Allergan: Pharm. Co. Smooths Contracts

Pharmaceutical company Allergan Inc. is likely to save more than one-third of its meeting spend next year due to new management procedures that centralize contract approval, standardize payment and shun third-party planning services. The new program, approved last month, comes after one-and-one-half years of efforts to reduce the number of vendors and convince management that meetings spend needed to be controlled.

Allergan, the makers of Botox and other eye care, skin care and neuromuscular products, is headquartered in Irvine, Calif., and has more than 5,000 employees worldwide. Bill Layton, director of shared services for North America, estimated Allergan's yearly meeting spend at $13 million and said its largest corporate event, an annual leadership meeting, involves about 200 attendees.

Layton, a certified public accountant and director of Allergan's accounts payable, said he unexpectedly became the instigator of major change in meetings management 18 months ago, when one of the company's full-time planners approached him with two hotel contracts. A meeting planner negotiated one of the contracts and an administrative assistant signed the other.

"What we found out was that it was the same high-end property, we had the same room nights, the events were exactly the same, different third parties were conducting that meeting and we found out that just the room rates themselves were a difference of $75 a night. There was no change in seasonal rates, apples to apples, so that kind of piqued my interest as a finance guy, and I said 'we might have an issue here,' " Layton said.

With upper management's final approval granted on Nov. 17, Layton is putting the puzzle of meetings consolidation together. Under the new rules, Allergan will have four meeting planners—one each for three major divisions and one handling all groups of less than 80 people. Only planners will handle negotiations and Allergan's meeting services department will review and sign contracts. Incentive companies strictly will be avoided and a standard hotel contract is in the works.

"You just make a request and it will flow to the appropriate meeting planner," Layton said. "The person who makes a request is a meeting sponsor, and they have input into the process, but the meeting planner will actually negotiate, though not necessarily sign, the hotel contract."

Allergan also has an approved vendor list in place and is working with American Express Corporate Meeting Solutions to streamline the meetings management process. Transient and group travel all will come through the same office, with Layton providing the oversight to make sure compliance stays on track.

"If you don't go through here, [the invoice] is not getting paid," Layton said. "I don't know how hard I want to be on that, but it will definitely be against company policy."

Layton expressed outrage about the use of third parties to plan events that can be handled by an internal staff. "These third parties direct us where to go, for whatever reason, and sometimes I have to let them know that we are the customer, we hire you, you do not tell us what to do. If it is a best practice or something like that, then, yes, we need your advice and we will follow your lead, especially if it is credible. But we're the customer, and you need to listen to us."

Layton expects, by avoiding the use of third parties and dealing directly with suppliers, to cut costs by at least 30 percent.

Now that Layton has the approval he needs to begin the major changes, he is also beginning contract negotiations with meetings technology vendor OnVantage to adopt sourcing and tracking software. Paper receipts are "gone," said Layton, and all expenses go into an online database. The company also uses the American Express Corporate Meeting Card.

"One of the most important things is to be able to measure, track and therefore, improve the process," Layton said. "It's like any other process in that you cut the fat. If you cut the fat and make it lean, you make it more efficient, and therefore more cost-effective. We're trying to work smarter."

The "work smarter" method hasn't come out of a need to cut costs, Layton said. Allergan is a highly profitable company, and Layton often has bumped heads with management and staff on their sense of entitlement, in what he dubbed the "pain of change."

"People still feel entitled, that the corporation owes them something, and that's one of my biggest fights," Layton said. "What makes you think you can go off and have that $200 dinner? Why? Because you work for Allergan? No. You spend the money like it's your own."

Management was not enthusiastic about the idea of meetings consolidation in the beginning. When Layton presented an initial white paper to top executives proposing change, he was told it would never work and that it had been tried before. Layton persisted, and began tracking the spend by sneaking a look at meeting contracts as they went through the legal department.

"I got inroads from legal because legal is going to be looking at the contract and I just added on to the process," Layton said. "It is very difficult to go to somebody and say, 'let me see your contract.' They'll say, 'who is this guy?' "

A year and a half later, after some initial success with tracking the spend, Layton said Allergan now is fully behind his plan for meetings consolidation. A standard operating procedure has been written, and with no setbacks, Layton expected the process to work like a fine-tuned machine by the end of next year.

"It basically comes down to no third parties for the national sales meeting, we will sign every hotel contract, only people who know what they're doing will negotiate and everything will come through Allergan's meeting services department," he said.

Layton said he will consider Allergan's meeting management effort a success when the standard operating procedure becomes routine, the technology is up and running and every meeting aspect is handled in-house.

Layton insisted the process will in no way affect the quality of meetings, and that he prefaces each change with the question: "Do we need it?"

"I never want to take away the quality of a meeting for our salespeople who work so hard and actually pay my salary. They deserve a good meeting," he said.

As soon as the new system is operating smoothly, Layton said he will get out of the meetings management business. After that, he said, he will be ready to find new ways for Allergan to cut costs.