Case study: O2 drives a new insurance experience for customers

• Who: Telefónica UK
• What: Developed and launched the O2 Drive insurance product in six months
• How: Using TM Forum Open Digital Ecosystem architecture, partnering guide and APIs
• Results: Accelerated time to market and Net Promotor Score ‘well above’ industry average

O2 Drive car insurance is part of Telefónica UK’s strategy to play a more significant role in customers’ digital lives. The aim is to bring a fresh approach to car insurance by rewarding customers as they drive, as well as enabling them to manage their policy via an app. The product also combines data about customers as consumers of O2 mobile services – such as how long they’ve been a customer and their payment history – with their insurance history to try and help them get better rates.

Capitalizing on a good relationship

“We have a strong relationship with our mobile customers, and because we know them we can use that data to provide insurers with a greater breakdown of the potential risk profile of that customer,” says Stephen Devereux, Head of Digital Products, Innovation & Insight, Telefónica UK. “This can translate into competitive pricing for customers with a low-risk profile,” he adds.

O2 Drive was launched quietly in December 2015 and then with more fanfare in March after a few months of testing. Today the service, which won TM Forum’s Digital World Award for Digital Service Innovator of the Year, is already considered a success.

He adds: “Creating a new product line into car insurance is part of a wider O2 strategy to help our customers be more connected in all parts of their lives. Combining our technology expertise with our brand values, our aim is to bring the O2 experience to the world of car insurance.”

Available through the O2 website and online insurance aggregator sites in the UK, O2 Drive is provided in partnership with BGL Group, a UK-based insurance provider.

Designing the app

As part of O2 Drive, Telefónica UK has developed an app that enables customers to access their documents and manage their policy at the click of a button. In addition, the app is GPS-enabled which allows Telefónica to collect real-time data about how a customer is driving. This helps the company provide personalized journey scores and tips on how to improve, promoting a safer environment not only for O2 Drive customers, but everyone around them. A future version of the product could also use telematics to help customers get rate reductions for safe driving. An additional feature on the app called Car Assistant allows customers to arrange discounted car servicing, maintenance and mandatory, annual vehicle inspections (known as MOTs in the UK). O2 Drive customers also enjoy exclusive perks as well as the benefits of O2’s rewards program for mobile customers, which includes free offers such as coffee from Cafe Nero or a £1 lunch from Boots.

Platform partners

Telefónica UK used TM Forum’s Open Digital Ecosystem to develop the platform, in particular the B2B2X Partnering Guide, the Digital Services Reference Architecture (DSRA) and Open REST-based Application Program Interfaces (APIs). The company drew on B2B2X Partnering Guide for partnership revenue models, partner management and service lifecycle management. The O2 Drive platform architecture aligns with the DSRA, particularly in terms of openness in exposing service APIs and delivering new capabilities by integrating, composing and orchestrating with partner APIs. The platform uses standardized APIs (such as O2 Identity Management and third-party driver behavior information) based on the TM Forum Integration Framework, which means Telefónica UK will be able to easily integrate with other over-the-top providers in the future. For example, the company is considering adding a service that would help drivers find parking in congested areas.

Using an elastic model

The O2 Drive platform is hosted on Amazon Web Services, which allowed Telefónica UK to get it up and running in just six months.

“We’re the first platform in O2 to build with an elastic model,” Devereux says. “We know we can scale very quickly, practically on demand. As a result we are now looking to move many of our other services to AWS, which for a telco is a major shift.”

There are many benefits to using AWS – speed and scale being the obvious ones. “You can spin up environments very quickly, like performance and test environments,” Devereux explains. “Traditionally for us to build those we’d have to order hardware, speak to our infrastructure team and get them to build a [support]stack for us – that usually takes two to three months. We can spin up an environment now in a matter of minutes,” he says.

Another benefit is ease of keeping infrastructure up to date. “If you’re managing your own servers, keeping them up to date is really difficult,” Devereux explains. “That whole problem goes away when it’s managed on your behalf. It’s debatable, but I think it’s more cost-efficient. Amazon is an operational cost rather than a capital cost, but over time I think it will be cheaper.”

Finally, using a platform provider like AWS mitigates the security risk for operators. “The cost associated with keeping your platforms up to date from a security point of view is massive,” Devereux says. “That cost goes away.”

Adopting Agile

Telefónica UK developed both the O2 Drive platform and service using a non-traditional Agile approach (see infographic below).

“Usually O2 waits until the complete product features have been built before launching a service,” Devereux explains. “With O2 Drive we launched with a minimal service and are employing a continuous deployment methodology to create incremental value. This approach ensures that we invest the right amount of money in the product at the right time, letting the product drive the investment profile based on how successful it is.”

The project team’s first meeting was spent defining the vision, goals and team charter. These plans then were used to drive all subsequent activity. “We created a genuinely tight-knit, cross-company core project team, pulling in colleagues from Customer Experience, Marketing, Sales, Service and Operations into one team, all with the same vision,” Devereux says. “This approach enabled us to work faster and more efficiently.” Devereux was also one of the first customers of O2 drive.

“We try to ‘drink our own champagne’ wherever possible,” he explains. “For this product we wanted to try something different, so we recruited a small internal team to be responsible for its creation and delivery. Our own people have completely immersed themselves in the product, creating a team bond that is one of the strongest in our IT organization.”