When Halifax and Bank of Scotland (BoS) merged to form HBOS in 2001, the new organisation faced a massive data management exercise.

Undaunted by the many conflicting operational systems, and duplicated data, held in different structures across the new £320bn organisation, management planned that the merger would deliver savings worth £300m.

Manually integrating the records and operations of two major national banks would arguably be a lifetime's work. But HBOS set its sights on completing the project in months.

One core business area, with the potential to generate multimillion pound savings, was procurement.

With a total spend of more than £1.7bn a year, purchasing is a vital process for HBOS.

'Acquiring management information was key to unlocking the cost-saving opportunities,' says Ian Taylor, head of group procurement.

'We wanted to provide accurate, timely information to decision-makers involved in supplier negotiations, and to measure supplier costs and performance across the group. Success in procurement is built on knowing who spends what, with which suppliers.'

But achieving a consistent view of all the data held in the separate Halifax and BoS purchasing systems was a major task.

Between them, Halifax and BoS had 100,000 suppliers, many of them shared - but they operated 17,000 unique account codes. Halifax and BoS used the same software to manage payments to suppliers, but disparities in coding and structural hierarchies meant

that HBOS was unable to view consolidated information about spending without lengthy, costly and inflexible manual processing.

To control procurement expenditure, rationalise and manage suppliers more effectively, and identify opportunities to reduce costs through consolidated purchasing, HBOS first needed to see the consolidated spend per supplier, and by commodity.

Preliminary studies showed that modifying existing procurement systems to fit each other would prove expensive and time-consuming, and would not deliver the flexibility to cope with future changes.

Instead, management created a flexible datawarehousing and business intelligence software layer that would sit above the two different systems, and act as a window into the data. This approach minimised disruption to operational systems, and was good preparation for future organisational change.

Information management specialist Acuma worked with the bank to develop a supplier relationship management system, called HBOS SRM, powered by Kalido's datawarehouse software. Ascential tools were used to handle the initial data preparation, and reports and analysis were - and still are - generated using web-based InfoView software from Business Objects.

The implementation began in February 2002, and the first stage was delivered just three months later.

Today, HBOS has eliminated duplicate suppliers from its database, cutting the list from 100,000 to just 28,000. The bank has also consolidated its 17,000 procurement account codes down to just 27 commodities split into 142 categories.

Staff in five locations have a consistent view of all the data in the original Halifax and BoS systems, and can 'slice and dice' the output to get the information they need in the form most useful to them. They can view purchasing spend in numerous ways, for example by supplier, category of spend, or item, and drill down from aggregated, group-wide information to individual transactions.

Numerous suppliers and categories of spend apply to all HBOS divisions - for example, everyone buys temporary staff, travel and print.

Prior to the SRM project, it was impossible to see costs split across divisions. The data management system makes this easy, reducing the time spent on data sourcing and preparation, and allowing procurement staff to manage even the most complex supplier relationships.

'We can now see exactly what we are spending with suppliers, and how much we ought to be spending with them, which puts us in a very strong negotiating position,' says Taylor.

The flexibility of the new system allowed the bank to add new fields to assist managers. One example is 'influenceable spend': commodities are categorised according to how much influence procurement has over them, making it easier for staff to concentrate on the most significant factors.

'Because HBOS SRM gives us a more complete picture of the group, with greater accuracy than ever before, we can monitor actual spend over time and against what was planned, and thereby identify and focus on areas where spend is increasing,' says Taylor.

HBOS has plans to reduce its supplier list even further, and Taylor is confident the data management system will support any future changes.

'With HBOS SRM, we know that if we suddenly have to switch to the euro, or find ourselves in new merger or acquisition activity, we have the flexibility to do so quickly, and with minimal disruption.'

'SRM has been a successful project that helps us to deliver information that is critical to the business,' he says.

'The integrated data is a key enabler for the significant savings we are now seeing in procurement. It gives us full visibility on group expenditure, and supports procurement activity to save money and control suppliers.

'I'm not aware of anybody in the industry today who has the same degree of access to data as we have.'