The proposed ScanSource acquisition of Intelisys Communications – think compute distributor plus cloud and connectivity distributor – is viewed by many as a sign of the times.
ScanSource CEO Mike Baur made no bones about his company’s acquisition strategy, which is to purchase what the company is missing, i.e. the opportunity to sell cloud and carrier services.
Both ScanSource and Intelisys are interested in broadening their solution set and customer base in the SMB market, where current telecommunication spending is about $150 billion and growing.
As Jeffrey Kaplan, managing director of ThinkStrategies notes, the world is becoming more data driven; the demand for greater and better integrated compute and connectivity capabilities is escalating. At the same time, businesses would prefer to reduce the number of suppliers they must rely upon.
“So, this merger is an effort to give customers a strategic source that can supply both their compute and connectivity solutions via the cloud. It can also strengthen their ability to sell and deliver recurring revenue services," he pointed out.
But what will it take for partners to take advantage of selling a combined compute-connectivity solution and do they view this deal as rosy as the distributors do?
“It takes a different set of skills," Kaplan said. "First, the sales person has to be knowledgeable re: both compute and connectivity requirements and solutions. Second, the recurring-revenue model means the sales person isn’t going to get the same level of compensation as in the past because of the way the revenue is recognized."
Therefore, the sales person will need to win more business from more customers. This often means that partners must rely on younger sales people who have lower compensation demands, he suggested.
Chris Ichelson, co-founder of Horizon Technology Group (HTG), a hybrid solutions provider selling both in the telecom space and the IT VAR/security space, sees a skewed number problem with the ScanSource-Intelisys deal. HTG works with both Intelisys and Telarus on the telecom side.
“There’s something funny about the deal … the issue I have with it is ...