BA tech plans to save £300m

Cash-strapped British Airways is planning to automate the purchasing process as part of company-wide plans to make £300m in cost savings by 2005.

Along with other airlines, BA has had to deal with the collapse in the worldwide travel industry following the terrorist attacks in the US and the war in Iraq, as well as losses from wildcat strikes at Heathrow over a new swipecard clocking-in system for staff.

BA has already achieved IT-specific savings of over £50m as part of its IT21 programme but the rollout of the spend management suite from Ariba will cut procurement costs by automating manually intensive processes.

Gavin Boswell, e-sourcing programme manager at BA, said the software will allow greater analysis of purchasing across the company and drive best practice. He said: "Most of it is done offline at the moment. We have a spend information system in-house developed which will be replaced and a number of Microsoft Office spreadsheet-based templates."

BA has already used online auctions 49 times for buying goods, saving £11.5m in the process and Boswell said there are plans to increase this using the new system.

He said an electronic process also needed to be set up as there are fewer staff at BA to deal with the traditionally long and complex purchasing process.

"The strategic sourcing process is one that is quite manually intensive at certain stages. The overall go is to reduce external spend by £300m by 2005 and we must achieve it with half the people we had two years ago."

The project began earlier this month and is expected to take nine months to complete, although BA is already taking advantage of some of the modules in the suite.

The airline already uses some Ariba software and will now be adding the Enterprise Sourcing, Contracts, Category Management and Analysis modules of the cost management suite.