MiceMaster Blog

A Quick Q&A with MiceMaster

What is MiceMaster?

MiceMaster is a web-based corporate procurement system that is custom built to allow corporates to enforce transparency of supplier quotes and regulate DCP rates, venue costs and other supplier expenses relative to MICE (meeting, incentive, conference and events) business. The MiceMaster system allows planners, authorisers, procurement people and finance personnel to quickly identify where true value lies in multiple venue quotes, in real-time. MiceMaster also enforces procurement strategies to save companies substantial monies, while rewarding quality, professional suppliers with increased business.

 

Simultaneously, the MiceMaster system will quickly expose PCO’s and other suppliers who are contracted to corporates at an agreed percentage, but may be hiding additional margins in management fees, commissions and overrides. Users who practice maverick spending, who are directing business in ‘favourable directions’, will also immediately be flagged by the system.

 

MiceMaster conservatively aims to save corporates 12,75% of MICE spend in year one, over 20% in year two and depending upon how aggressive the corporates’ procurement department and travel managers are, 28% in year three.

 

These are aggressive targets but as ‘Andrew Millar’ – developer of the system- says MICE, as the fastest growing travel sector, is plagued with rogue PCO’s, non-compliance, excessive mark-ups, inexperienced event planners, vague quotes and little MIS. The transparency that MiceMaster delivers will achieve these targets.

 

How long has it taken to build?

‘Millar’ recalls one of his partners over two years ago remarking ‘We have a simple solution that should only take a few months to build’. Over two years later the business still has an extensive development list being tackled by their webmaster ‘Irene Venter’ whom states that 90% of these new developments have been actual requests from Chief Procurement Officers in large corporates looking for additional functionality (such as the ability to reverse auction a conference RFP). ‘This is not a prototype – we have walked a long road with several large organisations while at the same time consulting with large hotel groups to develop MiceMaster. Much of the functionality has been developed by working closely with numerous corporate travel arrangers, PCO’s, PA’s, procurement heads and financial directors’, says Venter.

 

Why did you see this gap in the MICE space and explain why you think this area is under-serviced?

As opposed to other corporate travel sectors (such as airline, accommodation and car rental) corporates, travel management companies and self-booking tools (SBT’s) implement and enforce strict travel policies to control costs. Suppliers and TMC costs have long been subject to much scrutiny with complex procurement strategies, regular supplier negotiations and ever-advancing technologies and tools all of which are designed to drive cost savings in the above mentioned travel sectors while the MICE sector has been left to literally run amok. The enormous MICE spend generated by large corporates from all sectors is left almost completely uncontrolled.

 

‘We see large businesses with hundreds of suppliers who have very little idea where their millions of Rands are being spent, by whom and for what services’, says Millar.

 

Furthermore MiceMaster reports that the sector’s procurement processes are entirely flawed- whether secretaries, PA’s or travel arrangers are initiating an external conference or event directly with a venue, or contracting via any number of PCO’s, the process is totally exposed to abuse and rogue expenditure.

 

MiceMaster views the following as a few of the reasons why this sector is under-serviced:

  • Inexperienced secretaries, PA’s and internal event planners managing MICE business RFP’s tend to create vague email briefs with very little detail, omitting numerous costs at the start of the planning process.

  • Non-descript, inaccurate venue-direct and PCO quotes being received in multiple formats, rarely containing detail and the true costs of the event or conference with many categories such as catering being lumped into a single total. This makes it impossible to see what services and facilities are truly being offered.

  • Few expense- and contractual sign-off policies with junior secretaries signing hotel and PCO contracts with no understanding of the financial ramifications should an event be cancelled and without the authorisation to actually sign-off the agreement in the first place.

  • No budgets set pre-conference as historical data is not available, hence there is no benchmark to compare to as costs escalate.

  • Special favours extended to organisers at all levels by venues and PCO’s alike with many suppliers being friends, relatives or close relations.

  • No post-conference reconciliation process, numerous unexplained supplier costs and very little in the way of MIS for procurement and finance departments to control and analyse spend.

‘There are a couple of other systems available that are supposed to help manage business events but we see these more as glorified hotel directories pushing vague briefs and redirecting grey, non-descript quotes’, says Millar. ‘MiceMaster is not a delegate management system. It is a complete MICE procurement system that addresses many of the challenges companies face in wanting to contain business event costs’.

 

Give me a sense of how much ‘rogue’ spend there is out there, in this space?

‘We know rogue MICE spend issues are rife throughout the industry having consulted with numerous parties including SAACI, CIPS, Asata, corporates and PCO’s’, claims ‘Millar’.

 

‘This rogue MICE spend not only adversely affects corporate spend, it also undermines many reputable, professional suppliers actually offering good value (be it a PCO or venue) as contracts regularly are awarded because of favouritism’, says Millar. ‘The result o this is that suppliers, who are frequently less than qualified and are hiding excessive mark-ups, are being awarded millions of Rands of business’.

 

‘We had a live quote scenario recently where four PCO’s all contracted to the firm at a 10% management fee, quoted on the identical very tight MiceMaster brief and the one PCO was 39% more expensive than the lowest quote for the same venue, same services and same facilities. That is what MiceMaster does well: it forces transparency and allows users to easily compare apples with apples’. MiceMaster agrees that it is not always about the lowest quote and quality of services and expertise are critical, they claim their system helps redirect business to these quality suppliers, not just drive down rates and lower costs.

 

‘We encountered a large TMC who had purposefully dropped their commissions to zero percent and who still could not win the business’, further proof of the sector’s uncontrolled buying habits.

 

 

What has been the initial response from the market?

MiceMaster claim that they finished Phase 1 development in September 2015 but have been actively engaging companies for almost a year to adopt the system. ‘We currently have seven high profile, large corporates who are in various stages from interest to implementation. Some have used the system for live conferences, others are still presenting the solution to management’, says Millar. ‘It is a long sales cycle and we are very cogniscent that this can be seen as a disruptive business model which needs to be deployed carefully’.

They report that they have had push-back from some suppliers, not unexpectedly either, but others have welcomed the system as it potentially has the ability to bring them more business. ‘This cannot be a cart before the horse scenario, we cannot over-promise and under-deliver which has been the case with so many travel technology systems in the past. If we on-board the suppliers too early and we do not deliver conference RFP’s, the hotels, venues, PCO’s and other suppliers will not be enamoured. We know we have the only system in the market both locally and globally. ‘Recently a senior procurement head in a large financial management firm stated that he had been looking for a system like ours for five years’, claims Millar. MiceMaster are currently engaging with various parties including GDS’s to accelerate local and regional market share and to deploy the system .

 

What are your overall thoughts on what role technology can play in the business travel space, in terms of providing solutions?

Having sold numerous self-booking tools and other web-based platforms into corporates for years it is clear how technology adds a huge amount of value to the coporates, TMC’s and suppliers alike.

 

‘Coming to market with MiceMaster seems surreal in that there is nobody else playing in this space’, says Millar. “Nobody likes being ripped off and with MICE the playing field is far from level. The procurement of MICE is a unique process – unlike buying air or accommodation services or even office supplies for which even the big ERP’s offer a workable solution.

 

MiceMaster know they are not going to be too popular in some travel industry circles but if the one constant in life is change, this system could well be a game changer for the MICE sector.

 

Micemaster corporate risk
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Reducing Corporate Risk with MiceMaster

In many corporates the authorisation of MICE orders and venue contracts are completely out of control- employees are signing hotel contracts to secure room inventory with little or no understanding of the legal ramifications. Management cancel conferences with no understanding that a 100% cancellation fee is now due to the hotel. ‘Hundreds of thousands of Rands are paid out for services not rendered’ says MiceMaster. The system combats this by pushing the quote essentials through to the authorised personnel who are able to make an educated decision before an order is issued. This allows authorisers to question why a non-preferred PCO is being used or why a more expensive quote for the same venue is being procured.

 

At our system demonstration, MiceMaster revealed a live quote where three preferred partner PCO’s had quoted on the same properties with exactly the same detailed brief. The variable between the highest and lowest quote was 39% and these were PCO’s with contractual mark-ups agreed with the client!

 

Adding further compliance to corporate policy, the ERP or procurement/order numbers and codes can be inputted as orders are issued aiding reconciliations. ‘Complete ERP integration is high on our future development plans’ says MiceMaster.

 

MiceMaster users eat conference organising for breakfast

As opposed to dying of email and administrative overload, a MiceMaster corporate user, even if inexperienced, becomes a formidable, fast, detailed, efficient and valuable commodity in any business. In minutes a complex, detailed brief is constructed from scratch using the system’s user-friendly 10-step prompt interface. If any of the event details change: dates, number of delegates, city etc. as they so often do, the user does not waste time starting the re-brief process. He/she is able to open/edit and resend the updated brief to the same or new venues and PCO’s. The user can request quotes from venues directly, PCO’s or both.

 

When the detailed brief arrives at the venue for quoting, the recipient simply accesses MiceMaster via a unique hyperlink and completes the structured quote template that auto-calculates costs driving transparency and detail in the quote structure. If a venue wants to hide AV costs behind a sub-total and not be specific, it will easily be picked up by the organiser. If the venue’s room rate has been marked-up by a PCO in order to hide margin that contractually they are not entitled to, MiceMaster will help the corporate planner identify where the double-dipping is taking place.

 

The user also selects a date field by which they require the quotes to be submitted so that venues know how and when to react. As the quotes are received, MiceMaster alerts the users who are able to easily compare apples with apples because MiceMaster supplies identical quote formats in the system. When sufficient quotes have been received, users will trigger the authorisation process that will lead to an order which is also placed via the system.

 

As MiceMaster says this is not a glorified hotel directory that triggers an email to a venue to quote, of which there are several globally, this is a complete procurement tool designed to save monies and give business to suppliers who deserve the business.

 

Building Budgets and Pricing Intelligence

As MiceMaster goes about the process of sourcing quotes and issuing orders, it is continuously building a library of critical reports. The system auto-calculates what they call a ‘CFD’ or Cost per Delegate on every conference. This benchmarks what companies should be paying for standard conferencing models i.e. a one night, one day, facilities, food, drink and conference. This data will trigger ‘spend abuse notifications’, shutting down rogue expenditure further.

 

Average CFD rates are continuously tracked and over time a company can easily build a picture as to where value lies and where abuse is taking place. All this MIS consolidates to create a barrage of data that will assist in achieving procurement negotiation goals.

 

Corporate Cost Savings

MiceMaster functionality offers companies numerous opportunities to save on MICE costs. Managing maverick behaviour and rogue suppliers is near-on impossible without a system and the grid below indicates the various ways in which MiceMaster claim they can create saving opportunities. It makes sense in so far as if you tighten-up the preferred partner strategy and authorisation process and then show transparency in supplier quotes, you are a long way ahead. Just making secretaries, PAs and travel arrangers far more efficient results in substantial savings (note: these are MiceMaster’s estimations of savings).

 

MiceMaster says the PCO vs PCO image below is a true reflection of the contracted PCO’s competing with the same detailed brief on the same property. Identifying 40% savings must appeal to many a Chief Procurement Officer.

 

MiceMaster Future Development

Plans are in place to further develop the system to indicate to suppliers which aspects of their quotes are competitive and which are not. ‘We had a scenario recently where the PCO quote was astronomically high; unbeknown to the company it was the flight component the PCO had sourced that was precluding them from receiving the order’ says MiceMaster. The plan is to identify where pricing issues lie and allow the supplier to have another crack at the quote. Currently the supplier can easily override their previous quote but the functionality will be refined.

MiceMaster reports that a client has also requested ‘Reverse Auction’ functionality which, while commonplace in other procurement areas, has certainly never been available in the MICE space so that venues can bid on conference business.

MiceMaster
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Disrupting the MICE industry

Anyone who has watched the television show Dragons Den™ where would-be entrepreneurs pitch their ideas to a panel of successful business people would have seen that not many new business concepts hold water. At the same time, if one looks at information available on venture capital for new businesses, the appeal for investors seems to be what they commonly refer to as disruptive business models i.e. Uber or Airbnb that challenge traditional business models.

The MiceMaster business concept offers an elegant solution, if not the only solution, to the age-old issue of how to control the hundreds of millions of Rands that corporates spend on external meetings, incentives, corporates and events and can at the same time be described as a disruptive business model. While corporates will save a lot of money by implementing the system, suppliers of MICE services are going to find it very hard to hide anything that is not a fair mark-up, a contractual commission, margin or management fee.

Running on the MICE wheel

MICE is currently the fastest growing travel sector in South Africa. For many companies monies spent on MICE business remains a vague unknown amount procured via laborious, manual processes with very little sign of sound procurement strategies. When asked about volume of spend, many companies enter into a high-end vs low-end debate because MICE spend reporting is (more often than not) non-existent and companies cannot commit to a total spend. Furthermore, a large corporate may try and reduce the number of preferred PCO’s but parallel to this hundreds of suppliers still exist with staff continually adding more to their shot-gun procurement strategy.

Bad briefs equate to massive overspending

Booking a conference is frequently left to the secretary, PA or internal travel organiser to choose whether he/she will use a particular PCO or contact a hotel directly in order to source quotes. At this stage the process is already flawed as favouritism, such as free week-end stays, are commonplace. Because the email or verbal brief is often vague, it gives the venue or PCO license to quote on the minimum amount of services in order to keep the quote totals as low as possible improving their conversion odds. Venues and PCO’s leave essential services like parking, on-site management and specific catering needs off the quote totals in order to keep the total amount as low as possible. For example: sub-totals are bundled as catering™ but there is no detail such as extra costs billed for Halaal or additional drinks that fall outside of the DCP rates.

Paradoxically, if a venue or PCO responsibly includes all the extras they are compromised as the event organiser cannot compare apples with apples within the myriad of quote formats received. Missing items perpetuate confusion and it becomes impossible to see where true value of the quote lies. MiceMaster told us of a 5 star hotel who was discounting their DCP (daily conference rates) to win business but if you wanted anything more than a ham sandwich for lunch, then you should have requested the Executive DCP rate if you wanted a hot meal!

The result of this is that the event organiser issues the order based upon a misleading quote total and then the long list of additional charges start to appear that annihilate budgets requiring multiple authorisation of unforeseen costs. Even long after the event has taken place corporates are unable to reconcile costs.

MiceMaster builds and manages MICE procurement strategies

While corporate air, hotel and car spend is locked down tight with complex travel policies and self-booking tools, suppliers are frequently forced into volume-based negotiations to drive down rates and increase override deals as part of the on-going procurement strategy. MiceMaster manages MICE procurement strategies to achieve the same:

Procurement departments are given access to the MiceMaster procurement module and in conjunction with MiceMaster are able to pre-program the system to not only favour preferred partner suppliers, but also to consolidate MICE spend where volume-based discount negotiations and BBBEE procurement are to be had.

At the click of a mouse procurement is able to manage preferred buying through the system, add a supplier or immediately shut down a rogue supplier that is found to be either over-charging or delivering inferior services. The following supplier categories are pre-programmed and selected according to preference:

– Hotel groups

– PCO™s

– Catering companies

– Audio visual companies

– Travel management companies

– Transfer companies

Thereafter procurement departments, normally in association with finance departments, select the financial reports they wish to receive month-end. As users go about procuring conferences via the system, MiceMaster continually talks™ to the procurement department personnel, alerting them of quote requests, rogue behaviour and orders.

Furthermore, MiceMaster reports that many financial departments have no idea to what extent their cash-flow would be altered if all staff charged with sourcing MICE quotes issued orders simultaneously as there are no controls. MiceMaster solves this problem as at any given time, procurement can see what quotes are in the system and what orders have been placed. Most importantly, the system forces the user to explain why a particular venue was issued the order which makes for interesting reading says MiceMaster, The Marketing Director told me to book the 5 star property.

Adding fuel to the fire, people charged with sourcing quotes are often too busy or are late in sourcing quotes, compromising compliance further by only sourcing one quote. MiceMaster can reveal the user activities by date i.e. if Sandy only requested the quote a week before the event or only contacted one venue ¦ why?

At any conference, just because the venue has been given the contract to host the event does not mean that expenditure is under control, 3rd party costs continue to pressurise budgets such as entertainment, décor, guest speakers or team building. MiceMaster records these costs and allocates them to the quotation management modules so at a glance, procurement and finance departments can see additional costs being added. There is still a lot of additional functionality we are building into the latest version of the system that will enhance compliance even further says MiceMaster.

MiceMaster there is a rat in the mice kitchen
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The financial challenges of MICE business


…There’s a RAT in the MICE kitchen

 

A three day conference, twenty two delegates and Professional Conference Organiser (PCO) management fees of R357, 000!  A rogue PCO being awarded millions in net-commissions a year with a staff quota of five, still asking for additional margin from the corporate. A five star property found to be quoting vastly reduced DCP rates for an executive conference- when challenged it was identified that cheese sandwiches would not suffice- they announced that perhaps their executive DCP rate of R560 would be more appropriate. The problem: recently logged real-cases in the realm of MICE. How? Excessive commissions, mark-ups, management fees and overrides: all too common in the current world of MICE. Corrupted with rogue expenditure, so called preferred arrangements and constant weekend site inspections™, conference business today is ultimately steered by acquaintances and suppliers or close relationships™, which is seldom reported.

To be frank: the current realm of MICE, be it the corporate dealing with the venue or via professional conference organisers, is an uncontrolled nest of rogue procurement habits. MICE, however unregulated, is the most profitable, fastest growing sector of corporate travel business; ironically in an economy where one would think expenditure control was a priority for businesses.

So where does MICE procurement go wrong? The process is flawed. When a secretary, PA or an in-house travel arranger is tasked with organising a conference the original briefing hardly amounts to much more than a dozen email bullet points, inherently giving the suppliers carte blanche. Suppliers then intentionally submit vague quotes, omitting to give detail, which would result in the lowest possible Rand total for the conference. Once the client is contractually hooked, the  grey areas are revealed which entail additional services and charges, that were never specified in the first place.  These extras suddenly bombard the corporate, and is eventually blindly signed off by a supervisor when the frantic corporate organiser needs immediate signage on just another expenditure. The additional costs are never recorded and suddenly neither procurement nor finance know where the millions of Rands which were never originally allocated to the conference went. This flawed practice is fuelled by the corporate’s solitary Travel Management Company (TMC) policies as well as their Self-Booking Tools (SBT) which are pre-programmed with their procurement strategy. The corporate’s MICE approach is more often than not left up to an anonymous’ junior corporate employee to choose which hotel/venue or PCO gets the corporate’s business with no volume-based discount strategy over flights, hotels and car rentals in the corporate travel realm. Again, the supplier merely throws in an arbitrary low quote in order to be awarded the conference.

There are a number of operators who offer products to facilitate the vague MICE enquiry process. They offer fairly comprehensive hotel and venue listings to whom one can write a brief. They also facilitate, free of charge, the delivery and retrieval of said conference quotes. But can they provide such a service to corporates or afford to do so for free? No. These operators mark up the services en route to the corporate and therein lies their slice of cheese. Realistically such venue directories and facilitators do nothing to control the rogue behavioural patterns of South Africa’s MICE industry.

Enter MiceMaster, with the pay-off line: Who Moved My Conference. The first procurement tool designed to rein in costs and save corporates millions of Rands. Designed in conjunction with corporates, hotel groups and PCO’s, the system is unique in its holistic approach. Deployed into the corporate environment, MiceMaster firstly helps companies identify their procurement strategy in order to streamline the process efficiently. The corporate’s preferred suppliers are loaded onto the system, ensuring that anyone using the system to procure conferences is in no way confused as to whom they should be using as part of the corporate’s greater strategy. This is done in terms of primary, secondary and tertiary suppliers from hotel groups, venues, PCO’s, catering and Audio Visual companies, TMC’s, transfer companies and other service providers. The system then guides the corporate user as it assists them to build an accurate brief that suppliers find refreshingly detailed, saving them time and effort in communicating with the organiser to determine their needs via telephone or email.

MiceMaster, as per an airline booking system, runs the user through a sequence of platforms helping them to identify their needs; culminating in an overview or final comprehensive brief which is then ready to be distributed to the company’s preferred suppliers.

MiceMaster can conservatively save corporates over 10% of spend in year one with escalating savings as the procurement strategy takes effect. That is a big chunk of change that any procurement department would like to deliver to the board.

If you are a CEO, MD, Board Member, Shareholder, Chief Procurement Officer or Business Owner and with substantial expenditure on MICE, you need MiceMaster. With MiceMaster, venues and PCO’s who would previously never get the opportunity to quote and pitch to large corporate businesses also get a shot, transparently opening up the market and corporate to new and valued financial prospects. MiceMaster is also for the people at the coal face who slog away organising conference after conference, drowning in emails, phone calls and admin. MiceMaster speeds up processes, reduces admin, increases efficiencies, helps them buy better and become indispensable as a MiceMaster user overnight.