Business Model Canvas

Business Analysis Techniques Series. Business model canvas contains 9 building blocks describing how an organization delivers value.
As a diagnostic tool, business analyst use Business model canvas elements as a lens into current state of business, especially with respect to relative amounts of energy, time, and resources currently invested in various areas. 
As a planning and monitoring tool, business analysts use canvas to understand inter-dependencies and priorities among groups and initiatives. In this capacity, canvas can be used to view where enterprise is investing, where a particular initiative fits, and any related initiatives.
 
Key partnerships: Sharing of proprietary information, technologies, can lead to formalized relationships such as mergers and acquisitions.
Key activities: Key activities are critical to creation, delivery, and maintenance of value. 3 types of activities are:
Value-add: Characteristics, features, and activities for which customer is willing to pay.
Non-value-add: Aspects and activities for which customer is not willing to pay.
Characteristics to be included in to Business non-value-add: meet regulatory needs, or costs associated with doing business, for which customer is not willing to pay.
Key resources: Assets needed to execute a business model. Types:
Physical: Applications, locations, and machines.
Financial: Cash and lines of credit.
Intellectual: Proprietary knowledge, patents and copyrights, customer databases, and brand.
Human: People.    
Value proposition: What a customer is willing to pay for having their needs met.
Customer relationships: Deals with customer acquisition and retention. 
Channels are Different ways to interact with and deliver value to their customers. Can be communication-oriented (e.g. Marketing channel), or delivery-oriented (e.g. Distribution channel), sales and partnering channels.
Channels are used to:
⦁    Raise awareness about offerings.
⦁    Help customers evaluate value proposition.
⦁    Purchase of goods or services.
⦁    Provide support.

Customer segments: Customers with common needs and attributes. Helps to effectively and efficiently address customer needs.
Cost structure: Every entity, product, or activity within an enterprise has an associated cost. Understand types of business models, differences in types of costs and their impact, and where enterprise is focusing its efforts to reduce costs.
Revenue streams: A way or method by which revenue comes into an enterprise from each customer segment. 2 basic ways of organizational Revenues: 
One-time purchase of a good or service.
⦁    Sales: Grants ownership rights to customer for the product.
⦁    One-time license fees.
Recurring revenue from periodic payments for a good, service, or ongoing support.
⦁    Recurring licensing or subscription fees: Customer pays for right to access a particular asset as a recurring cost.
⦁    Transaction or Usage fees: Customer pays each time they business analysts use a good or service.
⦁    Lending, Renting, or Leasing: Customer has temporary rights to business analysts use an asset.
Strengths
⦁    Easy to understand and simple to use.
⦁    Understand and optimize business models.
⦁    Maps initiatives to the strategy of the enterprise.
Limitations
⦁    Does not account for social and environmental impacts.
⦁    Does not provide insight for strategy.
⦁    Does not include strategic purpose of enterprise.

Worked out Example:

Through this example let us learn how the Business Model Canvas for ABCT will look like. Please refer to this blog for a more detailed description about ABCT.
 
The 9 building blocks of a business model canvas which describes how an organization delivers value are:
Key partnerships: Sharing of proprietary information, technologies, can lead to formalized relationships such as mergers and acquisitions.
Key activities: Key activities are critical to creation, delivery, and maintenance of value.
Key resources: Assets needed to execute a business model.
Value proposition: What a customer is willing to pay for having their needs met.
Customer relationships: Deals with customer acquisition and retention. 
Channels: Different ways to interact with and deliver value to their customers.
Customer segments: Customers with common needs and attributes. Helps to effectively and efficiently address customer needs.
Cost structure: Every entity, product, or activity within an enterprise has an associated cost.
Revenue streams: A way or method by which revenue comes into an enterprise from each customer segment.
Key partners
⦁    Solution development firms
⦁    Digital marketing/automation firms
⦁    IT infrastructure (cloud computing) firms
⦁    API technology providers
⦁    Big data and analytics firms
Key activities
⦁    Software development
⦁    Software implementation
⦁    Software testing
⦁    Enhancement and software maintenance (Post-implementation support)
⦁    Project execution across geographies and industry segments
⦁    Consistent engagement with partners and product engineering teams
Key resources
⦁    Humans-Web application and development
⦁    Finance
⦁    Physical assets
⦁    Intellectual resources
Cost structure
⦁    Capital investments-IT infrastructure
⦁    Development costs
⦁    Sales and marketing

Value propositions
⦁    Develop unique solutions to address complex business challenges
⦁    Create and execute strategies for their digital transformation
⦁    Enhance client operations and streamline their business processes
⦁    Create value through sustainable innovation
⦁    Deliver extraordinary software projects based on the latest technology
⦁    Provide cost effective and user friendly solutions
Customer relationships
⦁    Personalized and contextualized content/service
⦁    Enhanced customer engagement and loyalty
⦁    Business friendly products and services
⦁    Enable seamless digital experience in all interactions
Channels
⦁    Website
⦁    Social networks
⦁    Networking
⦁    Partner channels
⦁    B2B interactions
⦁    Digital marketing
Customer segments
⦁    Financial services
⦁    Manufacturing
⦁    Energy & utilities, communication and services (ECS)
⦁    Retail, consumer packaged goods and logistics (RCL)
⦁    Life Sciences, Health Care and Insurance (HILIFE)
⦁    Hi-Tech
Revenue streams
⦁    Application development and maintenance
⦁    Consulting services and package implementation
⦁    Business process management
⦁    Infrastructure management
⦁    Product engineering services