Q&A: ScanSource CEO On How Partners Will Profit From Mobility

All of ScanSource's major business lines are touched by the mobility trend in some way, so it was no surprise that mobility solutions were the big theme of this week's ScanSource partner conference in Greenville, S.C.

As ScanSource CEO Mike Baur sees it, solution providers need to focus their energies not so much on iPad but what surrounds iPad, and figure out how their expertise contributes to that infrastructure solution, whether it's security or data capture or app development.

Baur was one of the original six employees of ScanSource when it was founded in 1992, so the celebration of the distributor's 20th anniversary this year holds special meaning for him. He was president from the beginning, presided over ScanSource's IPO in 1994, became CEO in 2000, and yielded the president title in 2007, all the while overseeing steady growth and addition to ScanSource's varied holdings via acquisition.

These days, ScanSource is a roughly $3 billion value-added distributor still very much focused on infrastructure and communications but building its businesses particularly in UC, video, POS systems, mobility and security, and expanding its international footprint further into Europe and Latin America. ScanSource overall has about 1,500 employees.

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Baur joined CRN Editor At-Large Chad Berndtson for an interview during the Greenville event this week.

CRN: There's lots of opportunity for solution providers in mobility, we've established that, so where do you see ScanSource partners having the best opportunity to make money, especially if they aren't Apple resellers?

Baur: So let's talk about the POS and cash register and data capture side of the business. They're excited right now because retailers are actually buying technology. It isn't iPad from them but, well, here's an example: I spoke to a partner last night who sells software to manage beverage inventory at restaurants. He wants to link that to the iPad and to the backroom management so they can track trends and what people are looking at and how they're buying. An iPad, our channel makes nothing on, but they're looking at what else can we surround the iPad with. I asked a partner the other day, 'Why do you have all these iPads here in your office if you don't sell them?' He said customers want them, and I'm their trusted adviser so I have to understand this. It's a little scary at first, but there is so much opportunity around it.

CRN: So the play is understanding the infrastructure that goes with iPad and mobile devices?

Baur: Yes. The integration of the IT infrastructure and applications and software systems isn't clear to a retailer. Our channel has a great opportunity to do that.

CRN: And the profits are good in that end of their business?

Baur: I think so. And another thing is this: I had a reseller last night who said, 'Mike, I'm asked by my customers to configure their iPads and provide them the [software] to handle that piece of it.' That reseller in turn is dealing with a larger partner who's taking its software and making it part of their overall deal. Customers are asking for that, so partners get together and find a good opportunity.

CRN: Do you expect to see more of that type of behavior, with partners leveraging each other?

Baur: It always looks like it's going to hurt business, but the truth is that there is so much more business potential. You are their systems adviser and everything that goes with that. That's part of the reason that with mobility we're seeing demand in all of our wireless business. Our Aruba sales are up, our Ruckus sales are up, our Cisco wireless sales are up, everything. Wireless is driving new infrastructure choices and customers -- if they haven't already -- are finally saying, maybe I do need to enable my retail shop.

NEXT: ScanSource Cutting Security Vendors

CRN: How often are you seeing partners engage at the application level? What is the opportunity for partners who don't have app dev practices or aren't ISVs?

Baur: Of the 300 or so partners you see here at the conference, over half of them, maybe 70 percent, have an app dev focus or some kind of relationship. There is still another technology play around the endpoints -- there's such a difference for a mobile, rugged device with a battery that lasts eight hours and has business productivity apps. So our customers are well positioned to take advantage of that opportunity, and some of them that don't do app dev will start to do more of that.

CRN: Is ScanSource encouraging that?

Baur: Absolutely. That's part of our AppSource offering where we can offer resellers the opportunity to download and demo apps with no commitment.

CRN: So is it safe to say the role of distribution going forward, especially in mobility and cloud, will be to enable these types of things as well as the fulfillment? Another program of yours partners keep mentioning to me is Sumo, your portal for connecting partners in similar disciplines.

Baur: The table stakes are fulfillment, credit, things like that. We want to be a company where we can share ideas, and to create opportunities among partners who can find partners a lot like them. Out in the global markets, one thing we're driving is focusing on customers already in practices like health care and how to better bring technologies to the vertical. We see that as, 'How do we add to your business strategy?'

CRN: Seems like you'll be driving those partners to get deeper into their verticals and really specialize, then.

Baur: I want these guys to grow. If these guys grow, we're in good shape.

CRN: One of the things that resonated with a lot of the partners here was during the keynote portions where you and Greg [Dixon, ScanSource CTO] mentioned how vendors like Google, with Google Wallet, are becoming more relevant to the mobility conversation than ever. You have to be out in front of which vendors to work with, so are you happy with your vendor mix now?

Baur: I think we are happy. We're adding vendors in markets and in places like accessories but not really strategic vendors. In our security business, we're actually dropping vendors -- we've had too many. We think that's a better strategy. There's only so much bandwidth we have. I think at the beginning we thought we were going to need 300 to compete in security so we signed too many. We've also got vendors who, over time, will come to us when we're thinking of bringing on someone that does this or that, and some will say to us, 'Hey, you know, we do that already.' A vendor that can see someone like a Google as a threat and turn it into an opportunity for us to do more with them is usually good for both of us.

CRN: Are there other areas you're cutting vendors? Wireless, for example?

Baur: No. Every one of those guys in wireless has grown -- that's the fastest-growing part of our business this year thanks to BYOD and everything we've talked about here. Everyone has a different wireless strategy and they're actually all doing well.

CRN: There's enough segmentation between your Cisco, Aruba, Meru, Ruckus and other business lines to make them all valuable for you?

Baur: I wouldn't have thought so, but yes. Each has a niche that's big enough right now.

CRN: You highlighted ScanSource's acquisition history during your keynote and lots of distributors are making strategic buys right now. Will ScanSource need to make more?

Baur: I think we've got the right platforms for growth and the right people so I don't think we need one today. Our history's really been to acquire to get into a new geography -- we're not in Asia-Pac today, for example -- or to gain expertise in a new technology.

CRN: Is Asia-Pac a priority for ScanSource?

Baur: Not right now. It is something that will take a look at, but right now Brazil is the international priority. It's a huge market.