When companies grow, they tend to forget about underperforming processes and carry them throughout their expansion. The business analyst in charge usually doesn’t recall them until the issue is big enough that it threatens to provoke a crash in the current business model.
That’s why gap analyses were created. These studies were popular in the 80s to identify flaws in a business department, and now they are still used to help business analysts develop an action plan to improve the company’s competitiveness.
It’s the first and easy method to identify and fix flaws before they are too much to be controlled.
This article covers the principles of gap analysis and how you can prepare one for your business to reach the desired state you want.
What Is Gap Analysis?
A gap analysis compares the current state of a situation with the desired state. This is a standard business process to determine how project goals and objectives are developed.
You can commonly see it in business, marketing, and enterprise industries that include internal and external performance to see if KPIs were met.
If the business didn’t achieve targets, you could prepare performance gaps bridged through actions.
A gap analysis is part of a business’ strategic planning that helps you understand how existing processes are developed. This document is also a project manager’s priority to improve processes in an established business.
After all, corporations can improve current performance by measuring the current and desired state.
How Does The Gap Analysis Process Work?
A gap analysis considers the company’s resources, such as capital, technology, and staff, to know how far they are from its goals.
As part of your business strategy, this document considers the organization’s needs at a corporate level, which will help you start identifying gaps between your present and future. With this, you can examine goals and develop a strategic plan based on your requirements.
It’s a simple process that takes relevant data from a performance gap for you to use it. And it’s applied to every field or department.
Why Is It Important For Project Management
Project Management requires a gap analysis to understand how business processes are developing and project new implementations that will help the company grow.
Gaps should exist to be filled with applied methodologies and strategic focus areas that increase the chances of business success.
So, for example, let’s say one of your business objectives is to meet customer expectations about a new product. You'd quickly identify gaps with a SWOT analysis and measure customer satisfaction to develop process improvements.
Types Of Gap Analyses
There are four gap analyses you can do depending on what you’re trying to achieve.
- Performance Gap: This analysis considers the desired future state of the business performance. This includes strategies, processes, and other business management procedures.
- Market Gap: It helps examine the market share of your business and compare current and future sales. It’s a great tool for identifying the strengths and weaknesses of a specific position in your market.
- Profit Gap: Helps businesses find key areas that help identify issues and the desired outcome to target profits. Once you find the problems, you can close gaps and work to improve your current situation.
- Personnel Gap: This analysis considers your staff's abilities. It’s a skills gap analysis that considers the hours worked, the staff expertise, and the task progress.
With the identified gap, you can create a gap analysis action plan with priority levels that attack relevant goals.
Cons & Benefits Of Gap Analysis
The gap analysis is an excellent tool for a business analyst and every managing position who wants to find existing gaps in a procedure.
But it has its flaws.
We have developed a table with the advantages and disadvantages of using gap analysis in your business.
Since you use a gap analysis as a first step for improvement strategies or to find what new businesses are doing that you don’t.
It’s also the first thing to do to develop corrective actions that actually make a difference.
How To Do a Gap Analysis
Creating a gap analysis takes time, but it consists of five steps.
Set Boundaries And Focus Areas
Establishing a gap analysis requires you to set up boundaries. This is the scope of your study.
To do that, you must determine your spot in the future. It needs to be specific, measurable, and accomplishable. With this in mind, your organization or team can know what needs to be improved.
Once you have done that, you need to ensure focus areas with due dates that will help you track your progress. For example:
- Financial growth.
- Customer service.
- Tech development.
- Industry achievement.
- Community impact.
- Employee satisfaction.
- HR solutions.
Start From The Future State Of Your Organization
Once you have decided on your focus areas, you need to establish the future of your company. Starting from a point in the future gives you a better understanding of what you’re trying to achieve when you perform a gap analysis.
Why?
Because once you have a vision, you can work towards it. All the information or tools you have don’t matter. If you can’t project, you won’t get far.
You don’t need to be specific about it – at least not yet – all you need to do is give enough details about your projection.
E.g., let’s say you select Customer Service as a focus area. Your vision in this field should be “To achieve top-notch customer service that follows exceptional retention practices.”
When you point to a reality you can manage – such as the one above – you can move to the next step.
Consider Where You Are Today
You have already researched your future, but you will need to know where you are now. This will help you measure the work and time required to reach your objectives.
Following the example above, if you want to provide top-notch customer service to retain clients, you need to see how your employees offer assistance. You also need to consider the following:
- The tasks they do besides attending to customers.
- If employees are trained enough to know your products.
- The provided software they used to practice customer service efficiently.
- If you care about employees dealing with the customers' demands.
- Evaluations implemented in the department.
- If you have a person in a managerial position involved between you, your staff, and your clients.
- The space you have for them to rest during their off hours.
At this point, you have to think about weaknesses and strengths honestly. To do that, you can start performing a SWOT or PEST analysis.
Preparing a SWOT or PEST Analysis
The SWOT means Strengths, Weaknesses, Opportunities, and Threats. This audit explores how your business develops in its current state.
Here, you need to analyze the fundamental aspects of your company and be sincere about how your organization positions in your industry. You could use evidence like images, previous research, ideas, and skills to be more accurate in your study.
However, a SWOT may not be enough to find the right threats and opportunities for your business or projects. That’s why you also have the PEST study.
This is a more direct and applicable approach created to give you an accurate picture of your situation.
Establish KPIs To Measure Growth
As the old saying goes, “you can’t improve what you can’t measure.”
Once you have all the steps above, you need to develop action items in the form of KPIs to evaluate how your business performs during the gap analysis framework.
Business analysts use Gantt charts and other types of graphical representations to analyze the data.
Now, the KPIs will vary according to your goal.
To begin tracking customer service success, you could establish a KPI that measures how many clients your staff dealt with.
Develop An Action Plan From Your Own Gap Analysis
When you identify gaps in your business, the last thing to do is create a plan to describe them and fix them.
The plan should contain action steps that answer how to solve those issues you found in the four steps above. Now it’s the time to be as specific as possible, use numbers, quotes, graphics, and write precisely so that everyone on your team understands the issues you want to solve.
For example, if you want to implement solutions for customer service deficiencies, then they would look like this:
- Provide missing training to the customer service team.
- Demand weekly reports to the proper departments.
- Review staff performance twice a week.
- Request feedback from customers through an online survey.
All the tasks above are achievable and measurable, which is what you should look for if you want to track the focused areas properly.
Gap Analysis Template
Now that you know how to prepare a gap analysis, where can you create it?
You can use productivity software such as Excel to prepare documents anytime. You’d need to get the Microsoft Office 2021 suite to use this and other related programs.
They will help you prepare complete reports and increase your analyses' readability.
With Excel, you can also automate formulas and create great charts to share with stakeholders.
And if you don’t want to prepare a complete document, you can use free gap analysis templates. There are lots of them on the internet that you can download and use.
Some of the best templates available so far are:
Template #1
Requirement gap analysis four-step template - Download Link
You can use the gap analysis examples above or combine them to create the one that fits the focus area you're researching. Remember that each template has differences and works for a specific type of gap analysis.
Gap Analysis Template - Summary
Gap analysis is a process that identifies flaws in the present to fix them in the future. It’s used in businesses to improve overall efficiency and effectiveness in multiple departments. You can also use it to increase staff skills and train them to be more precise.
This document is required in strategic planning to prepare a clear and concise action plan that leads to achieving the expected goals.
Yet, gap analyses aren’t perfect due to their time-consuming nature. Still, it’s a necessary piece of information to assess services, teams, skills and discover the root of underperformance.
The templates above will help you address all the issues, analyze circumstances and create a bridge between ideas and actions.