OK, so the purists will argue that LAG is overkill, and for them I offer this instead:

WITH SampleData AS

(

SELECT code=CAST('12333345566689333' AS NVARCHAR(4000))

UNION ALL SELECT '12333345566689'

),

Tally (n) AS

(

SELECT TOP (4000) ROW_NUMBER() OVER (ORDER BY (SELECT NULL))

FROM sys.all_columns

),

SplitString AS

(

SELECT code, s, n

FROM

(

SELECT code, n, s=SUBSTRING(code, n, 1)

FROM SampleData a

CROSS APPLY

(

SELECT TOP (LEN(code)) n

FROM Tally

) b

WHERE SUBSTRING(code, n, 1) <> SUBSTRING(code, n-1, 1)

) a

)

SELECT code

,ReducedString=

(

SELECT s + ''

FROM SplitString b

WHERE a.code = b.code

ORDER BY n

FOR XML PATH('')

)

FROM SampleData a;