The document discusses how companies can help their customers adapt to new realities in the current economic environment. It emphasizes the need to (1) deeply understand customers' challenges and strategies, (2) deliver balanced solutions that create value without compromising other priorities, and (3) provide expert project management and support. Acting as a "fulcrum" to help customers pivot strategically and implement solutions successfully position companies and their partners to succeed.

2. Intellectual Property All materials from this deck are confidential and for intended use only* and cannot be distributed outside this use without prior written consent of ScanSource. * Copyright © 2010. All Rights Reserved. Unless expressly authorized in writing by the copyright owner, any copying, reproduction, exhibition, export, distribution or other use of this product or any part of it is strictly prohibited. External sources and external trademarks are the property of the referenced sources. ScanSource, Inc. Confidential

3. The New Normal JEFF YELTON

4. Is there a New Normal? CONSUMPTION APPETITE FOR RISK USE OF LEVERAGE

7. Don’t be fooled. This is Normal

8. VAR Sales Process Repeat Business Prospecting Qualifying Proposal Decision Initial Sponsor Identified Value Demonstrated & Proposal Submitted Vision & Access to Decision Maker Signed Contract Outcomes/Goals Customer Identify Business Needs Determine Requirements Evaluate Options Negotiate Implement and Evaluate Success

9. ScanSource Investments in the Core Business

10. Business Transitions on Three Dimensions Installed Base Existing Technologies New Technologies New Categories Of technologies Existing Clients Solutions Driven New Clients Services Driven New Markets Product Driven

11. Cash Costs of Growth Existing Clients New Clients New Markets Existing Products New Products New Technologies Source: Channel Corp.

12. Business Transition Hardware BUSINESS MIX Software/ Services Break/Fix Software Consulting HaaS SaaS TIME

13. Business Transition Hardware BUSINESS MIX Software/ Services Break/Fix Software Consulting HaaS SaaS 1990’s Hardware Break/Fix Help Desk 2000-2010 Software Vertical Solution 2010 > SaaS HaaS Consulting Specialization TIME

14. Partnering to Increase Return on Cash Solution Revenue Return on Cash Solution Cost Profit Gap Make Your Self Partner TIME

15. Partnering to Increase Return on Cash Solution Revenue Return on Cash SCANSOURCE INVESTMENTS: SUMO Community AppSource HaaS ISV Program ScanSource Payment Solutions Solution Cost Profit Gap Make Your Self Partner

16. ScanSource Payment Solutions Suite Hardware Software Services Mobile Payments POS Solution

20. ScanSource Global Partner ConferenceTHE FULCRUM STRATEGY Chris Rezendes Executive Vice President

21. 21–  2009 VDC Research Group, Inc. Auto ID & Transaction Automation Practice By Way of Introduction VDC RESEARCH 1971 Mobile/wireless, AIDC, industrial and retail networks, embedded platforms 1,000 clients annually …90% technology suppliers, tech investors Chris Rezendes, Executive Vice President 19 years experience in embedded, industrial, defense and other mission critical and high available technology industries 14 years experience in senior management and leadership positions at a number of IT systems and professional services organizations 2 years DARPA contracting Chris has advised many of the largest and most respected technology companies in a number of technology segments worldwide Chris is a graduate of Harvard University

22. 22–  2009 VDC Research Group, Inc. Auto ID & Transaction Automation Practice Post-recession economy drives new realities The economic pressures felt in 2008 and 2009, and the accelerations of select customers out of the recession have set in motion a shift to new realities Financially stable enterprises are being given a unique opportunity to leverage the current economic climate to catch-up with or establish ‘new’ industry standards for sourcing and installation of automation technology – and they are doing it Agile technology suppliers and their integrator partners have that same unique opportunity … if they can develop, deploy and support customers in their new realities If they can help customers can pivot and accelerate … with balance … if they have a FULCRUM … if you can become that fulcrum … YOU win Your customers need to make changes … and they need help to do it

23. New Reality: Times Remain TURBULENT Consumer Demand for Value and Service Disposable Income and Consumer Credit Point ofDecision Point of Sale Point of Service:Delivery Point of Service:Selection Decision/Service and Sale Merging FunctionallyFragmenting Physically 23–  2009 VDC Research Group, Inc. Auto ID & Transaction Automation Practice

24. New Reality: OPERATORS Drive Technology Decisions High citation rate of top execs might be because our sample is stratified by Tier, but, that does not explain the involvement of Operations executives … Market views on AutoID, mobility and retail automation investments are changing: Becoming more strategic than operational Within the operational domain, more critical The Non-IT Directors include a mix of front-end and back-end managers Logistics Marketing Merchandising Promotions 24–  2009 VDC Research Group, Inc. Auto ID & Transaction Automation Practice

25. 25–  2009 VDC Research Group, Inc. Auto ID & Transaction Automation Practice New Reality: Customer STILL cannot afford any imbalance In a word, it means the aggressive pursuit of balance in those strategies and tactics that influence customer experience Inventory management/ cost reduction OR out of stock mitigation? Enhanced digital OR on-site experiences? Bolder promotions OR more authentic customer experiences? Value-based position OR premium branding? Enhanced training in customer management OR merchandising?

26. 26–  2009 VDC Research Group, Inc. Auto ID & Transaction Automation Practice ‘Kansas’ may no longer exist … The global economy as we knew it no longer exists. Customers are more powerful than ever before, forcing b-to-c and b-to-b operators to realign with a rapidly changing customer base and ever expanding scope of requirements For suppliers and integrators prepared for this, these informed customers become better customers. For the unprepared, not so much … Your customers need strategies, tactics and technologies to meet their customers where they are, and where they are going, in the post-Ford century/ post-recession economy They are going to need to pivot, they are going to balance … they are going to need a fulcrum to pivot with balance … you are going to be that fulcrum

27. 27–  2009 VDC Research Group, Inc. Auto ID & Transaction Automation Practice Learn About: What is Driving The New Investment The need to be more agile, and they need to address a lack of visibility

29. Proven ROI

30. Broad, Fluid Definition/Deployment

31. A number of legacy point applications could reach maturation in the next couple of years and offer little or no growth.

32. Security/Access Control

33. Tolling

34. A new generation of applications– some point, others meta – will account for a growing share of the market.

35. Sensing/Monitoring

36. Contactless Payment

37. Converging Solutions28–  2010 VDC Research Group, Inc. AutoID & Transaction Automation Practice

38. Learn About: Investment Analysis Metrics This data was collected in Q2 2010 … during the past 45 days! Cost reduction is still the number 1 driver – an indicator that retailers have no visibility to stability? Operations improvement – a fuzzy term – continues to rise on these lists of drivers. It is being driven in part by advances in business intelligence (BI) solutions Sales uplift, rated #3, and the only other factor with a rating higher than 3.5 on a 5.0 scale, remains the elusive, holy grail of ROI for many of these solutions Compliance – both customer and government – received relatively low ratings. This, and a relative absence of reference to PCI, leads us to believe that this is not driving material investment 29–  2009 VDC Research Group, Inc. Auto ID & Transaction Automation Practice Scale: 1=Low / 5=High

39. 30–  2009 VDC Research Group, Inc. Auto ID & Transaction Automation Practice Learn About: The Need for SW and Integration Support The highest scoring criteria --- and the only three above 5.5/7.0 – relate to support The recession is causing them to lean on their vendors for support and service even more than normal. 6 of the 7 most highly rated vendor selection criteria are directly related to vendor support/service. Vendors must have strong support services in place to help their customers with the huge challenge of integration.

40. 31–  2009 VDC Research Group, Inc. Auto ID & Transaction Automation Practice There are a few MASTER keys The economic pressures felt in 2008 and 2009 have set in motion a shift to new realities Intellectual capital is in tight supply in a number of our core and highest growth market segments – technology vendors cannot know all apps in all markets, enterprise staffing remains light … Commercial: Knowing where and how customers’ strategies, tactics and budgets intersect Technical: RFID, next-generation retail automation solutions, the mobile software stack Operational: Proven project schedule and budget performance Local, expert integrators and independent software vendors are in a unique position in these markets – technical and commercial issues, forces and trends are pointing toward greater dependence on and opportunities on these channels You can reinforce your own core strengths to serve as that fulcrum for your customers

41. 32–  2009 VDC Research Group, Inc. Auto ID & Transaction Automation Practice You Win: By Digging BELOW the surface with customers

42. 33–  2009 VDC Research Group, Inc. Auto ID & Transaction Automation Practice You Win: By Delivering NO zero-sum gains In a word, it means the aggressive pursuit of balance in those strategies and tactics that influence the point of decision experience Inventory management/ cost reduction AND out of stock mitigation? Enhanced digital AND in-store experiences? Bolder promotions AND more authentic customer experiences? Value-based position AND premium offering? Enhanced training in customer management AND merchandising?

43. 34–  2009 VDC Research Group, Inc. Auto ID & Transaction Automation Practice You Win: By PROFESSIONAL Project Management Over the past 8 quarters, your customers have responded to factors though a variety of measures – such as salary freezes/cuts, travel restrictions, staff reductions – placing additional pressure on the engineering teams’ productivity. 54.3% of respondents to VDC’s 2009 / 2010 Embedded System Engineering Survey reported that their current projects are behind schedule (more than the 46.9% of projects reported late last year). Time-to-market pressures are recession proof – 54% of projects are late

44. 35–  2009 VDC Research Group, Inc. Auto ID & Transaction Automation Practice Customers are finally starting to invest with more scale The performance we have experienced in the first half of 2010 evidences this – not everything that you sold was pent-up demand Projects remain mostly smaller than pre-recession levels – this is driven by a number of factors, most of which are repositioning markets in your favor Your markets have evolved to a point where the decisions to implement your technologies or not are being made by multi-functional teams – and more of them are being led by operations executives More customers are looking for point solutions with ROI to prove that they meet acute NOW-term requirements – and fit longer term operating vision You win when you deliver – the specified solution, and the added-benefits of flexible solutions that enable agile enterprises

45. 36–  2009 VDC Research Group, Inc. Auto ID & Transaction Automation Practice Summary You need to be the fulcrum on which your customers are able to pivot with balance Your markets as we knew them, may no longer exist … big changes were created or accelerated by the recession Your customer are under more pressure than ever to perform Your customers need safer, sharper solutions Your customers need your expertise to specify, qualify, install and support You will need to dig ever deeper into: Your experience in your served markets Your project management capabilities Your technical and commercial relationships with your technology vendors Your customers will win You will win