3 Views You Can Use - 2006-09-27

Originally published October 2006,Successful Meetings

Getting your arms around your organization's meetings expenditures is not an easy assignment. But the following companies profiled in SM's sister publication Business Travel News' series "The Best Meetings Practitioners of 2006," offer great road maps for any planner struggling to accomplish this task.

So take a page from the playbooks of Hewlett-Packard, Pfizer, and American Standard. Find out how HP turned a tech rollout into huge savings, how Pfizer unified its meetings programs worldwide, and how unified hotel deals helped American Standard to slash costs.

Meeting The Matrix

Two years into the use of a comprehensive meetings technology system, Hewlett-Packard Co. still does not know exactly how much money it spends on corporate events and meetings. It does know, however, that in 2005 the use of its "SmartMeetings" tool saved the decentralized company more than $3 million, and is expected to save at least an additional $18 million during the next two years.

Deborah Matarazzo, leader of the project and head of HP's data and spend consolidation and meetings management department, says the company turned to technology after it became clear that it could not accurately estimate meetings expenditures. Previously, they were estimated as 20 percent to 25 percent of overall travel and entertainment spend—equaling about $170 million. "We knew numbers were being buried," she says. "It was really hard to track what our spend was." The true amount of HP's meetings spend is still unknown, but that has not come as a surprise, Matarazzo says. "This is a huge mountain that we're chipping away at," she says.

Philadelphia-based StarCite Inc. powers the technology system—which already has paid for its investment through savings—incorporating its OneForm, RegWeb, and RFP Marketplace tools, as well as Outtask's Cliqbook online booking tool. HP does not have a centralized meetings process, but the system provides a central repository for its meetings spend.

The tool guides employees through an approved sourcing and payment process, including payment with American Express meeting cards. HP has had a meeting service bureau since 2003, which helps employees with group air booking and hotel sourcing. Expenditures were previously tracked through spreadsheets.

The meetings department has drafted a policy on use of the tool, currently under review by senior management, and the program may be mandated by this month.

"There are so many meetings that every day we find an employee who doesn't know what to do. I think we would need the mandate," Matarazzo says. "They don't realize that by going outside the system, we don't collect information."

Matarazzo says the company currently is 79 percent ahead of its savings goals. All of HP's 80,000 U.S. employees have access to the system. "Once people started using it and realized the benefits—not just that it streamlined their process but also helped them work within their own budget—they started telling other people and we grew from there," she says.

Other companies may find it easier to implement comprehensive meetings tools, she says, based on the sheer size and decentralized nature of HP. Securing buy-in and building success stories were crucial. Matarazzo's department worked with the procurement group in marketing to comply with a companywide initiative to consolidate vendors.

"If we had not had that alignment, we would not have what we have today. We have the approved event agencies working through SmartMeetings and sourcing hotels through the tool. We're now collecting data through the event agencies, which used to sit outside the system," Matarazzo says.

The department also created a seven-minute video, distributed to every employee, to explain the tool's benefits, Matarazzo says. "We aligned ourselves with the marketing department early on, because if you get the buy-in from marketing, then the rest comes easy. If we started the opposite way, and then went to marketing, they would not have had faith that we were robust enough for them."

HP expects eventually to roll out SmartMeetings in Europe, the Middle East, and Africa, she says, with Asia/Pacific operations following. Despite being ahead of schedule, Matarazzo takes a long-term view of the program. Industry peers say that after five years, HP may find it is actually spending double what it expected on meetings, she says. "Be patient," Matarazzo says. "The opportunities for cost savings and efficiency are all there, it just takes being patient."

Function Follows Form

Pharmaceutical giant Pfizer Inc. has slashed an average of 19 percent of its corporate meeting sourcing expenditures through a massive project to unify the company's meetings management programs across global operations. The initiative includes the creation of a global meetings council, with four regional councils, and the rollout of a standard technology system in 2005 to monitor the company's thousands of events worldwide.

The program is rooted in the United Kingdom, where Sue Shillam, director of European meetings and travel for Pfizer, first restructured a meetings council to unify the European, Middle Eastern, and African meeting programs. The success of the EMEA project has led to a multinational initiative with councils in Latin America, Asia/Pacific, and North America. Pfizer Director of Global Travel Phil Dunphy serves as head of the global council.

Rather than follow the industry standard of implementing a policy first and a technology solution second, Shillam says Pfizer chose to lead with the implementation of the management tool. Sarbanes-Oxley and pharmaceutical industry regulations require any process in place at Pfizer be auditable, so it was necessary to implement the tools and create the structure of the project first, and to build success in individual markets before issuing official global guidelines.

As the goal of the program is to reduce costs, the council found a strong ally in Pfizer's finance departments. Several departments are involved in the project, including global security, information technology, travel, and sourcing. Senior management support is strong, but the council actively works to maintain its place in the list of ongoing corporate initiatives.

Shillam spent 18 years building a centralized meetings program for the company's U.K. operations. In 2003 this was expanded to a regional project for Europe, the Middle East, and Africa.

"We started the program three years ago when we restructured a council that contained representatives from all those markets. In our markets, you tend to find that one person or one department will be responsible for travel and meetings. We see many great synergies between the two areas," says Shillam, who served as chair of the council.

The primary goal of the council was to consolidate data and gain visibility into overall meetings spend. They discovered that, on occasion, Pfizer meetings departments in separate countries had competed for the same properties—unknowingly bidding against each other—or that two Pfizer meetings at the same property would pay different rates. The communication gap also resulted in cancellation fees that could have been avoided by giving booked space to another Pfizer group, Shillam says.

The council was challenged in establishing benchmarks for cost savings and best management practices. "In the travel world, you can always find someone that's done something before you, and you can learn from their mistakes and use their benchmarks. In this area of consolidation of meetings, at this level of meetings and spend, it's impossible to find someone in our region on the same scale," she says.

In 2005, the council rolled out meetings management technology provided by Santa Clara, CA-based OnVantage Inc. Shillam says the goal by year-end is to have 75 percent of Pfizer's estimated $250 million meetings spend in the EMEA region pass through the system.

"For us, there are three distinct parts of the tool and rolling it out is sequential for our region. The first part is all to do with capturing the data, and that is what drives all the negotiations with the suppliers," she says, adding that the supplier group includes meetings management companies.

"One of the big issues for us is that we had a considerable number of meetings agencies that Pfizer was using. Even inside one market, we could have 20 agencies," she says.

Pfizer has begun to roll out attendee registration tools, another piece of the OnVantage system. The automation of rooming lists and attendee information has provided another source of savings to the company, she says.

The tool's electronic request-for-proposals function is the last stage of implementation, she says. "The focus for us is really the first two, the data capture and the delegate registration. The RFP we do use, but not to its full capacity," Shillam says, because in Europe most events are not held at chain properties and buyers typically know which property they wish to use before negotiations take place.

The RFP functionality already is proving useful in narrowing down the use of meetings management companies to a select group of preferred providers. Large meetings are bid out to third parties through the tool, which focuses on comparing management fees, she says.

"The future of our world is not mark-ups, hidden commissions, and goodness knows what else. What we want to do, and we're already doing it in the United Kingdom, is pay net prices for the actual venue and the service and then we will pay a management fee to the agency for doing the work," Shillam says.

In the future, the company may consider consolidating the entire EMEA business to two or three management companies.

"The opportunity for us is almost endless," she says. "We think sometimes that we're a long way along the line, and then we step back and we think, 'Wow, we still have so many opportunities here,' but we have come a long way."

Negotiating Once a Year

Hotel negotiations this year are becoming decidedly tougher for corporate meeting buyers, but Piscataway, NJ-based American Standard Cos. has been able to maintain its costs by developing a program in which hotel rates for small corporate meetings are negotiated once each year, along with transient negotiations. The program includes a dozen chains in 15 cities and has been successful in leveraging a combined spend.

Ernest Guerra, Nashville, TN-based director of global travel and meeting services for American Standard Business Services, spearheaded the small meetings program. Last year was the program's first big test as the hotel industry gained strength.

"We didn't know if we were going to be able to achieve our goal in that area, but we found that we exceeded it by about 25 percent," Guerra says. The program in 2005 generated over $100,000 in hard-dollar savings on hotel rates, he says.

Small meetings, defined by the company as including fewer than 75 attendees, account for about 300 meetings, or 80 percent of the total volume, Guerra says. American Standard planners focus on large, high-touch events. Smaller events are sourced and planned through the company's travel agency, BCD Travel.

The creation of the program was sparked by an overall discovery process into how meetings were managed at American Standard, initiated by Guerra after he was hired five years ago. "A good portion of time was spent on those types of meetings, negotiating every single hotel contract," he says. "It didn't make any sense when you have limited resources to do that for 300 meetings, applying the same resource and certified meeting planner as you would for a large meeting."

Guerra says hotels have been supportive of the small meetings program. One criteria for participating properties is that they have received American Standard business in the past. The meetings volume is an extra incentive for the transient business. "If people are going there, it's because they're happy," Guerra says. "It would have to be significant savings for them to make the move to another property."

American Standard has delivered steady annual volume to its partner properties, Guerra says, and is quick to contact the hotel if volume commitments may fall short. "We tell them they're a preferred property, and if the volume picks up they'll be the place we go to first," he says. "They get nervous, and you keep in touch with them because sometimes there's turnover. If they don't see any volume, they tend to think you moved the business elsewhere."

The program began as a Six Sigma project, Guerra says. "We identified where the spend was by using corporate card and agency reporting, and we saw the cities where we were holding a lot of these meetings, then decided to engage the agency and some local meeting planners and brought them into the process," he says.

The inclusion of local stakeholders was crucial to building adoption of the program, Guerra says. Administrative assistants could recommend their favorite properties, and better understand why a hotel might be left off the approved vendors' list.

"It took a lot of time, but it was well worth the effort," he says, adding that regular communication with stakeholders ensures that the participating properties are compatible with event needs.

Guerra also involved BCD Travel in the program from its start. After the structure and policy of the program were decided, the agency implemented it. Running the program through the management company is ideal, he says, because additional agents can work on the account during peak seasons without hiring full-time, in-house planners.

This year, American Standard is considering a few changes to the program. When noncompliance rates go up for a particular city, the company adjusts the number or type of properties available there.

Guerra says American Standard also aims to roll out the meetings program in Europe, and plans to follow a similar strategy of local participation in determining partner properties.

"Anywhere we can identify savings opportunities, standardization of processes, productivity improvements, and reduce the risk for American Standard in contracts, attrition and clauses, we can get people's attention," he says.

Another key to the success of the program has been giving stakeholders a reason to ensure the program succeeds, Guerra says, and giving responsibility and representation of the project to one person. "You have to have somebody accountable for the program," he says. "One of my meeting planners took on full ownership of the program in addition to meeting planning responsibilities. The person accountable becomes associated with that program, and they got recognition for that too."

Corrie Dosh is the meetings management editor for Business Travel News, a sister publication to Successful Meetings. She can be contacted at [email protected]