Business Model Canvas for VEXTEC Corporation: An Engineering Consulting Firm

VEXTEC Corporation is a small business technology start-up based in Nashville, TN. We got our start with the US Air Force developing unique algorithms and models to predict aerospace component reliability- mainly jet engines and airframes. The technology now protected with over eight patents has been extended to various other components like Navy Ships, Automobiles, Plant equipment and Stents. We have also productized our technology as software that is offered through the cloud (Amazon Web Service) to our customers through the SaaS (Software as a service) model. The firms serves a wide range of market segments that includes aerospace, automotive, medical devices and plant equipment. Primary activities are helping product firms determine the reliability and durability of their components and helping make their products better. We have had a number of successes in the commercial airline and medical device industry where using our technology firms have reduced costs, accelerated product development and improved durability of their products. Our technology stays ahead of competition by incorporating the latest research and models in the area of product failure analysis through close relationships with academic institutions and R&D labs. Being a engineering consulting firm, we employ talented people good at solving complex problems. Therefore the majority of our cost is employee salaries. We also depend on a number of expensive software tools and computer servers for our work, these are the second major expense. Most of our revenue is from consulting services and a small fraction from testing and software services. The details of the individual categories is below.

Key Partners: VEXTEC’s key partners are Computer Aided Design and Finite Element Software firms that develop software needed for product design. In addition we have close relationships with numerous academic institutions and R&D labs to stay at the cutting edge of technology. We incorporate their scientific break-through within our technology.  

Key Activities: We have two business units; the federal government unit is engaged in fundamental R&D and technology development. The commercial business unit is primarily engaged in engineering services and commercialization of the technology developed. The key activities include fundamental research into component failure issues, material testing both for in-house development and as a service, developing failure models and algorithms, software development and marketing, sales and operations.

Key Resources: Our key resource is people- being a services firms we are very human resource dependent. In addition, being a R&D firm, we employ primarily mechanical, material science or aerospace engineers with advanced degrees. A second key resource is all the software and hardware infrastructure needed to develop models and algorithms

Value Proposition: Our value proposition is around improving product durability and life cycle costs. This in turn reduces warranty and product failure costs. We also help accelerate product development by reducing test costs significantly. We also offer testing services and failure analysis as add-on services.

Customer Relationship: We have multiple levels of engagement. The marketing team is primarily engaged with the customer’s management team while the project management team is engaged with the actual technical customer. For our SaaS customers we have dedicated customer service for both software and technical issues.

Customer Channels: Our primary channel is word of mouth, where happy customers bring us additional business. Most of our customers are big firms that have exhausted their internal avenues to solve their problems and have come to use based on an article in a trade journal, or interaction in a conference. We get very little business through the internet or other traditional channels.

Customer Segments: We serve a wide range of segments; Aerospace (both DoD and commercial), automotive, medical devices. We have recently made forays into Oil and natural Gas equipment suppliers and plant machinery consumers (essentially big factories)

Cost Structure: A large portion (85% +) is employee salaries due to the human resource intense nature of our service. We also have expensive software subscription fee and hardware lease expenses.

Revenue: Our revenue is from two sources; he federal government R&D revenue is through long term fixed price contracts negotiated in advance and assured for a fixed period. Our commercial business revenue is through consulting services fee charged based on nature of problem and software service subscription charged based on number of users and functionality.