSDs.
"Let me be clear, Avant is fully committed to its North Star: We’re in the business of growing [technology advisor] businesses," Kieninger told Channel Futures. "We aren’t and never have been interested in selling direct and competing with TAs, nor do we want to have leverage within TA businesses via direct ownership.”
In a similar vein, AppDirect chief revenue officer Emanuel Bertolin said AppDirect Invest gives upfront capital to advisors in exchange for receiving the residual for that partner's book of business (or part of it). Bertolin said AppDirect functionally is buying an asset from the agent with the expectation that the agent will continue to own and operate its business. Those AppDirect Invest members must operate future business exclusively through AppDirect's TSD agreements. But Bertolin said AppDirect having exclusivity does not equate to owning equity.
"The difference is that we share the growth in that book. We're buying the crystallized value of the book today, but the growth of that book is shared in the future," Bertolin told Channel Futures. "So we're ... setting ourselves up to continually be partnering with the advisor. We see the advisor as a growth partner. We see this as capital that helps them grow, and then we collectively grow together."
The elements that don't fit neatly into this equation are acquisitions of partners that Telarus and AppDirect have made that actually have conducted direct business in the past. Often these acquisition targets are dubbed "mini-masters," or regional TSDs. The reality of the channel is that this was commonplace for smaller players to operate a hybrid model with both subagents and its own direct-selling employees.
In the case of Chorus Communications (which Telarus bought in 2021), the company leveraged subagents and also consulted with end-user customers. Channel Futures also drew attention to Telarus-purchased TelAdvocate being a former top 10 Telarus partner.
However, Telarus executives have told Channel Futures that those deals need more context. While those acquired companies had dabbled in direct sales, Telarus execs say they bought them for their distribution business. Buying smaller TSDs such as TelAdvocate that previously worked with Telarus allowed Telarus to more streamline its ecosystem. And that direct-selling does not happen anymore, they said. In the case of Chorus, its former leaders, Rob Molinaro and Daniel Cronin, have left Telarus to start an agency — Tech Mercenaries.
It's important to note that many TSDs started at a time where they stayed away from the term "distributor." "Master agent," a term that industry groups have retired, draws less of a line in the sand than "distributor" when it comes to touching the end customer.
"When they made the move to rebrand themselves as distributors and started drawing new lines in the sand, they also started a mindset shift on who they were and where their place was in the sandbox," Adaptiv Advisors partner and TAA co-founder Ryan Rowland said.
For AppDirect's part, its acquisition of the agency AdCom stood out from its purchase of TSDs like WTG, MicroCorp and TBI. Bertolin told Channel Futures AppDirect made the deal to take advantage of AdCom's network operations center (NOC). AppDirect through AdCom offers a NOC that advisors can white-label as their own.
So is NewCo doing exactly what other TSDs are doing? While NewCo emphasizes assembling a management team that will build an actual sales engine, Telarus, AppDirect and Avant say they are buying part of a partner's revenue base.
Baur's point stands, however, that ScanSource for years had been saying "no" to partners who had requested liquidity for an exit, and many of those partners sold to a private equity-backed superagency or participated in a capital program from a different TSD. That stung, especially in cases where the Bank of Intelisys had loaned money to the partner.
"All ScanSource/Intelisys wants is a level playing field with our competitors, and then it's up to us to win," Baur told Channel Futures.
Lost in the discourse is Baur's stated intention of adding tools that would give NewCo a technology/telecom expense management (TEM) capability. That move, he said, would help reduce friction in the sales and contract management processes.
"We're going to have to invest money to develop a TEM-like tool to allow agents to manage their contracts with their end users much more easily than today. It's very hard to renew a contract and upsell a contract," Baur told Channel Futures.
Those ambitions line up with where other players are moving in the industry. For example, ForgeOS quietly has entered the scene with the goal of giving partners a more complete view of their customers' technology life cycle. Bridgepointe Technologies bought Cannon Group in part so its IT strategists could see more of their clients' actual IT spend and potentially cross-sell in relevant areas.
![Procure IT's Randy Jeter Procure IT's Randy Jeter](https://eu-images.contentstack.com/v3/assets/blt10e444bce2d36aa8/bltde97e824c98c6ea7/6547cef1ec254a040af8be9f/Jeter_Randy_Procure_IT_2023.jpg?width=700&auto=webp&quality=80&disable=upscale)
Procure IT's Randy Jeter
While other partners point out that NewCo would need to get clients to agree to that TEM motion, the idea potentially is good.
"This is an industry shift, and Baur is smart to embrace a move meant to provide more value to the IT buyer," Procure IT managing partner Randy Jeter said. "The question is timing to build, cost to build and brilliance in the space behind the tech to build. Tango, Calero and Brightfin, along with others, are leading in the space. How do you peel them away unless you have amazing tech? This is no easy task, and the TCO for clients and companies making the shift is high."
Baur emphasized that NewCo management will be different from Intelisys management. In addition to wanting a silo between the businesses, Baur said he wants the leaders of NewCo to have experience running an agency.
"We've got to have a company that knows how to deal with end users, and that's not something we're proficient at as a TSD and never claimed to be," he said.
This is why Baur said an acquisition of an established agency would be a logical step for landing the leadership team.
Different rumors have swirled as to whom ScanSource might target to lead NewCo. In addition, it's uncertain as to how strongly the company will pursue "superagencies" like Upstack, Bluewave and Amplix. Those three all declined to comment on this article.
![Onward Communications' Tricia Ward Onward Communications' Tricia Ward](https://eu-images.contentstack.com/v3/assets/blt10e444bce2d36aa8/bltb4c9746bc3b5abe5/65fb1cb2a80adb040afc7c2d/Ward_Tricia_Onward_Communications_2024(1).jpg?width=700&auto=webp&quality=80&disable=upscale)
Onward Communications' Tricia Ward
Onward Communications' Tricia Ward encouraged ScanSource to hold closely to feedback from Intelisys partners, regardless.
"My advice to ScanSource would be to put together an advisory board with some of the agents and partners in their community as they start to unfold the plans for NewCo," Ward told Channel Futures, "to make sure that they have a balanced view of what's important to the agent community and what's important in terms of the longevity of the channel. I think they need to get lots of different perspectives."
Baur said he has received positive feedback from key Intelisys suppliers. He said he is encouraging them to speak on the record and participate in shaping the industry.
Sara Seegers, national vice president of indirect partner channel for Lumen Technologies, came out in favor of the NewCo initiative.
"From a provider view, we applaud the direct selling motion ScanSource/Intelisys is creating to complement their strategy that addresses the evolving marketplace and life cycle of our partner and advisor community, the investment in activating best practices, and overall enablement across their base of business," Seegers told Channel Futures. "Lumen is committed to serving the go-to-market motions of our technology solutions distributors, and this validates the transformation considerations we all need to evolve in our channel ecosystems."
![Lumen's Sara Seegers Lumen's Sara Seegers](https://eu-images.contentstack.com/v3/assets/blt10e444bce2d36aa8/blt26dbf6b1bd8ed6ae/6525dc9883549466f70fde39/Sara-Seegers.jpg?width=700&auto=webp&quality=80&disable=upscale)
Lumen's Sara Seegers
Most vendors said they preferred to speak on background or not give comment. The channel leader at a large cloud communications provider said they felt the channel was overreacting to Baur's very public announcement. Other vendors said they agree with Baur's assessment of superagencies not generating enough new bookings, but they were more ambivalent as to how much they actually need something like NewCo.
Vendors almost across the board, however, resonate with Baur's concerns about price compression.
Baur in multiple quarterly earnings calls has briefed shareholders on margin compression in the Intelisys business. In the TSD business, the supplier bills the end customer and provides a monthly commission – generally ranging from 15-25% – to the TSD. The TSD then passes the majority of the commission on to the subagent that sold the deal to the end user. The percentage of pass-through has steadily increased over the last decade. While TSDs may have more commonly passed through 75% of the 20%, that number has made it over 80% and often breaks 90%. One new TSD is promising a 95/5% split for its most committed partners. Most TSDs say they are simply trying to keep pace with what their competitors are doing.
Baur said he thinks the trend ultimately is damaging the channel; namely, he doesn't see agents using their extra margin to drive more customer value.
"Because of the margin pressure, the agents have gotten more profits. The question is, why do they need it? And what are they doing with it?" said Baur.
He's not alone in criticizing the trend. in an interview last summer, Avant's Ian Kieninger called it "share-shift."
Cary Tengler, who formerly worked in Comcast Business's channel program and now consults with vendors for Channel Acuity, said suppliers privately express their frustration with the commission wars. It logically follows that if TSDs are making less money on the actual deals, they need to find that margin elsewhere, such as in event sponsorship.
This is a trend that has overtaken the world of IT hardware distribution. One source told Channel Futures that the traditional IT distributors are making more margin on sponsorship than they are making on the actual technology sales.
![Channel Acuity's Cary Tengler Channel Acuity's Cary Tengler](https://eu-images.contentstack.com/v3/assets/blt10e444bce2d36aa8/blt139340ac67841ad6/652621aad41e335d2669bea0/cary-tengler-comcast-business-2018.jpg?width=700&auto=webp&quality=80&disable=upscale)
Channel Acuity's Cary Tengler
Moreover, many prominent vendors in the TSD community have noticeably cut back on how much they're spending on events. They stress to Channel Futures that they still believe in the TSD model but they need to be more nuanced in how they generate return on investment.
“Almost all the big suppliers are saying, ‘Enough is enough.’ The TSDs have created this race to zero, and all that higher pass-through does nothing but create share-shift and create more focus on back-end dollars," Tengler said. "We need them to be healthy. I know Intelisys and the other TSDs are still profitable businesses. But if the TSD community is giving away 90-95% on current business, it doesn’t bode well in the long-term. That just continues the pressure on the suppliers.”
History might shed light on this moment.
The majority of ScanSource partners (which the company calls customers) actually fit into the category of a value-added reseller. Baur has led ScanSource's evolution from a barcode and point-of-sale focused boutique distributor to a company that competes with Ingram Micro and Tech Data selling products and services from vendors such as Cisco and Extreme Networks.
Baur said his experience working in hardware has given him a front-row seat to margin compression. And the end result has not been positive, he said.
"I have seen this movie, and where it ends up is lower value delivered to the customer. Everybody in the food chain makes less," Baur told Channel Futures. "I think that's the mistake that's happening, and I think it's a shame, because this business looked to me like it was not going to go down the route of some of the VAR businesses that were never very valuable. That's why they weren't able to exit their businesses one day."
Even so, he said margin compression in the VAR world functions differently from the deal-shopping he sees agents doing.
"In the VAR world, most of the time it's because the end user is expecting a better price. And we as a community – supplier, VAR, distributor – all agree to take a haircut. But that's to close the deal. That's not what's happening. The agents are not growing more business because they're getting a bigger split. That's the question I keep asking and nobody has given me that answer," Baur said.
Initial responses from Intelisys partners range from deeply disturbed to ambivalent to positive. Social media comments reveal a wave of negative sentiment and concern from Intelisys partners. Some say they will further diversify their books of business. White Oak Solutions founder Daniel Beckworth said he knows "countless agents shifting their business right this moment."
"The TSD framework is in a state of transition. They've struggled to educate agents on advanced services (read: anything other than traditional telco). As the number of TSDs consolidate due to M&A, so do agents' options. For the last 12 months there have been rumblings that TSDs are buying agents via their private equity channels. It represents the agent's greatest fear – the cardinal sin of the TSD. Intelisys' announcement confirmed the fears of many agents. I'm certain that Intelisys anticipated conflict, but they didn't expect a blood feud," Beckworth said.
Many partners, however, say they don't know enough about NewCo to make a judgment.
"One of the things that I keep telling people is, 'Look, this is still an idea,'" said ClearSync's Richard Rodriguez, who does not plan to move any business away from Intelisys at this point. "Nothing really exists at this point. And until it really exists, and they've understand what they bought, they really can't answer some of these questions either, because they still don't know what it is."
Mejeticks CEO Robert DeVita said he isn't comfortable working with a TSD that is "funding competition in our markets." At the same time, Dallas-based Mejeticks has leaned on local resources from Intelisys. Namely, Mejeticks has leveraged Intelisys sales engineers who live in the region and have helped them with customer meetings. Parting with those resources could hurt.
![Mejeticks' Robert DeVita Mejeticks' Robert DeVita](https://eu-images.contentstack.com/v3/assets/blt10e444bce2d36aa8/blt6559c3a39f438a41/6552a9e886c97f040abdd42a/DeVita_Robert_Mejeticks_135x180_2023.jpg?width=700&auto=webp&quality=80&disable=upscale)
Mejeticks' Robert DeVita
DeVita said Intelisys and ScanSource can pursue "a multitude" or avenues for delivering more value to customers, but he said he has found innovation lacking.
"We have not seen a significant investment from them in people or systems/tools over the last two years. The power of Intelisys is their financial backing and their people, and they’ve been letting people walk out the door for the last 18 months.”
A couple of Intelisys' largest and most tenured partners have publicly stated that they see no problem with NewCo. Onward's Tricia Ward said she doesn't see NewCo as a threat to her business.
"In the channel, we compete against people all the time. It's just the nature of the beast," she said.
Moreover, she believes NewCo creates a valuable option for partners that want to exit.
"I can't say that I'm for sale today, but it does offer me an offramp. It's appealing because it's a company I know very well. I know all the players. I trust them. I've had a very longstanding relationship, and I'm in good standing with them," she said. "So it does present a compelling opportunity for me to exit some day and know that my customers will be taken care of."
Symplicity Communications president and CEO Catherine Behrenbrinker similar said she doesn't see any threat.
"I need Intelisys to be profitable, because they're committed to helping me be successful beyond just educating me. I need them to have the 50 engineers on their bench so that when I have an opportunity, I bring their engineers [into deals]," she said.
Lucas Salvage, chief revenue officer at Kairos Data Communications, said other TSDs are celebrating the "800-pound gorilla" making a mistake with its messaging. But the social media pile-on feels to him like people in glass houses throwing stones.
"With the stench of miscommunication here, it's blinding how many people are simply lying, and how many people don't seem to grasp the fact that because Intelisys comes out and says they are going to 'buy an agency' and go after direct business, this simply doesn't mean that 'your TSD' isn't doing the same thing," Salvage said. "There isn't a TSD that's been commenting here that hasn't 'invested in an agency' – so I guess they do that out of the goodness of their hearts?"
Initial responses from Intelisys partners range from deeply disturbed to ambivalent to positive. Social media comments reveal a wave of negative sentiment and concern from Intelisys partners. Some say they will further diversify their books of business. White Oak Solutions founder Daniel Beckworth said he knows "countless agents shifting their business right this moment."
"The TSD framework is in a state of transition. They've struggled to educate agents on advanced services (read: anything other than traditional telco). As the number of TSDs consolidate due to M&A, so do agents' options. For the last 12 months there have been rumblings that TSDs are buying agents via their private equity channels. It represents the agent's greatest fear – the cardinal sin of the TSD. Intelisys' announcement confirmed the fears of many agents. I'm certain that Intelisys anticipated conflict, but they didn't expect a blood feud," Beckworth said.
Many partners, however, say they don't know enough about NewCo to make a judgment.
"One of the things that I keep telling people is, 'Look, this is still an idea,'" said ClearSync's Richard Rodriguez, who does not plan to move any business away from Intelisys at this point. "Nothing really exists at this point. And until it really exists, and they've understand what they bought, they really can't answer some of these questions either, because they still don't know what it is."
Mejeticks CEO Robert DeVita said he isn't comfortable working with a TSD that is "funding competition in our markets." At the same time, Dallas-based Mejeticks has leaned on local resources from Intelisys. Namely, Mejeticks has leveraged Intelisys sales engineers who live in the region and have helped them with customer meetings. Parting with those resources could hurt.
![Mejeticks' Robert DeVita Mejeticks' Robert DeVita](https://eu-images.contentstack.com/v3/assets/blt10e444bce2d36aa8/blt6559c3a39f438a41/6552a9e886c97f040abdd42a/DeVita_Robert_Mejeticks_135x180_2023.jpg?width=700&auto=webp&quality=80&disable=upscale)
Mejeticks' Robert DeVita
DeVita said Intelisys and ScanSource can pursue "a multitude" or avenues for delivering more value to customers, but he said he has found innovation lacking.
"We have not seen a significant investment from them in people or systems/tools over the last two years. The power of Intelisys is their financial backing and their people, and they’ve been letting people walk out the door for the last 18 months.”
A couple of Intelisys' largest and most tenured partners have publicly stated that they see no problem with NewCo. Onward's Tricia Ward said she doesn't see NewCo as a threat to her business.
"In the channel, we compete against people all the time. It's just the nature of the beast," she said.
Moreover, she believes NewCo creates a valuable option for partners that want to exit.
"I can't say that I'm for sale today, but it does offer me an offramp. It's appealing because it's a company I know very well. I know all the players. I trust them. I've had a very longstanding relationship, and I'm in good standing with them," she said. "So it does present a compelling opportunity for me to exit some day and know that my customers will be taken care of."
Symplicity Communications president and CEO Catherine Behrenbrinker similar said she doesn't see any threat.
"I need Intelisys to be profitable, because they're committed to helping me be successful beyond just educating me. I need them to have the 50 engineers on their bench so that when I have an opportunity, I bring their engineers [into deals]," she said.
Lucas Salvage, chief revenue officer at Kairos Data Communications, said other TSDs are celebrating the "800-pound gorilla" making a mistake with its messaging. But the social media pile-on feels to him like people in glass houses throwing stones.
"With the stench of miscommunication here, it's blinding how many people are simply lying, and how many people don't seem to grasp the fact that because Intelisys comes out and says they are going to 'buy an agency' and go after direct business, this simply doesn't mean that 'your TSD' isn't doing the same thing," Salvage said. "There isn't a TSD that's been commenting here that hasn't 'invested in an agency' – so I guess they do that out of the goodness of their hearts?"
News of a proposed ScanSource subsidiary that would sell technology to end users in an agency model is only starting to capture the attention of the channel.
The yet-unnamed subsidiary, for now dubbed "NewCo," is indeed in development, ScanSource chairman and CEO Mike Baur confirmed last week at the Channel Partners Conference & Expo in Las Vegas. Baur, who also serves as interim president of ScanSource's tech services distributor (TSD) subsidiary, Intelisys, said NewCo will function as a separate business from Intelisys while using Intelisys as its exclusive TSD.
NewCo will buy books of business from agents who are looking to sell or liquidate. Furthermore, NewCo will develop platforms, tools and personnel that will manage and expand those customer bases.
![ScanSource's Mike Baur ScanSource's Mike Baur](https://eu-images.contentstack.com/v3/assets/blt10e444bce2d36aa8/bltb1e18d2b4f8d5be2/654d2b32155cb8040a3040c1/Baur_Mike.jpg?width=700&auto=webp&quality=80&disable=upscale)
ScanSource's Mike Baur
The announcement confirmed what Baur had already said at Intelisys' Club TPC trip weeks prior. Partners on the trip said they registered surprise when Baur said ScanSource was planning on creating its own customer-facing agency. After Baur publicly announced NewCo on the keynote stage at the Channel Partners Conference & Expo, discourse among agents reached a fever pitch.
Clarifying ScanSource NewCo
Chief among partners' concerns is Baur's admission that "channel conflict" would be a byproduct of NewCo. Baur said NewCo would improve upon where he said most agent rollups have failed — generating enough new bookings after the initial liquidity.
"When we take that book of business, we can't just farm it. The suppliers don't want us to farm it to zero," he told Channel Futures.
Above: The Coffee with Craig and James podcast tackles the debate over ScanSource "NewCo."
Baur told us that NewCo will develop a process to ensure it avoids competition with Intelisys agents over prospective customers. He and multiple partners also responded to partner concerns about ensuring data siloes between Intelisys and NewCo.
Partners React
Ashley Rowland, co-founder of agency Adaptiv Advisors and the Technology Advisor Alliance, said partner responses run the gamut.
"Some people are outraged that a TSD partner would compete with their agents. Others are annoyed that Intelisys is being singled out because they say other TSDs do the same thing but market it differently," said Rowland, whose LinkedIn post about the deal generated more than 200 comments.
She said the most important takeaway is that technology advisors are demanding more transparency from their TSD partners.
"It’s bringing to light the fact that many TSDs or smaller TSDs groups also have agencies. This can be marketed as a good thing or marketed as a bad thing. It’s up for every technology advisor to decide for themselves. All of the reactions are valid," she said.
Channel Futures spoke to about 20 sources – ranging from Intelisys agents and suppliers, to its TSD competitors. Many of them (including some of Intelisys' most decorated partners) asked to speak on background.
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