THERE'S A NEW guest at the party in today's corporate world — the procurement officer.
As corporations struggle to rein in costs while boosting productivity, many organizations are taking a long, hard look at the way their meetings and event dollars are being spent, and with whom. The result is new pressure on in-house planners and their vendor partners to document what they are spending and how.
At the panel “How Procurement has Entered the Buying Process,” staged by Special Events Magazine's sister publication Corporate Meetings & Incentives during The Special Event trade show in Las Vegas last month, independent event experts discussed how procurement is affecting the way they do business with their corporate clients.
Jodi Wolf, president of Chicago-based Paulette Wolf Events & Entertainment, noted that event companies that have enjoyed even a decade-long relationship with a client are now being required to go through the bidding process — “and not just the motions of a bidding process, but a real one.”
And the required bids are exhaustive. Mona Meretsky, CSEP, head of Fort Lauderdale, Fla.-based Comcor Event and Meeting Production, recalled an RFP from a large corporation demanding an itemized “laundry list” of information. Making the situation more frustrating was that she never heard a word back about the detailed proposal that she submitted. “In the future, we will require a [proposal] fee up front,” Meretsky said.
THE EUROPEAN EXPERIENCE
One revelation from the panel was that while the U.S. event industry is now grappling with procurement, the process is a fixture on the European event scene.
“As of today, probably 90 percent of our business goes through procurement,” said Colja Dams, managing director of Vok Dams Gruppe of Wuppertal, Germany. He added that former event planners are now working as procurement officers, and “they know what they are doing.” About five years ago Vok Dams began charging a presentation fee. Not only does the fee offset some of the burden of creating detailed proposals, it also discourages RFPs from clients who are not serious about a project, he said. He added that presentation fees are fairly standard across Europe.
The panel expressed frustration over a critical element of special event production — how to put a price tag on creativity. But panelists conceded that procurement is now part of the event landscape. “We know the corporations are looking for ways to save money and [document] ROI,” said Janet Elkins, president of Los Angeles-based EventWorks, “and at this period, they're going to forego creative and look around so they can go to their superiors and show savings.”
FACING THE FUTURE
How can event professionals make peace with procurement? An important element will be examining all aspects of the work they do and determining what that work is worth. In an interview with Special Events, Laurie Sharp, CMP, president of San Francisco-based Sharp Events, explained, “We have taken a closer look at our documentation and pricing structure — what we do, how we do it, what specific internal resources are required throughout the project timeline. Some procurement departments do not want to see a management or service fee, so we must build in line items for every step we take, every miniscule service we provide, so that our costs are covered and we can make a profit — and stay in business.”
But Sharp added that procurement has an up side, too. “We have not lost a client to the procurement process; we have gained a client,” she said. “Since some clients are [now] required to look at new vendors, it's opened the door for us where ‘good old boy’ relationships have been entrenched for years.”
Indeed, some event professionals maintain that despite these growing pains, procurement will boost professionalism in special events by shining a bright light on the relationship between cost and value.
While Andrea Michaels, head of Sherman Oaks, Calif.-based Extraordinary Events, bemoaned the tight billing deadlines that some procurement officers require (“We are expected to close our books sometimes before it is even reasonable for us to get billing from our vendors”), she pointed to procurement's payoffs. Michaels revealed that she sold a procurement officer on a job even after being told her price was higher than that of three other bidders. “I told them bluntly that the other three were hiding costs in individual line items, because for what they were quoting, they could not afford to be in business.”
She urges the industry to adapt to new realities. “Instead of looking at purchasing as ‘the enemy,’ let's get real,” Michaels said. “They are out to protect the bottom line of their company. Let's educate them the same way we once had to educate the meeting planner and show them what they get for the money they spend. There is a way to prove ROI by example and show them where cutting corners does not accomplish their goals.” She added, “A new way of doing business, right? Yet [it's] very professional, so how can we complain? Ultimately, it only elevates us.”
For an audiotape of The Special Event panel “How Procurement has Entered the Buying Process,” contact Sound of Knowledge at 858/635-5969 or www.tsok.net. For the proceedings of the MPI online procurement seminar, visit www.mpiweb.org.
MPI EYES PROCUREMENT
In December, MPI hosted the online seminar “Why Procurement, Why Me, and Why Now?” examining how the role of procurement and strategic sourcing in determining budgets is transforming the way meetings and events are being purchased in corporate America.
Christine Duffy, president and COO of Philadelphia-based MartizMcGettigan, traced the new emphasis on procurement back to the economic doldrums of 2001, aggravated by the 9/11 attacks.
Duffy said that while the procurement brings a much more “qualitative, black-and-white approach” to the traditionally relationship-based meetings business, she noted that procurement officers don't view themselves as experts on content. Instead, she described one of their main goals as putting practices and guidelines in place to ensure consistent branding and message. “Procurement's view most of the time is that they don't really care which supplier gets the business,” she said. “They're measured based on what they can save the company and where they can show value by leveraging spending or improving ROI.”
Craig J. Ardis, director of global special events with Ada, Mich.-based Amway Corp., noted that while meeting professionals have traditionally measured the success of their events based on participant satisfaction, the next step is to focus on the bottom line. “We need to manage it like a business,” he said. “It needs to be a discipline like marketing, finance and sales, using business tools so we can measure the progress we're making.” For example, administrative staffers who plan meetings in decentralized sales and marketing organizations may have limited skills in contract negotiations, which costs their companies money. In this new environment, it behooves the meeting professional to start managing spending and taking responsibility for the company's overall volume of meeting activity. “We need to be leaders in this arena,” Ardis said, “by going to procurement and trying to collect the data, seeing what the spending is around the company and how we manage that spend.” With the right data, “you're going to have volumes speaking for you. You won't have to do much selling — they're just going to look at the numbers.”