"In today’s economy, companies cannot afford to have a controllable expense go uncontrolled. There’s a focus on procurement, on tracking the meeting, and on tracking cost savings," says Jay Roseman, vice president of corporate meeting solutions, North America, American Express Business Travel, Mount Laurel, N.J., who specializes in helping companies strategically manage corporate meeting spend.
"management is rapidly evolving, much like the revolution transient travel experienced. The pace of change is accelerating, and will continue to do so until the transformation from event planning to consolidated expense management-oriented programs is complete."
It’s a daunting process for many who are just starting out.
The initial challenge for many companies is to identify who is planning what types of meetings and to determine how they can make their planning and procurement processes more cost-effective.
So Where Does One Start?
"We recommend that companies start the process in an area that inflicts the least pain of change," says Roseman. "Seventy percent of all meeting expenditures are governed by a hotel , including guest rooms, meeting space, F&B, AV, and telecom, so we suggest companies start there. By focusing on enhanced controls in the sourcing of meetings, companies will be able to track spend and leverage it for future negotiations, align with preferred suppliers, develop standardized , and effectively use canceled space, for example."
Companies getting started with a strategic meeting-management initiative need first to gather information to identify the stakeholders, find out how much they’re spending on meetings across the company, and target areas for cost savings. The stakes are high. A recent survey by The Meetings Group magazines, Primedia Business, publishers of Corporate Meetings & Incentives,, and Insurance Conference Planner, found that corporate meeting and event spending averaged $3.5 million in 2003.
To become more efficient, organizations with decentralized meeting departments need to implement policies and procedures to guide meeting planning and procurement; and centralized organizations need to demonstrate value so that stakeholders buy into the idea of turning these activities over to the experts. Better visibility into the total costs and potential savings is key to demonstrating that value.
"In our experience, the most challenging first step is determining who in the company is planning meetings," echoes Roseman. However, if a centralized sourcing program is in place, companies will recognize significant savings regardless of whether meetings are planned by on-staff meeting arrangers, administrative assistance, or professional planning companies. It’s not about who plans the meetings, but how they’re purchased."
Tools That Can Help "At American Express, our philosophy is that technology is an enabler," says Roseman. "It will not create strategy, but will support your meetings consolidation and expense management goals. There are a limited number of technology solutions in the marketplace that will—on an enterprise level—help companies gain visibility into meeting spend, increase efficiencies, drive productivity, leverage preferred supplier, and manage policy compliance."
"It’s not an insurmountable challenge, but it takes time to push the initiative," says Stanley Chin, corporate division president for seeUthere Technologies, a division of OnVantage Inc., a Santa Clara, Calif.–based leader in meeting spend management solutions and supplier. "We provide significant resources to get them under way to be successful."
"OnVantage has focused not just on individual tools and technology that allow a meeting planner to get value, such as e-RFPs, cost estimators for air travel, and a database of 40,000 hotels," Chin says. "What we focus on, in addition to those efficiency technologies, are collaboration technologies. That’s where strategic meeting management has the power. It’s not just making the individual meeting planner more efficient, it’s getting all the experts across the company to participate and provide best practices in different disciplines." By standardizing the workflow across departments, planners can more easily enlist the services of all the major stakeholders. For example, corporate travel managers can procure air travel at the best fares, legal can provide contract clauses that manage and reduce risk, purchasing can tap preferred vendors with pre-negotiated rates, and other planners can reuse canceled space.
"I’m not talking about revolutionary ideas," says Chin. "But there quite a few incremental improvements that, when you add them up, save the company a lot of money."
Good advice for many planners is to adopt a meeting credit card that planners can use to pay all their vendor invoices. The card captures all the spend data, so planners, at a glance, can gauge which is the No. 1 hotel chain, the No. 1 property, and the No. 1 airline.
Beyond data collection, consolidating the planning function gives meeting planning departments consistent operating procedures so that they can use their professional staff more efficiently.
Working in partnership with procurement and the corporate travel department is another huge step, say planners who are ensconced in the process.
PeopleSoft Takes the Leap
Identifying who is spending the meeting dollars is still the No. 1 challenge at PeopleSoft Inc., the world’s second largest enterprise application software company.
"Right now we’re not at all standardized, consolidated, or centralized," says Sharon Marsh, CMP, team lead for events marketing in Pleasanton, Calif. She expects to have a strategic meeting technology tool in place for the company’s North American operations in first quarter 2005, but she still needs to find all the company’s meeting planners.
Once they’ve identified who the spenders are, they’ll be able to "sell" centralized meeting planning services throughout the company. With experience planning and managing sales and incentive programs, customer user group meetings, educational conferences, trade shows, and other events, Marsh’s event marketing team has a proven track record.
Working closely with the procurement and travel departments, Marsh’s team in the marketing division is beginning to implement written meeting policies and procedures, designate preferred vendors, and standardize hotel contracts. "In the marketing division, we’ve been able to realize cost savings," she says. "If we can realize savings within one department—by taking advantage of economies of scale—we can clearly state that the gain would be larger on abasis." Once a management technology is in place, they’ll begin to register meetings companywide and encourage planners to use the centralized service to deliver better value.
By using electronic requests for proposals (e-RFPs), Marsh’s team will be able to specify which hoteliers receive the first round of RFPs and, if none meet the meeting requirements, which hotels receive the next round. And, by tracking historic spend data from the RFP through to final payment, they expect to gain leverage in their negotiations.
"Technology was the only way we could see to make it happen well," Marsh says. "Our projected return on investment is very high on this."
Although The Meetings Group survey indicates that enterprisewide meeting spend management is still in its infancy (see box), early adopters are realizing measurable results, and mainstream companies such as PeopleSoft are well on their way to controlling spending on meetings and events. It’s the laggards who will be playing catch up in the race to contain costs and strategically manage corporate meeting spend.
"Corporations will continue to focus on this, because they’re beginning to see success," says Chin. "In the future, there will be more widespread use of these tools and technologies, so that they’ll be available across all the meeting planners’ desktops."
Whether planning is a centralized or decentralized function, the right tools and technology can help gain visibility, control costs, and achieve the efficiencies that demonstrate value.
Sidebar: Where We Are Today
Corporations are eager to transform meeting spending from an ad hoc spending category into a strategically managed spending category. To find out how far they’ve come, The Meetings Group surveyed a selection of readers to assess how their companies collect and leverage data related to meeting and event expenses, and to determine the extent to which policies and procedures have been put in place to monitor and control these costs. The survey findings indicate that, although not widely adopted, strategic meeting management tools and best practices do help corporate planners achieve significant savings:
- 35 percent collect meeting spend data. Visibility into consolidated data is a key requirement for analyzing spending, evaluating vendors, and negotiating volume discounts, but 32 percent of survey respondents do not collect meeting spend data, and 22 percent report that their data is incomplete.
- 30 percent have formal meeting policies. Policies and procedures streamline meeting management and guide decision-making about vendor selection, contract language, negotiated rates, and reuse of canceled space. Among respondents who have formal policies, 73 percent mandate their use.
- 42 percent do not use preferred vendors. Low compliance with corporate policies that can control costs, such as selecting preferred vendors, suggests a need for a mechanism to communicate the value of following procedure and to enforce policy compliance.
- 43 percent achieve savings from preferred vendor programs. When followed, polices and procedures yield measurable results. Among those who have preferred vendor programs in place, 21 percent report savings of 5 percent or more.
- 40 percent use e-RFPs. Using electronic requests for proposals (e-RFPs) is one way to encourage compliance with corporate policies and procedures and, at the same time, streamline the procurement process. Of those who use e-RFPs, 95 percent say they save time and/or money.
- 25 percent collect historic RFP data. Tracking rate quotes over time not only establishes a baseline for current rates but also informs the budgeting process with reality-based estimates. Of those who collect historic data, 75 percent say it’s useful for determining future rates.
Source: Managing Corporate Meeting Spend: 2004 Benchmark Survey. Visit meetingsnet.com to download the survey report.
Sidebar: Tips and tools that work
When corporate meeting executives share best practices, policies, and procedures, it produces a ripple effect not only within their companies but also throughout the corporate meetings and events industry.
Here are some forward-thinking initiatives that are gaining traction:
Direct meetings of more than 20 to expert planners. Sales and marketing executives, procurement officers, administrative assistants, and other noncareer planners can manage small meetings. But mandating that large meetings and events be routed to a centralized department of professional planners achieves economies of scale.
Track meeting spend with one credit card. Paying all vendor invoices on one credit card accurately captures spend data, which can be sorted and compared by vendor, month, and year.
Negotiate volume discounts with preferred providers. Forecasting the total volume of business over a two- to three-year period gains leverage with select meeting suppliers, who in turn give more favorable pricing.
Rotate annual meetings among select hotel properties. Companies with several large meetings or incentives at various properties are selecting two to three properties, then rotating their meetings among these preferred hotels each year. That way, the companies get reduced rates, and their groups still get some variety. Different business units or departments take turns at different properties.
Create a meeting portal as a gateway to planning. Posting meeting calendars, preferred-provider databases, electronic request for proposal documents, space exchanges, and policies and procedures creates a knowledge center that is accessible to any meeting planner.
Use e-RFPs to quickly check availability. When it’s practical, using electronic requests for proposals streamlines the sourcing process, especially if planners can send a standard document as an attachment rather than filling out cumbersome online forms.