I. Project Information

a. Company and division name:

HBOS plc

b. Web site URL:
c. Project designation

An innovative supplier relationship management project (HBOS SRM)

d. Brief explanation of the goals of the project

When Halifax Bank and Bank of Scotland (BoS) merged to form HBOS plc, the new organization wanted to leverage the synergy between the two companies to generate significant savings in procurement. HBOS plc, the United Kingdom’s largest mortgage and savings provider, has 22 million customers and a relationship with two out of every five households in the UK, with assets totally more than £440 billion. Success in procurement is based on knowing who spends what with which suppliers, yet due to the disparate and conflicting operational systems in place, HBOS was challenged with providing accurate, timely information to decision-makers involved in supplier negotiations and measuring performance across the group.

With a company of such formidable size, manually integrating the records and operations of two major national banks was never an option for day one. To successfully address company-wide procurement activities, HBOS required a flexible solution that could address their specific needs, could be implemented quickly and would be resistant to any business change that might occur later on in the company’s life.

After the wide success of this initial phase, HBOS needed to extend the reach of the system to incorporate further subsidiaries. Additionally, HBOS wanted to include external data on the 20,000 suppliers, giving an even more comprehensive insight into procurement spend, and due diligence information. To maximize the economies of scale made possible by the merger, and drive significant savings, HBOS also needed to gain a better picture of all 10,000 line-items bought through its e-buy system organization-wide. An accounts payable system from Oracle was also being implemented at the same time, so HBOS needed to ensure no business disruption was caused to users.

e. Brief description of the business risks involved

The core business risks and challenges that had to be addressed were: time limitations; continued flexibility in the face of business change; integration between disparate operational systems; ensuring accuracy and timeliness of information; and business and IT user alignment and coordination.

HBOS required a flexible solution that could address their specific needs and could be implemented quickly. Traditional data warehouses would not fit the bill as they would take a minimum of 18 months to deploy and would be resistant to any business change that might occur later on in the company’s life.

Integration with other operational systems was essential to the success of the implementation. The operational systems used to manage procurement in Halifax and BoS were structured very differently, so HBOS needed to create a flexible data warehousing and business intelligence layer above them. HBOS needed technology that would provide a single, consistent view of procurement data, without the delay or disruption of standardizing source systems, and deliver accurate, timely information to decision-makers involved in supplier negotiations.

The project involved people from several different organizations including Kalido and systems integrator, Acuma, as well as people from the HBOS Procurement systems team and internal HBOS Group Technology experts. A strong team ethic permeated the whole project, making a big contribution to success, but also creating the need for intense corroboration and communication among all individuals/groups involved.

f. Brief description of how the system helps users

The HBOS procurement department is now able to nimbly drive efficiencies. With the integrated information, decision makers now can make better-informed supplier negotiations, maintain supplier performance and costs, and develop stronger relationships with suppliers across a complex organizational structure.

Enabling the e-procurement system to be extended to subsidiaries that run entirely different ordering processes and are located away from the main centers of Halifax and Edinburgh, HBOS SRM allows the local units - Birmingham Midshires, Clerical Medical and Halifax Life and Pensions – to continue with their normal reporting methods, maintaining agility in the face of complexity and incessant business change.

The procurement department is also now able to compare management information generated by the new accounts payable with that generated by the old – a tremendous benefit as typically it is extremely difficult to compare data spanning the lifetimes of two accounting systems.

II. Organizational Objectives

a. What short- and long-term benefits did the organization achieve from the project? Did the solution meet the projected goals for saving time and money? How were benefits measured? Was the system mission critical to the organization?

In short: The SRM system assists in generating significant procurement savings with spending reports for complex negotiation with suppliers; provides full visibility of group expenditure within just three months; reduces time spent by procurement managers on data sourcing and preparation; produces fast, accurate management information; and enables procurement to be viewed by supplier, category and/or item.

At the time of initial implementation, HBOS plc was investigating every possible way to generate savings and knowing each supplier, exactly what was being spent and with whom, as well as what was being purchased by different areas within the business enabled the procurement area to be an integral part of cost savings achieved. With £2.4 billion in annual procurement spending, this initiative was certainly mission critical to HBOS’ overall success.

HBOS not only achieved, but also surpassed, its primary objectives and goals in relation to saving time and money. Kalido has helped HBOS maximize previously untapped revenue opportunities with suppliers.

Through the SRM system, the organization has developed a consistent group-wide commodity structure, consolidating account codes by eliminating duplicates and re-ordering them into just 27 commodities split into 142 categories. For the first time, the organization has a clear view of all 10,000 line items bought across the entire organization using the e-buy system, with detailed spending and usage patterns. In addition users can ‘slice and dice’ the output to get the information they need in the form most useful to them. The solution allows users to view procurement spend in numerous ways – for example, by supplier, by category of spend, or by item – and to drill right down from aggregated information to the level of individual transactions.

In order to give an even more complete picture of supplier relationships, the procurement team extended the system to include external data feeds. Risk management specialists Dunn & Bradstreet provide HBOS with due diligence insight into its top 20,000 or so suppliers, and now supply a comprehensive data file every quarter detailing risk information. This makes complex procurement information much easier to understand and analyze.

All of this has been achieved in a fraction of the time it would have taken to build the SRM system using traditional methods, which unlike KALIDO software, would have required extensive and costly re-development to reflect the business changes. The procurement teams no longer rely on IT specialists to provide the views they need or to make changes. HBOS SRM gives a more complete picture of the group, with greater accuracy than ever before, and reduces the time spent by users on data sourcing and preparation. It allows HBOS to monitor actual spend over time.

With the SRM system based on corroboration with systems integrator, Acuma, reporting and analysis from Business Objects, Ascential extract/transformation/load tools, and the project lynchpin – KALIDO adaptive enterprise data warehouse – HBOS can now examine procurement by time and region through the merger date, regardless of region or organizational structure changes. This saved the procurement team massive amounts of time and energy, alleviating the need for extensive data reconciliation and research.

Success in Procurement is built on knowing who spends what with which suppliers – acquiring this level of management information was the key to unlocking a whole range of project and cost saving opportunities and the accomplishment of such was the greatest measurement of the project’s uncontestable success.

The SRM system has been a great driver in the organization and is expected to remain a critical component in the years to come – a difficult feat in an industry so prone to incessant business change where the IT components typically can’t keep up with the rapid pace.

b. Describe the business purpose of the new system.

The SRM initiative, centered with Kalido’s adaptive data warehouse technology, has been instrumental in delivering the needed business data and insight to make required procurement decisions and changes to fulfill the business’ need for cost savings and internal realignment in light of the merger.

c. Describe the features of the new system.

The new application provides an overarching view of the procurement data with granular detail. It enables business users to obtain top-level views across multiple systems. Reconciliation can now be achieved more rapidly and using fewer resources than were previously required, and the application now also provides comprehensive insight on supplier risk.

KALIDO’s easy-to-use components remove many of the management issues of data warehousing. Users can manipulate data within the business models and hierarchies with ease. The application controls access to data and automatically tracks all changes made to the warehouse, ensuring that valuable corporate information is safeguarded at all times.

As the system sits on the corporate Intranet site, authorized users can choose from a list of pre-written Business Objects reports and enter a supplier name, for instance, to generate a report with multiple tabs: from high-level information to supplier invoice lines.

d. Explain the functions of the new system.

The system provides reliable, secure and timely access to data across the enterprise through reporting tools such as Business Objects.

e. Who were the internal sponsors of the project? Which officials or groups were opposed to developing the application? Why?

Head of procurement was the primary sponsor; there was no opposition to the project.

The SRM initiative was strongly supported by business executives and the procurement team alike.

f. Were users of the system involved in the project during the planning and development phases? If so, how?

Integral to the project is the fact that the SRM system was driven by the business users who work with the data, rather than the IT department wanting to implement the latest technology. This meant the project fitted so much better within the business, as it was designed to answer the requirements of the user.

The HBOS Procurement systems team and internal HBOS Group Technology experts were all involved in the initial planning and development phases and continue to be strong advocates/drivers for the continued expansion and growth of the system.

All the amendments and subsequent phases of the project were driven by the requests of those working with – and benefiting from – the management data made available by the SRM system. Business users specified the information that would allow them to make more informed purchasing decisions, with the IT department adapting the system to accommodate these needs.

The procurement team also anticipated change within the company and ensured the system architecture was able to cope. As HBOS is such a sizeable company, regular business change is a fact of everyday life; the solution accepts this change as a constant, embracing it, and hasn’t required the major reworking so common with other procurement projects

g. What were the greatest challenges in completing this project? How were they overcome?

As mentioned previously, the key challenges that had to be addressed were: time limitations; continued flexibility in the face of business change; integration between disparate operational systems; ensuring accuracy and timeliness of information; and business and IT user alignment and coordination. Each was overcome through the selection of flexible IT solutions such as Kalido, enabling the project to be completed in three months, fully integrate all disparate systems, quickly and easily adjust to business change while ensuring accurate and timely information to a wide range of business users.

h. Were the goals changed as the project progressed? If so, what were the changes and why were they made?

While the initial goal of the project in 2001 centered on providing a single view of procurement data in the face of an intense merger, while maintaining local reporting structures, many additional goals were realized and achieved as the project progressed:

  • Addition of e-procurement data in March 2003 to maximize the economies of scale and drive savings by gaining a clear view of all 10,000 line-items purchased organization-wide
  • Extension to the collection and aggregation of the new accounts payable data in June 2003 while avoiding disruption to business users based on business users
  • Furthering the reach to give the procurement team a complete view of supplier spending habits within subsidiaries between June and December 2003
  • Incorporating external data in May 2004 to provide complete supplier risk management through early warning indications

Through all this change, Kalido’s extreme adaptability empowered HBOS to continually update and enhance the SRM system without disrupting everyday business functions and tasks.

III. Category

Please indicate the Innovator Award category as listed below. (Categories reflect the editorial organization of Application Development Trends. Many projects can reasonably be fit into multiple categories. Try to fit your project into the category that best reflects the tools and technologies used. Don’t worry about whether you picked the right category; we will review all submissions carefully and will make changes where appropriate.

Data Warehousing

Emphasizes the design and development processes and tools used in enterprise data warehousing projects, including: data mining tools, online transaction processing systems, data extraction and transformation tools, database management systems, universal data management systems, query and reporting tools.


IV. Methodology/Process

  1. Describe how productivity tools or techniques were used in the project.
  2. Not applicable

  1. Were testing tools used during development? If so, when were they used? Was the testing cost-effective?
  2. Not applicable

  1. Was a formal or informal software development life-cycle methodology employed? If yes, please describe it.
  2. Not applicable

  1. What formal or informal project management methodologies and/or tools were used to manage the project? If used, please describe how.
  2. Documentation was provided at all stages by Acuma to meet ISO9000 standards.

  1. Were software quality metrics used? If so, what were they, and did using them significantly help the project?
  2. Not applicable

V. Technology

a. What were the major technical challenges that had to be overcome to complete the project successfully? How did the team respond to those challenges?

The major technical challenge was incorporating such a wide range of disparate systems and extensive amounts of data.

b. What software tools, including databases, operating systems and all development tools, were selected for the project? Why were they selected over competing tools? What process was used to select development tools and software platforms?

To successfully address company-wide procurement activities, HBOS implemented the KALIDO enterprise data warehouse to integrate all the disparate systems and provide a single view of organizational data. Together with Business Objects (which was already used by Halifax for different applications) and Ascential, Kalido created an innovative supplier relationship management (SRM) system that enables HBOS Procurement to consolidate and analyze supplier data, enabling the company to nimbly drive efficiencies, assist purchasing compliance and better manage supplier relationships across a complex organizational structure.

These tools were selected over competing tools because, as a package, they offered the best solution to address the issues at hand and allowed for a rapid implementation that supplied a flexible, yet robust and reliable, solution to meet both HBOS’ current challenges, as well as their future needs.

c. Describe the overall system architecture. Were elements of the technical infrastructure put in place to support the new system? Please describe.

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d. What characteristics of the tools and technologies used were most important in achieving the business purposes of the system?

The most important characteristics were: the ability to cohesively integrate the disparate systems of the merging organizations; flexibility in the face of business change; ability to supply an accurate, reliable single view of organizational data at both an overarching and granular level; and the time it would take to complete the initial deployment.

VI. Project Team

a. What was the size of the development team?


b. How many person-months/days did the project take, and over what calendar time frame? Was a formal schedule created at the start of the project? Did the project stay on schedule?

Not many IT projects are delivered on time, to specification and to budget. There are usually too many unforeseen requirements, changes and obstacles. Accenture estimated that 84 percent of IT projects fail on at least one of these criteria – a credible source as they supply the other 16 percent worldwide.

The HBOS project was delivered in just three months without cutting any corners and without going over budget. This was achieved by making sure the specification was right, close collaboration by all the parties to the project, rigid project management disciplines, intense effort and by ensuring that the scope of the initial project was contained within sensible limits.

c. Did management and the user community consider the project a success?

In light of the significant business benefits and user conveniences that the system provides, management and users not only consider the project a success, but also champion its extension and continued development.

d. If you had to do the project over again, would you do anything differently? If yes, please explain why.

Based on the continued enhancements and extensions, the only thing possible to change for an improved result would be to have extended the system to encompass such a wealth of internal/external information from the start. We now strive to run all future projects in the same manner in hopes to achieve such tremendous success.