Procurement takes lead at setting sourcing strategy for marketing events at Microsoft
By Susan Avery -- Purchasing, 12/11/2008 7:00:00 AM
Marketing events for more than 10,000 people are not unusual at a company the size of Microsoft Corp. Think Tech-Ed. The software giant also holds events of this scale for employees, the biggest being Microsoft Global Exchange (MGX). And ensuring events like these go off without a hitch is the responsibility of the procurement organization at Microsoft.
"My role is to manage the sourcing process so that the people who manage events and marketing meetings have an infrastructure they can use to successfully put on their event," says Therese Jardine, senior procurement manager for events at Microsoft in Redmond, Wash. For Microsoft, the category consists of all the services that go into planning an event—venue, production, logistics, booth exhibits, registration, presentation management and audio visual services, to name a few.
Jardine brings to her role seven years of experience working at Microsoft as well as a detailed knowledge of financial systems which she gained working previously as a consultant. She reports to Warren Berger, group manager for marketing operations procurement, who reports into Tim McBride, chief procurement officer.
Involving procurement in sourcing events planning services has provided Microsoft with double-digit cost savings through increased leverage as well as more efficient processes, Jardine says. Procurement also helps the company minimize risks associated with the spend.
Sourcing strategy. At the heart of procurement's strategy for events is its venue sourcing program, an outsourced service that focuses on sourcing and negotiating with hotels and other venues. "Through it, Microsoft leverages purchasing and gets the best deal in terms of money spent and contract terms and conditions and so on," says Jardine who manages the program.
She also is responsible for the approved vendor list for events services suppliers; she's recently put one together for trade show services. "These are companies we deem competent," she says of those that qualify and make the list. "We negotiate rate cards and put them all under a master agreement. To work with a supplier, all trade show managers have to do is pick up the phone and say that they're with Microsoft and planning an event or exhibiting at one."
As with all indirect spend categories, satisfying internal customers when sourcing services is key to success. Making the order process easy is one way to do this. Another is to collaborate with colleagues in other groups, such as marketing and travel. "I also make a point of going to at least two events a year," Jardine says. "It is important for procurement to understand what the business is doing and what the important issues are, otherwise, we can't effectively support what it is trying to do."
For the category, procurement takes a strategic sourcing approach, beginning with a thorough analysis of the spend. (Microsoft was recognized by Purchasing for its efforts at spend analysis in March 2004.) Analyzing the spend provides a baseline from which Jardine identifies potential leverage opportunities. A challenge for events is that it is one of the most fragmented categories, she says, using the personal computer business to draw contrast. The PC industry has a few big suppliers and perhaps some smaller suppliers providing speciality items.
Managing suppliers. "There aren't many companies that do event planning globally," she says. "Almost all execution is done on a regional or local level with small or mid-sized suppliers." For the category, procurement does business with many minority- and women-owned companies as part of Microsoft's supplier diversity program.
In putting together the approved vendor list for events services, scalability is one of the more important selection criteria, Jardine says. Microsoft needs the suppliers to be able to handle more than one event at a time. Procurement also looks for suppliers with experience serving other big companies, which can be a good performance indicator. And the supplier must be technically proficient. "If a supplier is not big enough to invest in putting its presence on the web, then it is probably not going to meet the needs of Microsoft," she says.
Procurement formally measures supplier performance, holding an annual business review with all those on the preferred vendor list. Marketing keeps a scorecard too. And, for some parts of the category such as trade shows, procurement asks the suppliers to rate each other as well.
"We really work to foster collaboration between the companies that provide us event services," says Jardine. "Sometimes competitors have to work together. We hold them accountable for making sure any animosity is left at the door because the project is making sure the Microsoft event is successful."
Leveraging the buy. Jardine works closely with the travel group when the company is in negotiations with hotel properties. (Procurement is involved in the travel spend category as well.) Typically hoteliers like to keep their transient and events businesses separate.
"I've linked arms with the travel manager and the vendor account manager for hotels on the events team and we say to the hotels, 'You really need to talk to one Microsoft. We want to work with you on the transient side, but we also need your assistance on group. We don't take negotiations in a vacuum." When procurement assesses the suppliers' performance through its annual business reviews, the three groups are represented in the meetings.
At the same time, the suppliers get a little help from Microsoft. Jardine works on behalf of the hotels to educate employees planning events, providing them a realistic view of how the industry works. Those new to planning events, for instance, may not realize that while a transient traveler can cancel a reservation at a hotel before 6 pm on day of arrival, they can't do that for a group. "Addressing issues that make hotels less efficient helps drive down costs over the long term," she says.
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