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There’s some give and take between creativity and managing the bottom line.
Professional conference organisers (PCOs) and event agencies are tasked with creating unique, unforgettable events. But, in a world where they are increasingly forced to negotiate with procurement departments from the outset, does that remain possible? Can they produce magic when, in the pitching and planning stages of an event, they don’t meet with creative directors or CEOs, but instead with staff whose job is it to deal in the cold metrics of dollars and cents?
We asked Benson Tang, regional director, Asia, for the Association of Corporate Travel Executives: Has this new arrangement caused a shift in the way business is conducted, with financial concerns trumping creativity, and artistry being held hostage by the bottom line?
“It all depends on the company business model,” he said. “If the finance department leadership is taking a more expense-management approach, that means cost control is more the priority — and then, of course, creativity will be affected.”
Matthew Smith, director of M&E at MCI, echoed these sentiments. “It really depends on who is driving the final decision within the company — marketing, sales, or procurement — and, most importantly, how professional the procurement individual is,” he said. “Is the procurement team is simply looking to use the cheapest vendor or are they are looking at value, delivery, and experience as part of the decision criteria — e.g. a true partner that can deliver value?”
“Internal meeting planners are still part of the procurement process,” added Zarina Othman, director, MCI. “However, with a procurement team involved, decisions are influenced heavily by price versus value. There is also an emphasis for PCOs to offer their services as a shopping list, which leaves little room for creative and innovative solutions.”
All procurement departments, however, are not created equal. The better ones are able to manoeuvre through the nuances of an event. “Good procurement individuals know that price is important but not the key deciding factor,” Smith said. “The impact of a failed event can cost a business or organisation a lot more versus paying a little extra for a true partner that can provide guidance and deliver an outstanding experience that meets ROI and ROO.”
Either way, the reality is that procurement departments aren’t going to disappear, so the key to moving forward is to understand how the two different philosophies can work to better understand each other. PCOs and agencies will need to adapt to the new normal in order to justify their role and costs.
“Show value and difference versus your competitors,” Smith advised. “Define and demonstrate why your rates are what they are, and that they can be clearly measured.”
“The magic word is ‘communication,’” added Tang. “Only by frank, open, unreserved communication can you bring a win-win. This is not just between two departments, but all different departments should do the same.”
Othman recommended that greater transparency of costs and individual line items is crucial. “Gone are the days of an all-in-one package. Now procurement teams want you to specify each individual item that is included. As this may disturb the symphony of the event planning, it can be quite critical.”
Beyond the challenges posed by procurements teams, PCOs and agencies must contend with the looming spectre of China, where big event agencies offer cut-rate low prices in order to land a contract, and players in destinations like Singapore and Hong Kong are priced out of the market. Is this a threat that will decimate the market?
For some, it is not a cause for concern. “Price is absolutely not the most important factor,” Tang said. “Duty of care, excitement, language, service, transportation, visa restrictions and safety all play an integral part in the decision-making process — particularly for events that involve senior management or incentive trips. Cost is indeed, a much lower priority in these events.”
Furthermore, the truth is that staging an event is a people’s business, with complex processes and variations, and simple outsourcing will remove the human element, the core of the structure holding it all together. The result is that no matter how good a company or infrastructure, it is the team’s talents, know-how, and insider knowledge that deliver the result.
“We don’t see a big exodus of clients outsourcing their event procurement to China,” Othman said. “While price is important, so is local understanding of business culture and quality experience.”