Planners Tell Of Consolidation's Merits And Challenges

<B> Planners Tell Of Consolidation's Merits And Challenges</B>

By Lauren Bielski

Executives from AT&T, Bristol-Myers Squibb Co. and Eli Lilly Co. said that consolidating meetings at least partially yielded savings, improved service and supplier accountability and proved beneficial to their careers. But they also cautioned that pulling together group spend is neither quick nor easy.

Meeting managers from the three very different corporate cultures--AT&T's James Cutropia, Lilly's George Odom and Squibb's Lynne Ridzon--spoke at a panel discussion during Meeting Professionals International's recent Professional Educational Conference in Orlando. All three said they achieved hard and soft dollar savings in the initial phases of centralized meeting management, though each faced significant challenges in getting corporate buy-in and in generating proper vendor partnerships.

All three adopted the same overall configuration: an internal department that handles negotiations and meetings registrations, augmented by a multiple, but clearly defined, list of preferred corporate vendors.

Each of the three panelists also has developed a meetings calendar that is publicized internally among all meeting planners, so that the company can save money by piggybacking multiple meetings at the same destination, and avoid penalty fees by filling in the gaps caused by last-minute cancellations.

While it seems obvious in retrospect that all three companies should have the clout and identity to command negotiating advantage with suppliers, surprisingly, none were organized to leverage their meetings volume until 1990.

"What commonly happens at large companies is that individual divisions or regional offices operate independently, and in an uncoordinated way, so the right hand doesn't know what the left hand is doing," said Christine Duffy, vice president of the eastern division of Philadelphia-based McGettigan Partners.

Duffy estimated the total U.S. meeting spend at about $30 billion annually, and that a typical organization spends between 0.5 and 1 percent of its annual sales on meetings, conventions and training annually.

Duffy said that consolidation doesn't imply that all meetings are going through one office. Rather, it means that everyone contracts business with the knowledge of a big picture spend--and that requires a single source of combined data and senior management approval.

The panelists stressed that improved service quality and cost savings are the results of a good consolidation program, and advised planners to build a program that focuses on the return to the corporation for its investment. "You have to get into a mode where all group purchasing decisions are scrutinized, and ask why a particular planning approach is being used," Duffy said.

Panelist Jim Cutropia, manager of conference and group travel at AT&T's Basking Ridge, N.J., office, painted a picture of a leaner organization that in 1997 had captured about 20 percent of all meetings--and saved about $7.5 million in the process.

Despite these impressive results, Cutropia said that implementing a centralized approach wasn't always smooth sailing. Five years ago, AT&T was much bigger, and meetings were rather unconsciously planned, as secretaries with little experience signed contracts with little, if any, management scrutiny.

"We found that individuals who didn't have the authority to purchase meeting supplies were signing contracts worth thousands. Not enough attention was being paid to meetings, and there were basic misconceptions about the value of professional planners," he said. Still, trying to sell the services of a nascent centralized planning organization was slow going--until senior management threw its support behind the concept.

"I'm not a fan of the soft sell approach to consolidation," Cutropia said. "I found that at AT&T, none of the divisions wanted to pay for internal services, and many doubted that it was necessary to plan centrally. A more mandated approach budgeted as a corporate expense worked better for us."

Currently, the company uses a centralized Center of Excellence that teams up with a pared-down list of meeting service, air and hotel providers, and has implemented McGettigan's CORE Discovery software to begin centralized registration (<I>Meetings Today</I>, Feb. 23).

A corporate mandate to streamline all purchases during a fiscal lean period at Eli Lilly also got that centralized program moving about three years ago, and resulted in the formation of a centralized meetings services department.

"The company knew it would have a strong product when Prozac hit the market, but we needed to wait for it to save us," joked George Odom, director of corporate travel and meetings.

Eli Lilly's mandate, however, had the opposite effect of AT&T's: the fledgling department immediately was inundated with requests. "Once the CEO used our services and other division heads discovered us, the floodgates were open," Odom said.

As a result, Eli Lilly recently deployed a strategy that pairs centralized, internal negotiations and contracting with five different outsource partners, including McGettigan, Microsoft and World Travel Partners in Atlanta. Group air volume is being leveraged with transient business travel volume.

But implementing the consolidation properly has been a process of trial and error, Odom said, adding that "everything had to be examined."

Odom and his team have relied on an exhaustive screening process of potential partners, as well as comprehensive internal auditing and focus groups to uncover problems and solutions.

Lynne Ridzon, the director of corporate planning at Bristol-Myers Squibb, agreed that standards are critical to success. She credited the increased professionalism of the planning community as much as the centralized program she helped to engineer for the good results she has acheived.

Bristol-Myers relies on a Meetings Resource Center and seven regional planning units, a program design that was begun at a time when meetings weren't thought of as big business. "I think our biggest problem is that everyone thinks they can do our job," Ridzon said, adding that planners seeking consolidation must find ways to convey what they do in hard fiscal terms. She added, however, that consolidation doesn't necessarily yield immediate hard-dollars savings, particularly in the hotel area.

Ridzon, who worked from a mandated policy at the start of her consolidation, did so after completing evaluations of the company situation with the help of consultants.

"It was comforting to outline our scenario and have an independent source mirror our sense of the problems and what might work," she said.

Ridzon said it became clear that a hotel program for meetings wouldn't, for example, result in placing all the group business into five properties and asking for volume discounts or annual chain agreements.

"Meetings are different. There are too many variables to get chain agreements in those terms," she said, though part of the corporate planner's strategy included developing standardized contract language to protect the company, a strategy becoming popular in the sellers' market. Now, she said, the approach she helped to develop has become accepted enough for the company to consider expanding it to Canada and Europe.