Intelisys On Being Acquired By ScanSource: 'We're Going To Need A Bigger Boat'

On the heels of the news that master agent Intelisys is being acquired by IT distributor ScanSource, the two companies are reveling in the possibilities of how combining an IT services and hardware provider with a telecom and cloud solutions provider will disrupt the industry.

ScanSource's purchase of Petaluma, Calif.-based Intelisys for $83.6 million, plus earns-outs, points to a palpable evolution within the channel, executives at the two companies told CRN Monday.

Referring to the deal as a "watershed moment" in the channel, master agents and IT distribution organizations will start to blend together to more succinctly fulfill a business' IT needs, according to Mike Baur, CEO of ScanSource.

[Related: Partners: ScanSource-Intelisys Deal Unlocks Recurring Revenue Bonanza]

For Intelisys, which will now have the reach to bring more partners on board with recurring revenue opportunities, the master agent is "going to need a bigger boat," Intelisys' president Jay Bradley enthusiastically told CRN

Intelisys has a robust channel of more than 1,800 solution providers – also known as telecom agent partners -- who have already cracked the recurring revenue code. For this partner community, the merging of Intelisys with a large IT distributor means more services, greater reach and more credibility, solution provider partners told CRN.

Tricia Ward, founder of Onward Communications, a telecom and cloud consulting firm and Intelisys' first Platinum Partner, said the deal will be huge for the channel as a whole. For her company, the acquisition brings the security of working with a larger company and more cloud sales opportunities.

Portland, Ore.-based Onward Communications is primarily selling cloud services today, representing between 70- 80 percent of sales, Ward said.

"With ScanSource's VAR relationships, I think this means I can get to more cloud services and partnerships, and maybe even new products, so I can grow faster than I probably could have before," she said. "I see a huge upside."

The telecom agent partner community is intrigued by what ScanSource has to offer, including the possibility of bundling new products and services for their business customers to fulfill all their IT needs, said Intelisys president Jay Bradley.

"Some [telecom agents] will start selling hardware and some won't, but many will feel really equipped with both scale and product both on the hardware and the connectivity side," he said. "I think as these partners learn about the distribution side, they'll be telling us what gets them excited."

The benefits of the deal are immediately obvious to ScanSource's VAR partner community who may have "dabbled" in cloud and connectivity services, but have largely left these opportunities untouched, Baur said.

Now, Intelisys will have much better access to the VAR partner community, too, Bradley said. Intelisys has been offering its Advanced Commissions program to VARs that need help adjusting to the recurring revenue model. Under ScanSource, Intelisys will be able to scale programs like Advanced Commissions to reach more partners, he said.

VAR partners will also be able to reap the benefits of Intelisys' Cloud Services University, a cloud training program for solution provider partners that was the brainchild of Intelisys' senior vice president of cloud transformation Andrew Pryfogle.

"We've been working hard to get VARs excited about the recurring revenue game, but frankly, it took a lot longer to figure out how to help them be successful actually selling," Pryfogle said. "Education is a big part of this … and [it's] moving the needle in our partner community. We can't wait to apply that same commitment to education to the ScanSource community."

RDS Solutions, a telecommunications solution provider and Intelisys Platinum Partner, predicts that the acquisition will allow Intelisys to put even more resources behind its all-important training programs, like Cloud Services University, said RDS co-founder J.R. Vernick.

"ScanSource is spending that money on [Intelisys], and there's a reason for that – Intelisys has done great in the cloud and telecom space," Vernick said. "I think ScanSource is going to go to their partner community and try to get them on-board with the recurring revenue model."

While many VARs have a lot of cloud learning ahead, these partners have clients relying on their IT expertise every day, Pryfogle said.

"These clients trust them with IT decisions, and when you start to add on cloud and connectivity services to that conversation, it will be a natural option for them when [VARs] come off of that learning curve, and we are committed to helping them do that," Pryfogle said.

To that end, ScanSource intends to let Intelisys continue to "do what they do best," Baur said, including keeping the Intelisys leadership team in place to head up the cloud and connectivity business arm at ScanSource, according to the two companies.