When ScanSource finalized its blockbuster Intelisys acquisition less than 18 months ago, Buck Baker thought his legacy partners would have few issues building practices around the master agent's telecom and cloud services.
The president of the ScanSource's Worldwide Communications and Services business has since learned that the transition from transaction-based hardware deals to recurring revenue is often a slow, complicated process for many solution providers.
"You have to find some expertise there. You have to make the investment," Baker told CRN this week at the company's Global Partner Conference. "We're finding out from Intelisys that it takes a good bit of time. You might break even in 18 months, but you're probably not going to see a return on your investment for about three years. That took me aback, to be honest with you."
As a result, the Greenville, S.C.-based distributor has begun encouraging an alternative strategy for solution providers hesitant to make that recurring revenue investment right away: Partner with Intelisys agents who already know the ropes.
Baker said several agents have already expressed interest in teaming up with locally-based ScanSource partners. CRN found that multiple agents were attending the company's event this week for that very purpose, as well.
"You can start doing that and create a revenue stream," Baker said. "The agents have been great in helping VARs do that. I was a bit taken aback that agents were so willing to help the VARs get into (monthly recurring revenue) … a large number have raised their hands and said, 'Do you have a VAR in my area? I'm willing to sit down and talk to you.'"
Interested partners and agents then work with Intelisys channel managers, ScanSource business development staff to align both sides of the partnership.
This week's partner conference featured a panel of four Intelisys Platinum Partners, who fielded questions from ScanSource resellers and discussed the benefits of teaming up with an agent. Partners are not required to make upfront capital investments, mitigate financial risk and protect existing clients from potential being poached by possible telecom and cloud competitors, they said.
Best of the Best! Intelisys Platinum Partners @onwardcom, @gcgcom, @LanYapNetworks and @DM_Enterprise present at #ScanSourceGPC on the benefits of teaming with Intelisys Sales Partners as they build out their carrier and cloud practices. pic.twitter.com/91dtod4b0R
— Intelisys (@IntelisysCorp) November 10, 2017
Jeff Willis, president and owner of Memphis-based Direct Connections, said he is more inclined to partner with an agent until his business gains a firmer understanding of recurring revenue cloud deals. But the prospect of sharing revenue did give him pause.
"Am I going to have a partnership with them where recurring revenue is going to be in a shared environment, because of the resources they provide and the decision-making connectivity that they have, but it's going to be they're keeping a significant part of the recurring revenue? Or am I going to learn some applications and ways to drive it, and then our team takes it, and we own the margins side of it?" Willis told CRN. "I need to understand how that model works. Normally, I'm going to want to drive as much margin to the business as I possibly can. It might be we need to get qualified at a certain level so that we can take more of a stronghold of it and run it ourselves."
For partners that want to build their own cloud and carrier service practices, ScanSource intends to support them in a handful of ways. CEO Mike Baur highlighted the advanced commission program Intelisys provides to its sales partners and a ScanSource partner investment program, based on the amount of recurring revenue driven, during his keynote address.
Also, the distributor offers training programs for partners that want to jump into the cloud market. The Cloud Services University, created and managed by Intelisys, features course and certification tracks that educate sales partners on the ins and outs of the cloud business.
Within that program is Super9: peer education groups of nine geographically dispersed partners that help each other set ROI expectations, structure field compensation plans, discuss sales strategy and network with industry colleagues. ScanSource and Intelisys have more Super9 education sessions planned for 2018, including sales, technical and security-specific training conferences.
"Most VARs, if they don't have a recurring revenue stream and they've not built that practice, it's as hard for them as it would be for me to figure out how to comp their field around that," Baker said. "Then, how do you set that individual up? What should be the expectation for the return on that investment? That's what Super9 and the Cloud University help you do."
Intelisys continues to operate as a standalone subsidiary of ScanSource. Baker applauded the aggressive pace of the master agent's sales charge, which will include channel and engineering team additions shortly, and said he has no intentions of limiting their independence.
"ScanSource VARs that want in, we are showing them where the on-ramp is, putting out some milk and cookies and letting them know we're a friendly place to land," Intelisys co-founder Rick Deller told partners during the conference's general session.