Gap analysis definition
Gap analysis is a method of comparing the actual level of performance versus the desired level of performance for a business process, project, strategy or IT solution.
Gap analysis, sometimes referred to as “needs analysis” or “needs assessment,” is an important tool for determining business requirements and assessing whether business requirements are being met. Vital to strategic planning, gap analysis can be leveraged to identify performance gaps in policies, processes, technology, and strategies, and to determine how to bridge those gaps going forward.
Gap analysis process
There are six key steps to conducting an effective gap analysis.
- Identify any relevant information that is essential to analyzing current business processes in terms of performance and allocation of resources. Depending on the nature of the activities, a number of sources may be needed for information gathering.
- Identify the current state of your business. This involves documenting your current processes, resources, and technologies.
- Determine the desired state. This is how and where you would like things to be.
- Determine where any gaps might exist between the two states. To do this, you will have to identify and map all of the missing pieces in your processes, resources, policies, or resources. This will help you to bridge the gap to bring your current state in alignment with your desired outcome.
- Create specific goals and objectives that are linked to your strategic planning or performance improvement.
- Develop and implement corrective plans to fill the gap between the current performance level and desired goals.
Gap analysis template
When performing a gap analysis, documentation is crucial. As such, most gap analyses begin with a template in which elements of the gap analysis are displayed in columns. Common elements for gap analysis templates include: the item (or process or team member) being analyzed, the item’s current state, the item’s desired state, existing gaps, action items, task assignee(s), priorities, dependencies, task status, and other considerations.
- Items being analyzed: This field is used to identify the people, processes, policies or technologies that warrant the gap analysis. Focus areas could range from a single department to the entire organization.
- Current state: This field identifies the current condition of item(s) being analyzed. It should include a detailed and thorough account of how things are currently performed.
- Desired state: This field highlights the targeted condition of the item being analyzed.
- Existing gaps: In this field, the gap analyst describes the nature of the gap that exists between the current state and the desired state. The field should also highlight the constituents of gap factors responsible for the gap. This column also contains a list of reasons in clear, specific, objective terms. The components of a gap description may be qualitative items such as workplace diversity, or quantitative such as a number of customers in a particular area.
- Action items: This column lists all possible measures and solutions that can fill the identified gap(s) between the current state and desired state. Solutions should be specific and in conformance with the factors given in the gap description. The recommendation or solutions in bridging the gap might include increasing the salary of the employees to enhance employee satisfaction or releasing more funds for marketing campaigns to increase the number of customers in a specific area.
- Tasks assignee(s): Here are listed any internal or external people assigned to address each of the action items needed to resolve gaps.
- Priorities: This field identifies priorities to assist teams and task assignees in knowing which gaps should be addressed in which order.
- Dependencies: This field helps determine priorities by identifying the tasks that may be dependent on the partial or full completion of other tasks.
- Task status: This column provides teams with progress or status updates on each task to help keep everyone on the same page.
- Other considerations: Other fields can be part of a specific gap analysis template, or it is common to have a catchall column in which anything else that a team needs to factor in can be listed, such as limitations, conditions, assumption, or risks.
Various gap analysis tools exist that can make lighter work of gap analysis. These tools ensure that gap analysis is done right and nothing falls through the cracks. These are four of the most commonly used tools:
- Fishbone analysis: This cause-and-effect visualization tool helps to analyze manpower, methods, metrics, machines, materials, and the time. It aids in identifying how each area links to any underlying issues that might exist and is often used to identify root causes of problems.
- McKinsey 7S Framework: This tool, named after the consulting firm McKinsey & Co., is used to determine specific aspects of an organization that are meeting or not meeting expectations. It is an analysis of a business through the lens of seven people-centric categories, including strategy, structure, staff, systems, style, skills and shared values.
- SWOT analysis: SWOT stands for strengths, weaknesses, opportunities, and threats. These are factors that have an effect on the efficiency and success of a product, project or person. SWOT analysis helps companies to determine the best possible solution by playing to their strengths, allocating resources in accordance with needs, while avoiding potential threats.
- Nadler-Tushman model: Named after Professors David Nadler and Michael Tushman, the Nadler-Tushman model, also referred to as the organizational congruence model, examines how business processes work collectively and how gaps influence the operational effectiveness of an organization or a firm as a whole. The Nadler-Tushman model determines operational gaps by assessing an organization’s operations by separating its business processes into inputs, transformation, and outputs. Input refers to the operational atmosphere, physical and non-physical resources used, and the workplace environment. Transformation denotes the existing procedures, people and processes present in a place that changes input into an output.
Gap analysis reports
Project management, process improvement, and business transformation teams within small to large businesses will often use gap analysis and related reports when determining the optimal allocation of resources. Gap analysis reports assist company leaders and key stakeholders in understanding any operational gaps that may exist in various areas of the business. Reports should include the identification of gaps, the roadmap to resolving each issue, the impacts and risks of each issue and its remediation, the progress being made, and the final outcome of any resolutions. In essence, it is a barometer for operational inefficiencies.
As a widely adopted mechanism to identify gaps in performance, businesses continue to leverage gap analysis to transform various aspects of their operations and provide a higher degree of value to stakeholders.