Global spend for external meetings and events is estimated to be in the region of $200 billion a year (£128.4 billion), up to 4 per cent of the total global revenue for many professional service companies.
Over the last five years, most large organisations have been considering the effectiveness of their own external meetings spend. Nevertheless, while many of these organisations have engaged their procurement departments to develop policies and procedures to capture spend, they have failed to consider the true cost of running meetings.
They have also importantly failed to see the real opportunity to make savings lies not only with improved internal processes, but instead with levering spend with the third-party supply chain and the venues that host the meeting and event requirements.
When engaging venues for improved commercial terms, most companies are not prepared to invest the time to fully understand what they have done historically and what their future needs may be. This attitude may have worked a number of years ago, but venues now need to be engaged with a definite ‘what’s in it for them’ way of thinking, rather than just allowing them to be on a preferred venue list that may or may not lead to increased business opportunities.
Grass Roots recently worked with a global financial services organisation to formulate a five-year plan to reduce the external meeting spend for its UK offices.
An initial audit of all its company and office space (used and unused) identified an annual spend of £10 million, made up of 1,500 events (50 per cent for training, 20 per cent for marketing and 30 per cent for the PA network). The client in question was prepared to consolidate 60 per cent of its total meeting activities to one group which also included the group taking over two of the clients’ existing leased offices to use as open market training centres. In doing so, the net saving has been £1 million a year over a five-year period, which dwarfed the 10 per cent year-on-year savings they had been trying to achieve.
Third-party suppliers can also offer creative solutions delivering greater savings opportunities if engaged properly and if there is less emphasis on transaction price.
In short, at a time of great austerity organisations need not just to tell their supply chain what to do, but ask what their supply chain can do for them. It will pay dividends.
☛ David Taylor is sales director of venue procurement at Grass Roots