ScanSource-Intelisys Deal Shines Light On Solution Selling, Hardware Opportunities for Agent Partners

The convergence of the IT and telecommunications is influencing the traditional VAR community to include connectivity and services-based offerings in their portfolios. But the ScanSource-Intelisys acquisition now has some agent partners curious about selling hardware, too, according to the two companies.

At the Intelisys Channel Connect partner event in Napa, California last week, ScanSource's Buck Baker, president of worldwide communications and services, said that the concept of building a hardware practice has been surprisingly well-received by the Intelisys agent partner community, who primarily have been selling only services-based solutions.

"We weren't expecting this interest level on Intelisys side as we've seen here at [Channel Connect], and we think that's a great thing, but to be frank, we were a bit taken aback by it," Baker told CRN.

[Related: ScanSource To Intelisys Partners: 'We Live To Serve You']

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The level of interest in hardware also came as a "pleasant surprise" to Intelisys, according to Jay Bradley, president of Petaluma, California-based Intelisys. For the first time during its annual partner event, the master agent held two crowded sessions for agents on how to get started building a hardware practice last week.

ScanSource's breadth of products and global reach will go a long way in helping partners go from agent partners selling connectivity to complete solution providers that also offer hardware, according to Joe Monaco, CEO of The Monaco Group, an IT consulting firm and Intelisys partner in the audience at Channel Connect. Monaco said he planned on attending one of the hardware sessions during the event.

Boca Raton, Florida-based Monaco Group is already selling some hardware -- specifically, the company is a Palo Alto Networks VAR -- but the partnership between an IT distributor and a master agent will help partners put complete solutions in front of customers, Monaco said.

"This really allows you, during a customer meeting, to open a new door for more discussion and opportunity," he said. "It gives [partners] a faster path to being a trusted advisor."

There's no denying that software and cloud are eating into hardware margins, so the value of the ScanSource-Intelisys deal is obvious for VAR partners, according to Mark Morgan, vice president of sales for ScanSource's communications business unit, who led the two breakout sessions on building a hardware practice last week.

"Nearly 100 percent of the things that ScanSource sells requires connectivity, but we've been stepping right over connectivity," Morgan said.

At the same time, however, agent partners are stepping over hardware that would complement their portfolios, such as unified communications (UC) headsets and desk phone endpoints. For agent partners interested in hardware, the easiest point of entry in hardware solution selling will be around cloud and hosted voice solutions, he said.

"If you're allowing customers to go somewhere else, or to someone you don't see as being a competitor, like an IT distributor, you're allowing others to come in – we can plug some of those holes," Morgan added.

Building a hardware practice won't happen overnight for agent partners. These partners still need to meet certain requirements and receive authorization from IT vendors. Additionally, agents will need a reseller certificate, something that many agent partners don't already have. ScanSource said that while it has yet to work out all the details, it is ready and willing to help agent partners with this new endeavor.

ScanSource is working "feverishly" to figure out how to make hardware selling a reality for interested partners, Baker said. The company is putting together teams that will focus on helping and educating agent partners on how to build successful hardware businesses.

Agent partners will have access to ScanSource's business development managers located across the country who are advocates at the vendor level, as well as dedicated product managers that can help with marketing funds, training and education. Partners can also work with financial managers to establish credit terms, Morgan explained.

ScanSource is interested in working with Intelisys partners to learn about agent selling models, and how this model could potentially translate to hardware selling. One way that could be appealing to agents is bundled solutions, or hardware-as-a-service selling that would still provider partners with the familiar recurring revenue model.

"If we can find the right formula for building out a hardware-as-a-service unit for you, that would be the right route. I think something like hardware-as-a-service really fits what you're doing today," Morgan told partners.

Of course, not every agent partner will be interested in adding hardware to their portfolios, acknowledged ScanSource's CEO Mike Baur. With that in mind, both Intelisys and ScanSource are working to bolster existing programs – including the Partner Investment Program -- and potentially putting new programs in place aimed at helping both VARs and agent partners grow their business. Among these plans is a portal that could be used to broker deals between agents and VARs so that agent partners can still earn a percentage on hardware deals, without with stocking hardware or handling returns themselves, Morgan said.

At the same time, many Intelisys partners have existing relationships with ScanSource VAR partners, in addition to partners of other large IT distributors in which partners exchange referrals back and forth. These relationships will continue to be encouraged, and the ScanSource-Intelisys deal will help take those relationships to the next level, Intelisys' Bradley said. "We are building programs that work for everyone, but we are going to be very deliberate and take our time with it," he said.