At Hewlett-Packard, procurement consolidates the meetings-management spend
By Susan Avery -- Purchasing, 4/10/2008 2:00:00 AM
Gathering data on meeting spending is a challenge, but having that information in hand can be a powerful tool for procurement when negotiating with suppliers.
So says Lea McLeod, director of travel and meeting services at Hewlett-Packard Co. in Palo Alto, Calif. McLeod works in procurement; she reports to Becky Cornett, vice president of global (indirect) procurement. HP consolidated its meetings spend globally within procurement four years ago.
“It’s been an insightful process for us,” says McLeod. “To go from having no information to having a good deal of information is huge. It’s really been a transformation.”
In consolidating the meetings spend globally, procurement at HP has selected preferred suppliers and standardized terms and conditions of contracts it negotiates with them. Procurement also built a central process for employees to use when planning meetings and installed technology tools that make that happen. It also introduced a credit card for its meeting planners to use to pay meeting-related expenses.
A company doesn’t have to be the size and scope of HP to consolidate its spending on meetings, says McLeod who figures a company’s annual spend on meetings to be roughly 30% of its total annual spend on travel. For HP, that’s approximately $200 million.
HOW THEY BUY. For HP, procurement is the function to consolidate the company’s meetings spend. “The idea behind procurement in general is to leverage and exploit the company’s spending,” says McLeod. “The beauty of being in procurement is we have a 180-degree view of all verticals in the organization. Our value is to bring together all the disparate pieces.”
McLeod, in fact, compares the process of consolidating meetings spending to finding pieces of a puzzle and putting them together. Meetings spend is complex, and the challenge is that there is no single expense item for the spend category on the company general ledger. It’s buried in several different cost account codes. So McLeod and her team sought out internal stakeholders—the people at HP who actually plan and conduct the meetings—and asked about what they spend and with whom they spend it. They also approached suppliers, the event planning companies HP uses for its larger meetings.
With the data, the team worked closely with colleagues in HP’s marketing function to select preferred suppliers for the company. They knew they had a handle on spending with airlines so they focused in on the event planning companies and hotels. They also worked as a team to select a technology tool.
Once procurement identified preferred suppliers, narrowing down the number the company uses in regions of the world where it does business, it worked to standardize its expectations of suppliers and terms and conditions of the agreements procurement negotiated with them. The team also created a template for meeting planners to select a supplier from its preferred list.
STANDARDIZATION. Procurement created a single process for paying suppliers that set up registration websites for use by meeting planners within HP. From the data the team gathered, McLeod and her team determined that one division was paying a per-attendee fee. Another was paying one lump sum. Now, everyone uses the same method for payment.
Procurement learned from the data that when event planning companies negotiated hotel room rates on its behalf, HP was not building leverage with the hotel properties. “So, we insisted that rooms be booked and credited to HP so we could get visibility and leverage that spend,” she says.
For smaller meetings, those for whom HP doesn’t use event planning companies, procurement selected and implemented use of tools from StarCite, meeting solution providers in Philadelphia.
The technology allows a meeting planner to go online for information on meeting venues and hotel properties and prices procurement at HP negotiated with them. With the tool, the planner can also book the location.
Procurement asks that its preferred event planning companies use the StarCite tool when they can. That way, much of HP’s spend data on meetings is aggregated in one place.
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