ScanSource is pushing its agent partners to sell hardware in addition to cloud and carrier services. The IT distributor may have finally cracked the code on bundling equipment with services after years of trial and error.
“Technology distribution is being transformed with the convergence of hardware, software and services,” ScanSource Chairman and CEO Mike Baur said last week, during the company’s Q1 2026 earnings call for the three-months ending Sept. 30. “As IT, connectivity and cloud computing markets continue to converge, we believe that end users will prefer channel partners who can provide integrated, converged solutions.”
ScanSource is banking on a multi-category sales boost. The company’s net sales declined 4.6% year-over-year to $740 million although its gross profits grew 5.8%.
“We keep seeing these large deals push out or break up,” Senior EVP and CFO Stephen Jones said during the earnings call. “They're not getting canceled. And so that gives us confidence that this is a timing issue, not necessarily a weakness in overall demand.”
Cross-sell efforts
ScanSource’s efforts to promote agent sales of hardware goes all the way back to its 2016 acquisition of tech services distributor Intelisys.
ScanSource historically worked with value added resellers, who sold hardware for networking, communications, barcode, point-of-sale and physical security. Intelisys gave ScanSource a new agency route to market and a community of TAs that historically sold network and IT services.
In the Intelisys agency model, the vendor pays the partner a monthly commission and directly bills the end customer, while value added resellers buy and resell an offering — typically in a one-time deal — and perform invoicing.
ScanSource wants partners to merge the two selling strategies.
To encourage this convergence, ScanSource adjusted its invoicing system to make it easier for TAs to embrace a hardware portfolio they historically resisted, Baur told Channel Dive in an interview.
“We've been talking about this for years. We wanted VARs to become more like agents. We wanted agents to become more like VARs,” Baur told Channel Dive.
Cross selling has proven easier for the VARs — particularly as the unified communications market forced them to move on-premise hardware to agency-heavy unified communications service vendors. As of 2022, more than 540 ScanSource VARs have sold a deal through the agency model.
TAs, however, have proven a tougher nut to crack. Some agents told Channel Dive that they aren’t interested in hardware margins, which are lower than those in the Intelisys portfolio. The logistical challenges and financial risk of reselling hardware made the prospect even less appetizing.
“They don't want to build a billing system. They don't want to take inventory. They don't want to have to get a bank line or a line from us to give credit to their end user,” Baur said.
ScanSource’s new billing capabilities, which ScanSource initially piloted for software, lower those financial hurdles.
The company launched a Channel Exchange SaaS marketplace late last year, expanding on a Microsoft-focused platform that partners used for cloud licensing. Many of the vendors in Channel Exchange were interested in selling through agents but wanted a resale model instead of a commission-based system. ScanSource in the Channel Exchange model resells the vendor’s product and pays the agent a commission.
ScanSource is using the SaaS marketplace as a blueprint for hardware.
“This will look just like the way they built their company to do with all the other technologies they've been selling,” Baur said.
As the plan moves forward, ScanSource will have to overcome accreditation challenges. Vendors selling through agents typically do not require certifications; while reseller-focused vendors typically do. Baur said his team is convincing hardware suppliers to count ScanSource’s certification as a proxy for TAs.
The devil in the details
Some Intelisys TAs sell hardware but not through ScanSource.
TeamKC Telecom founder Cynthia Ferrell partners closely with a regional VAR for her clients’ hardware needs. The referral partner takes care of Fortinet hardware and licenses, Zyxel Access points and switches, and storage access networks. She earns 40% gross profit on the deals and said she would have earned more from that arrangement than reselling through ScanSource.
Ferrell added that ScanSource provided quotes without deal registration. Maintaining a state resale license was a hassle not all TAs want to deal with, she added.
ScanSource intends for agents to increase their margins, Baur said.
The executive met with a group of agents last week who all signaled their interest in hardware sales. The sudden interest is driven by customer demand, Baur said. SMB customers increasingly need help with on-premise solutions, said Colombo DiSalvatore, founder and president of C4 Communications, who was in the meeting with Baur.
"As a long-time Intelisys partner who once swore I’d never roll a truck with a C4 logo on it, I’m warming up to the idea of selling hardware,” DiSalvatore said in an email.
