Next Generation Event Consolidations - Pharmaceutical Executive

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Next Generation Event Consolidations


Pharmaceutical Executive


Carol Krugman
A few years ago, when you saw a pharmaceutical company consolidating its overall event and marketing spend, you could be pretty sure that the goal was to save money. Not anymore. Today we have Sarbanes-Oxley requirements, federal regulations, and promotional guidelines, and an increasing number of state-level limits on honoraria, gifts, and grants to healthcare practitioners (HCPs) and their institutions. Add all that together and companies have a powerful new reason to control, track, monitor, and justify funds allocated to such areas as meetings and conventions.

Today, companies must be prepared to document what they spend on an event, providing detail down to the level of a specific HCP participant at a specific meeting and/or across several events over a given period of time. Internal planners and the event management agencies to which they outsource logistics must align their major activities—sourcing, contracting, organizing, on-site implementation, and final reconciliation—to one or more regulations, codes, or requirements.

For example, let's say that your company works with a certain Dr. John Smith, a cardiologist from Omaha, NE. He's a principal investigator in a study being coordinated by a CRO that your R&D division has contracted with; he has participated in two KOL meetings sponsored by your marketing division; he's a member of your speakers bureau and has given presentations at three dinner meetings organized by an agency working directly with your local sales rep; and he has chaired an open symposium at the American College of Cardiology convention funded by an unrestricted grant from your company given to the ACC by one of your professional relations liaisons.

Now imagine that your auditor is requesting an accounting of your financial relationship with Dr. Smith. He doesn't just request the total amount spent by your company on Dr. Smith (though that would be hard enough to determine). He also wants proof that the cost of travel, hotel accommodations, and meals provided by your company at each individual meeting he attended were within "reasonable limits." And he wants you to demonstrate that everything is in compliance with PhRMA, OIG, ACCME, SOX, and the rest of the alphabet soup of agencies, policies, and rules that regulate your company's activities.

It's not easy. The technology for doing the job is constantly improving, but it's still a challenge to track individual and aggregate spend throughout multiple business units and divisions of a company. Add a new layer of requirements relating to multiple compliance codes, guidelines, and regulations, and the task becomes even more complex.

The Challenge of Consolidation

Take Dr. Smith, for instance. To provide an accurate accounting of what your company has spent on him, you will most likely have to cull information from two, three, or four databases, none of which are integrated with your department's "central" meeting database, and each of which can be accessed only by specific people in the departments where they reside. Did I mention that there are more than 400 Dr. John Smiths scattered throughout these databases, including multiple cardiologists and Nebraskans? There's even a Dr. Joan Smith, a gastroenterologist who just happens to work in the same group practice in Omaha as the doctor you're trying to track.

Talk with anyone in procurement or meeting management who has been involved with a consolidation initiative and you'll hear just how challenging the process is. But there's no getting out of it. Your company is required to track every financial touch point with Dr. Smith and thousands like him. It's a regulatory necessity.

And that means that meeting consolidation is also about your company's relationship and credibility with regulatory authorities, HCPs, and the general public. Infractions or failed audits can result in significant financial penalties, negative media coverage, or both. Can any company today with products in Phase III trials or beyond afford not to implement an enterprise-wide meeting consolidation program?

The Keys to Consolidation

To consolidate marketing spend, you have to implement a comprehensive strategy grounded in measurement, enabled by new tools and processes, and driven by a focused alignment with business objectives. Though there are substantial technical challenges, this is not an IT project.

There is consensus that a successful strategic meetings management program should include the following components:
Stakeholder identification and inclusion
Data gathering/benchmarking
Strategy development
Process and procedure development and/or standardization
Implementation
Supplier management

At a workshop on Procurement and Global Meeting Planning earlier this year, Shimon Avish, practice leader of advisory services at American Express Travel, summarized his company's methodology this way:
Policy
Technological infrastructure
Preferred supplier program
Standardized sourcing and planning processes
Payment platform
Change management

Clearly, one could devote a whole article to any of these points. For now, let's just take them as a sign of the breadth and depth of the project.

Each of the above-mentioned components requires cooperation and collaboration among professionals from several departments, and in many instances, outside expert facilitators. The words "cooperation" and "collaboration" may roll trippingly off the tongue, but cross-functional initiatives are challenging in companies organized in silos. In a given company, the meeting planning department may reside in marketing, finance, procurement, or a division referred to as "general operations" or "shared services." The most successful consolidation programs are usually developed by meeting and procurement professionals who have educated each other, understand and respect the fine points of each discipline, and work together as a team from the outset.

Get a Buy-in From Management

If we've learned anything over the past 10 years, it is that the success of any consolidation effort is directly proportional to the involvement and support of senior management. If the initiative is not publicly endorsed, championed, promoted, and mandated from the very top of the organization, its success will be limited. Consolidation entails major behavioral and organizational change, and change of this magnitude requires time and patience—and consequences for noncompliance.

Some people will lose control over decisions they used to make. If you haven't experienced how people react in that sort of situation, think of a mother lion defending her cubs from hyenas in one of those National Geographic television documentaries. Ask employees to use the services of a centralized meeting department, and you may or may not get significant results. Have the CFO mandate that hotel contracts will be signed and invoices related to meeting expenditures paid only if they go through the centralized department, and you're likely to see change more quickly.

The Quantum Leap

Over time, a top-down, methodically implemented, and continuously reviewed and improved consolidation program produces truly significant results. Ten years ago, one CEO decided his multinational IT company was hemorrhaging money and diluting its brand image in thousands of large and small events around the world. Meetings, exhibits, trade shows, and customer events were managed by multiple departments, business units, and country organizations, as well as hundreds of suppliers.

The CEO made a bold decision, appointing one global advertising agency of record and one global event management company of record to establish and maintain a uniform and coherent brand identity and manage a carefully controlled group of suppliers. Cost savings for events in the first three years of the program totaled tens of millions of dollars. A decade into the program, under a different CEO, the program is still in effect, and the same agency continues to coordinate major events and a reduced supplier chain. To date, procurement-documented savings for this company total nearly $100 million.

While this may appear to be an extreme example, the point is not to suggest that pharmaceutical companies rush to adopt single-source supplier models. Rather, it is to demonstrate that strategic meeting/event management is not a theory, but rather a real-life option that is producing real-life results in companies from various industries. Given the increased pressure from both internal cost-control mandates and external compliance imperatives, it is not surprising that meeting consolidation within the pharmaceutical industry is poised to take a quantum leap.

Carol Krugman is director of client services for experience marketing agency George P. Johnson. She can be reached at

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