Intelisys-ScanSource: Education Key to Successful Integration

Partners are anxious to learn about new opportunities afforded by ScanSource’s acquisition of master agent Intelisys last fall.

That’s according to Jay Bradley, Intelisys’ president, and Mike Baur, ScanSource’s CEO. During last week’s Channel Partners Conference & Expo, they talked about how the two companies are coming together, as well as response from partners.

Intelisys last week announced it is buying the channel assets of Kingcom, a master agent known for its exclusive relationship with Verizon. The deal will give ScanSource a direct supplier relationship.

In a Q&A with Channel Partners, Bradley and Baur talked about what’s been taking place since the acquisition was completed, and what’s ahead in the coming months leading up to this year’s Channel Connect conference.

Channel Partners: What’s the status of integrating the two companies?

Jay Bradley: I think the highlights are a lot of education on both sides. We’re learning a lot about the ScanSource world and vice versa, and finding ways to come together so we can make one plus one equal four, five or 10. It’s been great.

One of the most exciting things we’re doing is our Super 9 cloud education program. We just completed a couple of them where we included 54 different agencies on the traditional partner side, and then in Phoenix a few weeks ago we completed one with 54 of the ScanSource customers or VARs. And the reviews are just off the charts. It’s two different kinds of agendas and tracks, really, because our partners understand the recurring revenue, and the more traditional partners … they’re still learning about the recurring revenue piece. So this education is critical for them. We completed the thing in Phoenix two to three weeks ago and we’ve already got sales, so they get it. I think we had 54 invites that went out and we had 53 people that showed up that were ScanSource VARs. So that’s one of the most exciting things we’re doing right now.{ad}

As we look how to leverage each other’s strengths, and as we come together and integrate the two organizations, education is critical; that’s a critical part of what you have to do. And we get to do it in an environment where people are excited about new opportunities, about new ways to make money, even for our guys on the services side, looking at the hardware opportunities, finding ways to get them credit facilities that they didn’t know they needed or that they could get. Increasing the opportunity for folks to take advantage of our partner investment program. Leveraging the strength and the posture of a Fortune 1000 company as part of the ScanSource family. So these are all things that we’re talking to our partners about and they just couldn’t be more excited.

Mike Baur: What started this was this idea that we believe that end users want to acquire technology and services in a different way in the future. The fact that everything’s connected to the Internet makes it obvious. And every time you see …

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… a presentation on the Internet of Things, it gets kind of exciting because you [think], “How in the world is that going to really happen?” And it’s only going to happen if the channel plays a big role in that. So if you think about IoT, it’s the future and it’s going to require everyone in the channel to play a bigger role if they want to have the business with that incoming customer. If we look at it from that perspective, we knew that when we acquired [Intelisys], it’s going to take a while for things to happen. We just have to learn to work with each other. They’ve got a business that we have done very little at all to integrate. So from an integration standpoint — there’s … no physical integration, they still have their own financial systems, it’s amazing. No one lost their job. This wasn’t a deal of synergies where to make the numbers work we had to lay some people off. Nobody lost their job, so that’s pretty cool.

We’ve made great progress, but man, how do we, as Jay likes to say, put some gas on this fire? And so the Super 9 is a great example of how to do this.{ad}

CP: How does what Intelisys and ScanSource are doing relate to what’s taking place in the channel?

JB: As I’ve told everybody, the channel’s hot right now. The new entrants, some of the cloud providers and others, they’re not even building direct sales forces; they’re coming to the channel and saying you guys be my sales force. And then a lot of the older legacy carriers are moving toward the channel, and they’re relying on us more and more. So the timing of the acquisition last year was perfect because we wanted to leverage more resources, and go bigger and make bigger investments, and that’s what we’re doing.

There’s no lack of opportunities in the channel, it’s about choosing ones that you can go fastest with and that will mean the most in the long term. Our partners are more successful than they’ve ever been, and they love this education and they love what we’re doing for them. They love the scale that we’ve brought through our acquisition, so they’re happy campers, they’re in a good place.

CP: Is the ScanSource-Intelisys acquisition an example of M&A done the right way?

JB: I think we found some magic, so I don’t know if we can comment on is it the way it should be done. But our two organizations, the cultures, the way we think, the way we act, the way we approach problems, the way we would look for opportunities, the way we invest — all of those things as we went through the negotiation of this deal were very similar. Our co-founders have roots in Greenville, [South Carolina] — one of the first providers they ever went to market with was a Greenville-based company. So they really understood the culture and the kind of people that were down there, and when you look at our two companies’ histories, they’re actually very similar. We’ve been around similar amounts of time; we’ve been strictly channel, we don’t sell direct, [and] we don’t compete with our partners.

CP: What’s going to be taking place heading into this fall’s Channel Connect?

JB: I can tell you the education will continue because …

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… we’re getting such incredible feedback on it. So we’ll double down on our cloud education, we’ll double down on more education about the ScanSource side of the business and that world for our partners. That was maybe one thing that surprised us a little bit. We had a number of our partners that said, “How can we take advantage of what ScanSource brings?” And so we’re going to continue that part of the education.

We learned several years ago when we first really started looking at the VAR community, their businesses are not that different than our businesses, it’s just a different perspective. These are scrappy entrepreneurs and the ones who do the best have the best entrepreneurial spirit. They never say die. They’re completely determined, they’re good people, they’re providing jobs for their communities, all those kinds of things. So part if it is that cross-pollination and really just showing them how to learn about each other and have fun. A big part of Channel Connect, of course, is having fun, getting people into an environment where they’ll let down their guard and they’re willing to talk to folks about what they’re doing and where their success is coming from. So that’s what Channel Connect is, an opportunity to network and really learn about what your peers are up to. So a lot more of that you can expect.{ad}

MB: We’re in the listening and learning mode. At ScanSource, by the way, we were doing very little in the cloud because we’ve been listening to our vendors, our existing telecom suppliers, talk to us about what their cloud strategy was and we wanted to be sensitive to that. And Intelisys and ScanSource have always had a tremendous relationship with our suppliers. We spend a lot of time understanding what their strategy is for go to market. And now, we’re at the point where the suppliers are asking us. It’s changed. So we’re now in this convergence place where we’ve got VARs and agents, and they have unique knowledge that, when we combine it, we’ve got something more valuable than we ever had separately.

The ScanSource suppliers and Intelisys suppliers are really interested and curious, and almost too excited. We’ve got to figure out, how do we pace everybody in a way that makes sense? Because we’re almost ahead of ourselves. So we still have some listening and learning to do. And that’s why I love the education tracks because it gives us a chance to try stuff out. And what ScanSource has been good at for many years and the reason we attracted these guys is they needed some more fuel long term, which was capital, and organizational capital, and more talent. And we think that we now have the ability to scale this thing to a size that has not been seen in the telecom industry. These guys, already the biggest, are going to be massively big over the next three years, so stay tuned.