Intelisys Steps Up Carrier, Cloud Services With Higher Up-Front Commissions

Intelisys Monday introduced a new partner program that helps solution providers ease into the recurring revenue model and overcome the cash flow challenges that come with taking the leap to selling cloud and carrier services.

Intelisys' new Advanced Commissions Program, unveiled Monday at UBM Channel's XChange 2013 event in Washington, D.C., lets Intelisys partners choose how they want to receive commissions on cloud and carrier service deals.

The aim of the program, Intelisys said, is to help solution providers maintain the up-front cash flow they've traditionally relied on to run their business, while still building up a long-term recurring revenue base.

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"The biggest challenge for VARs has been how to adopt this recurring revenue idea without crushing the cash flow that they have today. That has been the biggest hurdle that most VARs have when they look at pivoting to a recurring revenue model," said Andrew Pryfogle, senior vice president and general manager, Cloud Services and Complex Bids, at Intelisys."We've been talking with hundreds of VARs around the country and we have been formulating what would be the appropriate way to tackle that challenge for them, and that's what we are announcing at XChange."

The new program, Pryfogle said, is actually a revamped version of an Advanced Commissions Program Intelisys already had in place. Through the traditional program, Intelisys would start paying solution providers monthly residual commissions on a deal as soon as the deal was booked, rather than having partners wait the usual five to six months it often takes for these residuals to be paid out.

Through the new program, however, partners can choose to receive a one-time up-front payment, worth up to 60 percent of the total value of the deal, in lieu of these residual commissions. They also can choose a combination of the two, receiving a smaller up-front payment and smaller residuals.

Intelisys is offering a calculator tool for partners to determine the best model for them, and partners can adjust their payment model on a deal-by-deal basis. "They can adjust those levers between up-front and residuals as they want," Pryfogle said.

Intelisys, Petaluma, Calif., is a master agency that's traditionally partnered and gone to market through telecom agents. But the company also has started to build a reputation in the channel as being a master agency that puts a lot of muscle into helping traditional solution providers embrace the fast-growing cloud computing and carrier services markets Earlier this year, Intelisys introduced its Channel Alignment Program, which pairs solution providers with an Intelisys telecom agent to help add cloud and carrier services to their portfolios with minimal impact on their day-to-day business.

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Jason Kraft, director of carrier services at FusionStorm, a San Francisco-based solution provider that created its own carrier services practice in 2007, said Intelisys' Advanced Commissions Program seems like a great way to incent solution providers to take a similar leap.

"FusionStorm was an earlier adopter in terms of bringing in a carrier services team into a VAR, but I think if there were programs like this back when we started, it would have absolutely given us even more incentive to invest and grow that business quicker," Kraft said. "The Advanced Commissions Program is really going to be a catalyst in getting more and more VARs signed up."

Mike McElaney, director of carrier services at Presidio, a New York-based based national systems integrator with its own carrier services practice, said the new Advanced Commissions Program will help ensure consistency in commission payment models for Presidio's IT infrastructure account managers and carrier services account managers.

"It resonates across Presidio because commission dollars are traditionally paid in full 45 to 60 days after the sale is closed," McElaney said. "A lot of times the carrier services solutions that we sell are tied directly to the infrastructure projects we are working on, so the IT infrastructure account managers and the carrier services account managers want to be paid the same across the board. Residual payments on carrier services sales does not allow for that." For those solution providers that have embraced cloud and carrier services, the investment is paying off. Tim Kennedy, vice president of carrier services at Carousel Industries, an Exeter, R.I-based solution provider, said Carousel has been investing more heavily in carrier and cloud services over the past few years, with the benefits of that investment really starting to show.

"Carousel has been in business 20 years and we have always been an IT services, voice, video, data and managed services company, but carrier services was relatively new," Kennedy told CRN. "We sold carrier services quietly, without much focus or manpower for several years, but I joined the company about five months to really accelerate our carrier services group and scale it across the country."

Kennedy said that Carousel's carrier services practice has "absolutely" been growing, and that sales in the second quarter were up 42 percent over the first. Kennedy said much of that growth was driven by customer interest in cloud, business continuity and SIP migration services.

FusionStorm's Kraft noted that taking the leap to cloud and carrier services isn't just a smart investment for solution providers, but a necessary one.

"As carriers start to do more in equipment and as cloud becomes more pervasive, traditional carriers are starting to do more business in the world VARs live in," Kennedy said. "And if VARs don't pivot and start offering some of those services themselves, they're going to start missing out on hardware opportunities, too."

Meanwhile, Intelisys' attempts to lure IT solution providers to the carrier and cloud services world through programs like Advanced Commissions, appear to be working. Intelisys' Pryfogle said the company has on-boarded roughly 200 new solution provider partners in the past 18 months.

"It's really starting to accelerate. We are growing by 25 percent a year, and it used to be that 99 percent of that revenue was from the telecom agent community," Pryfogle said. "Our growth now, easily 10 [percent] to 15 percent is coming from the VAR community, and we expect that to accelerate at a much, much faster pace."