Working WIth Procrument
Author: Sandi Cain
May 2008
Features
It's not a numbers vs. service game
Using “meeting planner” and “procurement department” in the same sentence doesn’t have to be an oxymoron. Instead, there are ways to make the combination a win-win situation for both sides. So says Christina Wilkes, meeting practice leader for American Express Business Travel, who was the keynote presenter at the launch of Virtualmeetingworld.com. Wilkes says planners who understand the motivation for subjecting meetings to procurement and learn to speak their language may find the relationship opens more doors than it slams shut.Marcia Willett, senior director of corporate events at Santa Ana-based Ingram Micro, agrees. “It was scary in the beginning, but once we established guidelines on what we would do and [what] they would do, it’s worked out well,” she says.
So instead of thinking of meeting planning as the “last frontier” of freedom from accounting types, you might accomplish more by thinking of it as the “first frontier” for career development and advancement.
THE CASE FOR PROCUREMENT
While it may be a natural tendency to close your eyes and hope procurement will go away, it probably won’t. According to the MPI Future Watch 2008, three-quarters of planners said procurement plays some role in their purchasing decisions. Forty-five percent said they expect procurement to become more involved with meetings over the next year, compared to just 7.3 percent who foresaw a smaller role.
“Procurement tries to get a handle on all spending,” says Shelley Newkirk, strategic account manager with meetings management company Experient in San Jose. She says meetings came to the attention of procurement departments because of the travel component, which has long been subject to scrutiny. “It’s not going to go away and [their] involvement will grow,” she says.
But if planners are accepting the inevitable, it comes with high expectations for the procurement departments. A quarter of Future Watch respondents said they expected procurement to become more knowledgeable about meetings and more helpful to planners instead of simply overseeing expenses. Twenty-three percent hope those departments will evolve into collaborative partners. But an almost equal number—21 percent—think procurement will become an obstacle instead of an asset.
Though procurement departments in general are becoming more involved with meetings, the evolutionary process is still young. Most corporate planners say their companies have no preferred-vendor programs in place. And the number of corporate planners that reported centralized meeting functions fell to 50.5 percent from 54.4 percent in 2007.
That could change as the economy cools. As the cost of business trips continues to climb along with fuel prices, some companies have begun to require employees to book the lowest fares, stay in less-expensive hotels or provide economically justifiable reasons for business trips. That’s beginning to carry over into meetings. A 2007 NBTA Groups & Meetings Committee Survey indicated that 70 percent of companies have meetings policies in place—almost double the number who had such policies in 2003.
Newkirk says a downturn is likely to result in more pressure from the finance folks to justify every meeting expense, and that planners can be proactive by looking at each meeting’s cost/benefit ratio. “That can determine which meetings are kept and which go [on] the web, [to a] regional meeting or whatever,” she says. “I absolutely see that as part of the trend.”
WHY NOW?
Several factors are driving the newly found emphasis on procurement for meetings. Wilkes points to corporate scandals, industry regulations, the Sarbanes-Oxley Act (SOX) that beefed up accounting procedures for public companies and economic conditions.
According to MPI Future Watch, government regulations are a concern for 20 percent of all corporate planners, but that jumps to 42 percent for pharmaceutical planners, 30 percent of insurance planners and 25 percent of financial and other healthcare planners—industries heavily affected by SOX. Roughly half of corporate planners say they have been affected by Sarbanes-Oxley requirements.
Add in economic woes, and the time is ripe for more meetings scrutiny. Atlanta-based BCD Travel Americas Division forecasted 2008 airfares to rise between two percent and four percent. Hotel room rates are expected to increase by six percent to nine percent, while car rental rates were projected to go up by five percent to 10 percent. According to American Express, hotel costs represent about 90 percent of all meeting costs aside from airfare. Hotel costs include the room, food and beverage, meeting space rental fees, A/V and other services such as golf, spa or resort fees.
Overall meeting costs were forecast to rise between eight percent and 10 percent. Rapidly rising fuel costs and a dollar sinking in value compared to other currencies could send those projections even higher as the year progresses. “It’s a good time to be proactive to reduce the risk of meetings being eliminated,” American Express’ Wilkes says.
That’s a heavy load for a planner to bear, so it might be a relief to share the pain—even with a procurement department. And having more people involved to balance value, risk and meetings quality can’t be a bad thing.
Procurement has turned out to be a helpful “hover” for us, Ingram’s Willett says. Because Ingram Micro has carefully chosen preferred vendors, procurement works out the legal language, insurance and other issues so planners don’t have to. That, Willett says, frees up planners to concentrate on the meetings themselves.
And it’s not a one-way street, she adds. Sometimes procurement suggests companies for the meetings department to consider; other times, Willett and her staff ask procurement to take a look at a new prospect. “Their business is helping us source out the best possible contacts for the best possible pricing,” she says. “[Procurement] sounds like someone is trying to take over your job, but that’s not the case at all with us.”
EMBRACE IT, DON’T FIGHT IT
Wilkes says there’s plenty a planner can do to embrace the new reality. Being proactive is a good start. One way to do that might be to build a team of planners who can formulate the overall corporate meeting strategy. She suggests creating a network by connecting with other planners who work in the same industry, talking to other departments within the company, asking the procurement folks to suggest people you should meet from their perspective, and asking for additional tools that might help the two departments work together.
The corporate event planner also says it pays to make procurement understand that the meetings department isn’t just looking for the cheapest price and why that’s true. “I had to educate them a bit on what our role was and what we were trying to do,” she says. “But once they understood we’re not just looking at price, it was smooth sailing.”
There also are other ways you can illustrate your willingness to meet procurement’s needs. Newkirk advocates the use of budgeting principles, because that helps the company’s bottom line. Going a step beyond that, Wilkes suggests “speaking the leadership language.” That means talking in terms of business principles executives all understand, such as ROI, risk or achieving company goals.
Tips on how to do that might include:
- Demonstrate your value by sharing how your decisions reduced risk, helped to lower negotiated costs or other impacts.
- Speak of the impact of a meeting on the bottom line by defining skills learned or ways costs were reduced.
- Document every cost savings, even if it’s just $10 on each of several items.
To control hotel costs, Wilkes suggests some solutions that might be easy to implement, save money and make the procurement folks happy, too. These include:
- Promote compliance with company travel policy.
- Shift arrival and departure patterns to take advantage of better hotel rates and/or airfares.
- Track negotiated rates to make sure those are the rates you get.
- Use second-tier markets or a lower-tier hotel when possible.
- Take the meeting’s purpose into account and choose a hotel accordingly. For instance, if people are coming for an intense two-day regional meeting, choose an airport-handy hotel instead of a resort.
- Given the weak dollar, consider Mexico or the Caribbean instead of Europe if you must have an international destination.
You might also be prepared for the possibility that hotels may implement demand-based pricing in the future. Las Vegas, the No. 1 destination for meetings, conventions and trade shows, already encourages groups to stay away from weekends due to high leisure demand. A quick search of almost any leisure travel website for Las Vegas hotels is likely to reveal rates that vary by the day—sometimes depending on what convention or event is in town. And we all know what happens if you’re looking for hotel rooms at the same time that the Super Bowl, Mardi Gras or other major event is on the horizon in a city.
In a nod to this possibility, two former Marriott executives last year formed a new site-selection company called Inn Fluent that takes hotel revenue management practices into account when booking meetings. Under the Inn Fluent model, the company’s commission is based on how far ahead the meeting is booked. The longer the lead time, the smaller the commission they get. That ostensibly allays a hotel’s fear of selling too many rooms below the published daily rate. It also favors the corporate market, which tends to book shorter term than other groups.
But what if you encounter a procurement department that initially thinks it will take over the meeting planning function? Kathryn Jurgensen, president of Premier Meetings in Irvine, Calif., suggests putting it in the perspective of other areas of the business. “Does procurement handle lawsuits or lease renewals?” she asks. Jurgensen points out to management that putting an inexperienced department in charge of meetings could end up costing the company lost time and money.
CAREER ISSUES
Working with procurement can be good for your career. Traditionally, the meeting planner has been autonomous, handling the logistics of meeting planning without (usually) being on the executive radar screen. Now, planners who work with procurement may find they are more visible to management and have the opportunity to put meetings in the limelight and become a strategic leader with expertise in that arena.
Being more visible and involved with another department also makes people more aware of your work and your abilities—and that could lead to an advanced career path. “If they want to stay relevant, they have to do more than food and beverage and liaise with the hotel,” Newkirk says. “That’s the baseline…not the value-added [component].” But she cautions that a planner must be willing to give up (or outsource) the day-to-day planning details in order to do that. If it’s the details you enjoy, moving up may not be your cup of tea.
Willett’s positive experience at Ingram Micro may be due partly to company culture and partly to the fact that she’s had a seat at the strategic table since day one. But that doesn’t mean others can’t ramp up to that same kind of experience. “Slow down, take time to sit down and get [a satisfactory outcome]. It can be very positive for everyone. Planners are happy and the company is happy. There’s nothing to be afraid of,” she says.
HELLO WEBSTER’S
Procurement means getting stuff, right? Not so fast. Here’s the difference between the standard definition and the one usually applied to meetings.
Standard definition: The process of obtaining goods or services with particular care and effort to ensure lowest total cost of ownership and highest quality.
Meetings definition: A division responsible for strategically managing company spending and corporate risk. This may include overseeing vendor relationships, developing purchasing tools and/or managing compliance for the corporation.
—Source: Presentation by Christina Wilkes, meeting practice leader for American Express Business Travel
MEETING ATTENDEES AREN’T STAPLERS
Christina Wilkes, meeting practice leader for American Express Business Travel, explains why procurement departments have to treat meetings differently than other expenses by comparing them to staplers. If you’re trying to decide what staplers to buy, she says, once you choose the price point, features and vendor, almost any stapler within those parameters will do the job, because it’s a commodity.
There also are many models for meetings, many price points and a wide variety of required features, but if you pick the vendor and price first, you’re overlooking the most important element: the human one. That’s what procurement needs to understand. If you let procurement put an incentive group at a Motel 6 or send a group of executives to a miniature golf course, you’ll have more than trouble in River City (with apologies to The Music Man).
The bottom line is that you can’t commoditize meetings. But you can work with procurement to reach a middle ground that meets their cost requirements and the meeting’s strategic goals.
DEMONSTRATING VALUE
Marcia Willett, senior director of corporate events at technology company Ingram Micro in Santa Ana, Calif., oversees more than 900 meetings annually and has been doing it for 18 years with the same company. She offers some tips on how planners can demonstrate value to their procurement departments.
- Demonstrate consistency and professionally run meetings and events. Willett’s department is sometimes hired by the company’s resellers and vendors to help stage their own events, which is a vote of confidence in the value they bring to the table.
- Control expenses. “We meet budget time and time again,” she says. “When you do that, you build a reputation within the company.”
- Train company planners. Willett says Ingram Micro spends a lot of time on training and places a priority on getting high ratings on participant surveys. If a survey comes in with lower ratings than expected, she calls the participant to find out how the department could have done a better job and takes that information back to her staff.
- Make sure the two groups communicate and share information. “Communication is key,” Willett says. “They look at numbers and we look at service...we have to come to a meeting of the minds.”
Sandi Cain, a regular contributor to Smart Meetings, is a freelance journalist who has covered the meetings, hospitality and tourism industries for more than a decade.
