21 January 2010 | Amon Cohen
Quantifying the cost of meetings and creating a strategy will produce greater benefits than simply saving money
The one-time US defence chief Donald Rumsfeld was not renowned as a doyen of strategic meetings management, but he did hit on something with his legendary disquisition on the theme of known and unknown “unknowns”. Most businesses appreciate they have substantial expenditure on meetings, but inadequate processes and tools mean they have little idea what that spend is.
Usually, they underestimate. Consequently, corporations fail to invest in bringing this deeply fragmented expenditure under control, even though a strategically consolidated approach has numerous benefits (see 'Why do it? Four reasons' below). Winning over senior managers is tough when they are told such a programme will incur up-front costs that may include dedicated personnel and strategic management tools to handle e-RFPs, data gathering and analysis and event registration.
So if you want to secure executive buy-in, how do you create a killer business plan? According to a white paper from StarCite, a provider of meetings management technology, the answer is to demonstrate how the programme would nail strategic targets for the business. Cutting costs will almost certainly be one of these, and another will be risk management, ranging from knowing where employees are in an emergency to contractual liability and complying with regulatory limitations on meetings expenditure.
StarCite says the plan should include why there is a need for a meetings programme, as well as likely short-term and long-term costs, plus expected benefits and an implementation strategy.
The main sticking point is likely to be providing figures, both for current costs and the expected return on investment (ROI). The Catch 22 is that only a well worked programme will provide accurate spending data, but buyers can at least obtain an estimate by foraging through card expenses, the general ledger and requesting management information from suppliers. StarCite also recommends providing a few brief examples that prove the weakness of current data gathering – to demonstrate some of the known unknowns.
Quantifying the likely ROI is even harder, but StarCite suggests putting a figure on current savings levels and then assessing likely additional savings through four basic areas of improvement: automation, sourcing, visibility and compliance. Benchmark figures can be obtained to show the estimated savings in each of these areas.
StarCite claims companies can cut their meetings expenditure by 25 per cent through adopting strategic meetings management, but at the same time Kevin Iwamoto, its vice-president of enterprise strategy, urges caution when quoting figures to senior executives. “It is far better to be conservative with ROI estimates in a business plan,” he says. “Meetings programme champions need to deliver the results they promise, but the history of these initiatives proves that they will come in with more.”
Iwamoto suggests packaging up the business plan into two parts. The first is an executive summary, including key findings, business challenges and recommended solutions, and a waterfall model showing the net present value and payback analysis as the ROI of each of the four areas of improvement is accumulated. The second, more detailed, part of the plan includes best practice processes and benchmark data with comparable organisations, plus the deployment strategy and a cost breakdown.
It is also important to have the right people present the business case to senior management. Joint representation from the travel, procurement, legal, IT and human resources teams will strengthen the argument.
If all of that sounds daunting, the good news is that this is an auspicious time to make the argument for strategic meetings management. Not only are directors receptive to well constructed cases for reducing cost, but risk management is increasingly influential in the boardroom too. Whether the board will say yes may be a known unknown, but so too are the considerable potential savings.
Why do it?
1. Automation: increases efficiency, improves data accuracy, reduces costs of outsourcing.
2. Sourcing: leverages preferred supplier programmes, improves negotiating power.
3. Visibility: measures meeting spend, allows calculation of ROI, allows benchmarking.
4. Compliance: reduces risk exposure, reduces unapproved spend.
Strategic meetings management is arguably more important to pharmaceutical companies than any other sector. They spend heavily on conferences for health professionals but are also governed by codes of conduct limiting the extent of their entertaining.
Eli Lilly is no exception, which is why its European travel team and managers with meetings responsibility wanted to invest in a management system and additional staff. However, Lilly’s IT department was unwilling to develop a platform to support the tool without senior sponsorship for the project. To obtain this, a strong business case was needed.
Lilly’s European travel manager, Richard Darley, says: “Senior management were interested in four things: costs, head-count, risk mitigation and brand perception.”
Darley and his colleagues tackled each of these head-on:
Costs and headcount For Darley, these could both be achieved through system efficiencies, improved procurement and better visibility of data. He helped the meetings managers build a procurement-based return on investment (ROI) case.
“There were some efficiency savings in terms of headcount reduction, but these were small beer compared to the procurement savings,” he says. “People say these tools are expensive. They are – but the ROI is pretty good. It was actually a very easy sell for us.”
Brand perception Before Lilly adopted a strategic approach, each national business made its own arrangements for international congresses. “This resulted in them separately sending groups of 40 doctors to a congress and each of these groups ending up in different hotels,” says Darley. “It made Lilly look a smaller company than it really is. We suggested centralising the process to facilitate communications, including central procurement of the hotel.”
Putting all the doctors in the same hotel is also better for them, because it enables them to meet counterparts from other countries.
Risk The ROI case explained how standardised processes would improve compliance with regulations governing hospitality for healthcare professionals. “We have to make sure that if doctors are coming from Venezuela, for example, we are not exceeding their lunch allowance in the meal we are providing for the whole global group,” Darley says. “This requires a huge amount of communication. We are also now being asked to document what we spend on every individual doctor. We have to store this information somewhere, so again the software is the only way we can start to do this.”