Procurement has a greater say in events policy as firms look to control spend. Des McLaughlin suggests some more methods to influence strategy.

Last year was the worst year I can recall for the meetings industry, yet it presented great opportunities for procurement. As the recession began to bite companies immediately tightened their events budgets. Purchasing specialists were at last listened to and given the power to negotiate contracts – as well as question what events were being held and why.

This change in dynamic is perfect for those who want to rethink their meeting and event strategies. Rather than internal stakeholders dictating an events programme, procurement now has a greater say. Preferred meetings plans or hotel agreements were often in place but now there is a chance to channel business through these venues instead of selecting them on their facilities. This move towards controlling meetings policies has led to an increase in compliance rates from 60 per cent to 80 per cent.

Over the past couple of years there has been a rise in globalisation in the meetings industry with more international RFPs issued for full event outsourcing. Although this behaviour is often driven from the US, there is also increasing demand for regional procurement RFP responses, suggesting that the most popular proposals are global in strategy and local in delivery.

Event spend
In most big companies procurement has taken control of event spend and has a good understanding of which venues spend is allocated to. The next stage is to understand event-related spend, such as event logistics, registration and delegate management services, production and associated costs. These often equal the venue spend and have the propensity to be part of a meetings management programme but are largely uncontrolled. Sophisticated meetings management technology can track all event-related spend, regardless of the provider and allows procurement specialists to make better buying decisions and instigate preferred supplier programmes.

Consolidation is directly linked to globalisation, and agencies that can offer international coverage, with local resources in key markets, will have a major advantage.

Internal space
Although common practice in sourcing external meeting space, a minority of large corporations also use agents to manage their internal meeting areas. Some forward-thinking procurement professionals are looking at a more radical form of space management, whereby they outsource their internal meeting space entirely. This means they no longer have any financial liability for the lease agreements.

The client sees a reduction in their overall costs and the space management provider can earn additional revenue through maximising the space usage by selling it to other clients. Agencies can help procurement and facilities teams meet agreed occupancy levels and ensure overflow business is directed to preferred suppliers. This is more attractive when you consider only a third of meeting space is in use at any one time. Internal meeting space – UK city centre cost estimate.

A typical model would be where the venue operator takes over the building lease from the company, taking over the dilapidation, renovation and any remodelling charges as part of a long-term contract. The business commits to agreed levels of usage for training, meetings, presentations and drinks receptions – for which a highly negotiated day delegate or meeting room hire rate is charged. When associated costs are added to the lease rental, this would be expected to generate 25 per cent to 30 per cent savings - often higher when dilapidation charges are taken into account. However this model will work best for companies in city centre offices with strong transport links.

Technology
Unquestionably technology is a key enabler in delivering event strategies. Across different industry sectors innovative clients are implementing technology to support purchasing strategies, promote brand messaging, personalise delegate interaction, drive cost reduction, implement compliance and create performance benefits.

Technology has brought about fundamental changes in the way in which we communicate through events. Video and audio conferencing products now provide a compelling alternative to face-to-face meetings, from both cost-saving and sustainability perspectives.

It can add scale to big, face-to-face meetings by allowing speakers to attend virtually, and by enabling delegates to engage with each other pre and post-event. An organiser might replace quarterly overseas meetings with two face-to-face meetings and quarterly online conferences, but meetings remain all about the experience and networking opportunities.

Procurement specialists are keen to show they are not just interested in cost, but adding value to meetings programmes. They often request information on corporate responsibility activity, but struggle to evaluate responses, as it is not comparable. RFIs often don't translate into a requirement within a brief, so agents are left to deploy their own planning and implementation approach to sustainable meetings.

The Green Globe Index (www.greenglobeindex.com) allows travel and tourism vendors to self-assess their sustainability performance, and is perfect for the MICE industry. Those registered provide data on areas such as energy and resource consumption, employee and community engagement. The user is given a score and a ranking with a peer-group comparison for their business type, both nationally and globally. Index users can demonstrate their achievements to prospective and existing clients.

I do not anticipate a return to pre-recession levels of meetings activity, there will be an upturn in events particularly in the last quarter of 2010. However, I suspect volumes will still be 25 per cent down on 2008 levels.

The consensus amongst purchasers is budgets, while unlikely to rise greatly in 2010, will not be cut any further and many of the events cancelled in 2009 will now take place in 2010. The Harvard Business Review indicates corporations are protecting certain types of meeting from cuts. Sales meetings with new clients and contract negotiation are the least vulnerable.

This year provides procurement specialists with a host of opportunities to continue to influence their meetings events strategies and add business value.

This article first appeared in Supply Management in October 2010.