A strategic meetings management program can be competitive edge in down economy
By Susan Avery -- Purchasing, 4/30/2009 2:00:00 AM
As companies continue to cut back during this economic recession, the meetings spend category has been taking more than its share of hits lately.
Witness public reaction to financial services firms accepting government bail-out money and neglecting to cancel or reschedule events held in such seemingly lavish locations as Las Vegas. Other companies took a second look at the meetings they had scheduled this year and, rather than experience any public backlash, decided outright not to hold many of the events.
But canceling events could actually bring companies more distress as contracts with hotels and other venues carry penalties for doing so. With a formal process in place to manage the meetings spend, a company can make informed decisions about whether or not particular events should still take place. It can also continue to schedule and hold fruitful meetings despite a lower budget.
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In fact, having a formal process or strategic meetings management program (SMMP) in place can give a company a competitive edge, says Kevin Iwamoto, vice president of enterprise strategy at technology provider StarCite in Radnor, Pa. "A company with an SMMP can make sound business decisions about the meetings they've scheduled and meet their corporate objectives," he says. Prior to his current post, Iwamoto served as global commodity manager responsible for a $1.2 billion travel and meetings spend at Hewlett-Packard.
For most companies, the meetings spend is decentralized and fragmented. About 70% of companies have no formal process for managing it. And it's big. Size of the spend varies by industry. To estimate it, experts use such metrics as 25% to 35% of a company's total annual spend on travel and entertainment (T&E), 60% of corporate air volume or 1% to 3% of annual sales.
"Meetings is one of the largest spend categories that purchasing does not have visibility into," says Iwamoto.
GETTING A HANDLE ON IT. To Tony Wagner, vice president of meetings and events North America for Carlson Wagonlit Travel (CWT) in Minneapolis, Minn. "it is only logical that purchasing be the internal champion for putting a formal process in place." And George Odom, senior director of business development for Advito, the consulting arm of BCD Travel in Atlanta, believes that "purchasing brings real value to the meetings world." Prior his work with Advito, Odom developed and implemented an SMMP while at Eli Lilly & Co.
"Companies make investments in meetings to generate a return, whether it's increased sales, product awareness or employee engagement," says Issa Jouaneh, vice president for strategic meetings management and spend solutions for American Express Business Travel in New York. "Purchasing plays an important role in defining and helping the company measure that return. Purchasing also can help meeting planners and internal stakeholders identify and measure the value their meetings add to the business."
According to the National Business Travel Association (NBTA) in Alexandria, Va., the definition of a SMMP is: The strategic management of enterprise-wide meeting-related processes, spend, volume, standards and suppliers to achieve quantitative cost-savings, risk mitigation and superior service. It includes matching department goals to corporate values/objectives while using data consolidation and reports to enhance the strategic nature of meetings.
While cost savings from an SMMP can range as high as 40% of annual spending on meetings—particularly if a company has a good mix of mid-size and large events—other benefits of having an SMMP in place can be equally as compelling. One of those benefits is risk mitigation. With purchasing leading the sourcing, a trained expert is negotiating contracts with hoteliers and other suppliers resulting in lower rates and more favorable terms and conditions including cancellation and attrition fees. And, with a central process in place, management can keep tabs on meeting attendees' safety and security.
"You can't expect someone who is trying to plan the meeting to worry about all that," says John Broaddus, vice president of sales at technology provider SignUp4 in Atlanta. "They are trying to make sure that the event gets done in time."
For most companies, getting started is one of the biggest challenges of managing the meetings spend. For one thing, the spend tends to be managed by any number of people within an organization—meeting planners, sales and marketing, travel, purchasing, individual administrative assistants or executives. For another, defining a meeting can be tricky. There are internal meetings for training or motivation activities, and external meetings for product launches. And meetings can be of any size, for fewer than 50 people or as many as 2,000 to 3,000.
Yet getting started can be as simple as setting up a system for registration and asking that everyone in the company planning a meeting to register it through the system. "You can start collecting the data and the data will drive you to the area with the most need," says Odom at Advito.
American Express Business Travel's Jouaneh adds, "Data generated through registration creates visibility and transparency."
CWT's Wagner recommends that purchasing approach the category as it would any other service it is sourcing for the company and resist temptation to treat a meeting like a commodity. No two meetings are alike. To be successful, purchasing must meet early and often with its internal customers and work to understand their needs and requirements. And it goes without saying that it needs support of upper management.
"If you don't make the effort to get key executive stakeholders or business units involved and communicate to them that the company is going to use the program and drive compliance to it, then you won't get the results you intend," he says.
A general rule of thumb is to conduct a business assessment (including the company's objectives for putting an SMMP in place), get an understanding of spending on meetings, build a business case and drive compliance to manage the program. Travel management companies like American Express Business Travel, CWT and Advito as well as technology providers offer services that can help with any or all of these activities. The NBTA also has resources available for travel buyers and suppliers.
Later, purchasing can leverage spending on meetings with the company's spending on air travel and hotels. With the economic downturn, now is an especially good opportunity to approach the hoteliers with data on meetings spending at their properties says CWT's Wagner. In the past year, the market has shifted from a seller's to a buyer's. For example, he suggests that purchasing approach the suppliers and negotiate concessions based on the fact that the company is still planning on holding an event scheduled for later this year instead of canceling it as some are doing.
"A strategic meetings management program is really about understanding the spend across several categories and being strategic as a corporation with those suppliers," says Jouaneh at American Express Business Travel.
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