June 2008 - Microsoft Corporation at the start of the decade began to re-engineer procurement practices and develop technology to centralize them. The rigor and technology saved millions of dollars, but neither the technology nor the process improved event buying.
Microsoft's global procurement group studied the corporation's acquisition of meetings and events, and ultimately "implemented a strategic meetings management program to control and manage spend, support internal controls and policies, and share best practices," Therese Jardine, events procurement manager within
Microsoft's global procurement group, told attendees at the Motivation Show
last fall. The company also needed theability to communicate the goals as "it does you no good to have a plan in place if nobody knows about it," Jardine said.
It was clear that most people planning meetings at Microsoft knew of its existing procurement system, as "over 90 percent of our purchasing orders throughout the world go through our Web-based system. It's millions of transactions each year. That's great from a transactional efficient approach,"
Jardine said. But employees often get "bogged down with the system," which
does little to help direct meetings to preferred suppliers or even vendor options. It also didn't allow Jardine to direct planners to the master hotel agreements that she and her team had so diligently negotiated with hotel chains.
And, as she learned from a "crisis," it did nothing to help employees pay hotels or other vendors in an emergency.
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Organization:
Redmond, Wash.-based software firm Microsoft Corporation with 78,565 employees, $51 billion in revenues and $14 billion in profits in fiscal 2007 |
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Volume:
Thousands of meetings, of which 30 percent are planned by a central corporate event marketing group; remainder planned by decentralized product marketing executives and admins |
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Challenge:
Control and manage spend, support internal controls and policies, and share best practices in a decentralized organization |
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Approach:
Develop a strategic meetings management program within the existing procurement program |
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Solution:
Introduce program in phased approach to register meetings, centralize sourcing and provide a new payment card--all using existing procurement controls and systems |
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"We literally do thousands of events each year, but broken into two types. Centrally managed events by our corporate marketing group events team are my primary customer with about 30 percent of the events at Microsoft," Jardine said. Their events include high-profile citywide conferences like an annual
sales meeting for 15,000 people, user conferences like Tech Ed and such executive events as the Global Leadership Forum. The remaining 70 percent are "independently managed events," sourced, contracted, planned and executed by marketing employees within product groups.
"There are hundreds of marketing managers across the country and each of those is having some sort of an event during the year," Jardine said. "But because they're independently managed, it's hard to get a handle on what's going on where."
Decentralization also meant that some hotel sourcing was assigned to admins or marketing employees with little experience or knowledge of hotels. The company's procurement tools listed suppliers, but little more than their names and addresses.
The company provided no databases of all meeting options, master contracts and negotiated rates.
To control spending, Microsoft needed a meetings "strategy." Unlike companies that require planners to secure at least three bids for any meeting, Microsoft wants to only "issue RFPs for spend that can be leveraged. There's really no point in putting out a bid if there's no competition in the space or area, or if a vendor is really niche-oriented. We want to make sure we're putting our effort toward RFPs where they make sense."
Ultimately, Microsoft's strategy included development of an RFP for a sourcing services provider. Jardine said she spent much of 2006 and 2007 developing and fielding that RFP, as well as building a new meeting card as part of existing purchasing process. Once both a vendor and payment program were in place, she began to test them.
To pilot the new program, Jardine in May 2007 informed 700 Microsoft marketing employees of the new strategic meetings management program, a centralized sourcing desk and the new meeting payment card program. Within four months, 17 percent of the 700 had registered more than 150 meetings within its new meeting request system and nearly an equal number of meeting card requests were submitted.
"Our provider has told us it's the fastest ramp up they've ever seen--which is delightful, but scary, too. I had a pretty aggressive rollout plan and scaled it back because we want to make sure people have a good experience when they use the service for the first time," Jardine said. "We don't want to kill
the vendor, and we want to make sure it all succeeds."
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"We have implemented a strategic meetings management program to control and manage spend, support internal controls and policies, and share best practices."
— Therese Jardine, Microsoft Corporation global procurement group events procurement manager
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Planners access an online system to register their meetings and request sourcing. "That request form drives the central event calendar and reporting for us," Jardine said. Over time, procurement will be able to identify "which hotels we're doing the most business with, which business groups are doing the most events and what kinds of events. As people register their events, they have to identify themselves, which gives me my distribution list" to communicate to that group.
Based on the meeting needs identified by each requestor, Microsoft's sourcing vendor finds "appropriate venues" and presents options to the requestor. Once the options are narrowed, the vendor negotiates terms and a contract, if required.
In the tight meeting market, Jardine said, many planners were delighted when they found an available venue for an event and few bothered with RFPs, or knew how to create an RFP. The new process eliminates that issue and reassures procurement that individuals sourcing and negotiating contracts have the expertise to do so.
Meeting organizers also may go into the purchase order system to request a meeting card to pay for all components of a meeting. "We structured this program so we still have a purchase order and approval process in place," and a manager must approve the dollar limit for each card. But the beauty of the system, Jardine said, is that instead of having to approve a purchase order for every component of a meeting, managers now approve only one PO request. "To maintain internal controls, we require the meeting ID must be on the card application and purchase order," according to Jardine. "The reason we do that is to make sure we capture the event on the calendar" and to enable program audits for Sarbanes-Oxley compliance.
The card substantially reduces data entry for accounts payable, which previously had to add each vendor to a master database, collect tax forms and verify vendors to comply with payment policies. Within the first four months, Jardine said, the meeting card process helped to avert 75 vendor setups and "countless
hours on the back end for our accounts payable group."
Instead of central bill payment cards, Jardine said, the meeting card provider invoices against the purchase order. As a result, employees do not need training on how to reconcile a central bill, and Jardine did not have to rely on information technology for any programming--so "we were able to put it in very quickly," she said.
The need for faster payment methods was identified after the corporate events team a few years ago scrambled to relocate the Global Leadership Forum after a security official for a head of state expressed concerns about the original locale. A new venue was quickly booked, but the planners then asked Jardine, "How will you pay them?"
"We did get them paid, but we really had to pull favors," Jardine said. "After
that experience, I sat back and said this is just wrong. We can't have this happen on a regular basis."
While she fully expected at least one "flame mail" about the new registration, sourcing and payment process, Jardine said, "I haven't had a single complaint, which I'm still shell-shocked over." She did receive some questions and "constructive criticism" on process improvements, which she implemented.
Applying other procurement practices to the meetings space, Microsoft has found success with reverse auctions to purchase promotional merchandise and audio-visual services. The buying approach is most successful, Jardine said, when the company builds a market basket of multiple promotional items, such as T-shirts, bobble-head dolls and other trinkets. It adds specific items to a "basket, issued in advance to one of seven approved promotional vendors," she said. "Instead of issuing an RFP and having to do a lot of back and forth negotiations, we have an online event where vendors bid on the market basket." Typically, the online reverse auction can take just 15 minutes. "It saves us a ton of time and some money," Jardine said. "Once vendors get used to it, it saves them time, too. They're fun to do, interesting to do. Suppliers, as they get experience with it, tend to find that it's not all bad."
One of Jardine's primary objectives is to convince planners to use one of the six preferred registration site vendors to ensure compliance with data privacy polices. Each of the vendors is contractually liable for any breach of data privacy, a point that Jardine said she often uses to remind those who request a lower-cost vendor.
While Microsoft employees frequently ask Jardine to review their meeting plans and budgets, she acknowledged that the best she can do is provide a "sniff test" on costs that look out of line. "Where I want to get to is where we have benchmarking in place. If you have a trade show of X size, it should cost you this much per square foot. Or, if you have an incentive trip, it should cost this much per person. Those are the kinds of things I want to put in place, but we have to have the SMM process in place in order to know the events, price and get those statistics."
