Business Model Canvas - #1

For this assignment I decided on focus on the company where I work (Fiserv Investment Services) and our core business within IS - our APL trading and portfolio management platform.

Upon completion of the Business Model Canvas, several things about our business model became glaringly obvious to me.  In my analysis, I will address how several different aspects of the canvas drive our revenue stream and cost model. 

Revenue Stream & Cost Model

The lack of diversity in our revenue stream is a major concern that arises in the Canvas.  Approximately 97% ($122M) of revenue is generated through activities associated with trading and portfolio accounting.  Although this revenue stream exhibits some apparent strengths, such as its recurring nature and organic growth through increased client account volumes, it likely does not fully account for our entire value proposition, as significant value is created for clients by enabling them to interface with other investment managers through our robust trading network.  Scalability is also another major driver of client value, as our solution is able to handle large volumes of accounts spread across different product offerings without causing any delays in processing time or trading responsiveness.  Our ability to customize our solution and handle the requirements of three distinct client segments is also another point of strength, however, it comes at significant cost.

With annual expenses of approximately $76.7M, APL has a very healthy profit margin of ~39% ($49.6M).  The biggest strength of cost model arises in the increased operating leverage that is achieved due to our proportion of fixed costs (91% fixed).  The $6.6M of variable cost exists as a result of per account fee charges paid to data provides  such as IDC and S&P.  If revenue should decline, however, our operating model does not enable us to adjust quickly in order to reduce fixed expenses in proportion to any decline in revenue.  Because we provide personal assistance and a customized solution to every client, our key resources are our people and their technical knowledge of our platform.  We have several channels that touch the customer, including sales and marketing, client services and customer operations.  Further investigation is warranted to determine if any synergies exist between these functional areas and if we should re-design our current operating model in order to drive efficiencies and opportunities for cost savings.