The enterprise value of a solution provider focused on traditional hardware transactions is half of those that add recurring revenue, and existing customers that need managed services represent a huge market opportunity for ScanSource partners.
That was a major theme of CEO Mike Baur's message this week at the distributor's Global Partner Conference in Greenville, S.C., where many partners gathered to learn more about how they can incorporate recently acquired telecom master agent Intelisys into their solution offerings.
"It's not easy, but there is a tremendous financial reward," Baur said on stage during his keynote address. "What we're doing I hope is something of a model [by which] you can add recurring revenue and services. Your bottom line, gross margins and operating income can all improve dramatically."
Baur highlighted several as-a-service markets around which ScanSource sees lucrative opportunities for the channel, including the $49 billion managed services market, the $100 billion enterprise mobile apps space and, farther down the road, a $14 trillion opportunity in the Internet of Things. Baur told CRN separately that his company plans to work toward offering an IoT solution for health-care, retail and manufacturing companies.
To take advantage of that recurring revenue, however, Baur said ScanSource partners need to rethink how they've been programmed to sell to their customers, many of which prefer to work with a single trusted partner that can provide a wide range of services.
"There's a lot of those customers out there today, that you have sold to over the years, that might need these other products and services and they may work with someone that doesn't look like you," he said.
Adjusting to a smaller-but-steadier stream of cash will be "hard sledding" for solution providers accustomed to transactional-based revenue spikes, Baur admitted. But the advanced commissions provided by Intelisys to its sales partners, as well as a ScanSource partner investment program determined by how much recurring revenue a company drives through ScanSource, are meant to make the shift easier for legacy partners.
"ScanSource VARs that want in, we're showing them where the on ramp is and putting out some milk and cookies and letting them know we're a friendly place to land," Intelisys co-founder Rick Deller later said on stage.
Adler Archer, CEO of Baltimore-based IT consulting firm Allasys, said his company has already established some recurring revenue agreements in its dealings with federal government agencies and SMBs, particularly around networking and security. He said he was "definitely" interested in learning more about how he could tap into Intelisys' lineup of products and services.
"A lot of it is the requirements to be able to resell their product," Archer told CRN. "There are different revenue goals and different time frames you have to consider, as far as experience goes."