What is Gap Analysis?
Gap Analysis is a technique that can be used to assess if the enterprise can meet its needs using its present capabilities. The capabilities that may be examined for improvement include staff competencies, facilities, applications, technical infrastructure, processes, lines of business, etc.
Any exercise that involves comparing the present state of the business with a conceptual and desired future state with the objective of “closing the gap” is known as gap analysis.
Imagine a situation where you have been asked to improve the performance or efficiency of a particular unit of an organization. You have no clue whatsoever as to what set of factors is the real cause for the degraded performance you have been asked to improve. Identifying the gap between what is expected and what you are delivering, that is, the current state and the future state is referred to as “Gap Analysis”.
As far as the business definition is concerned, gap analysis can be defined in a number of ways, which more or less point towards the same thing:
1. It refers to the process through which a company compares its current or actual performance to its expected performance to determine whether it is meeting its objectives and using its resources effectively.
2. A technique that a business uses to determine what steps need to be taken in order to move from its current state to its desired, future state.
So from both these definitions, it is evident that gap analysis is a technique which helps a business reach its peak eventually. By defining and analyzing these gaps, a project team can create an action plan to move the business forward and fill the gaps in performance.
Digging further, we will see that gap analysis is not just a one-step process. It involves three stages which can sometimes prove to be somewhat time-consuming and tedious if the improvements to be made are not clear. These three stages include:
1. Accurately defining the required changes/future goals: If you are not clear about the organization’s goals, all your efforts will be in vain. The first and foremost thing to be done is to identify what exactly the goals of the business are and the changes needed to achieve these goals. If the goal is not clear, the improvement exercise will keep on deviating from its desired path.
2. Identifying the current scenario and the associated issues: In order to reach ‘where you want to be’, you have to first assess ‘where you stand.’ For example, a failure to see the real reason behind the poor performance of the relevant units of your business will affect profit and growth on the long run. For this stage, the analyst should organize brainstorming sessions, employee interviews, document reviews, etc. Only after a comprehensive definition of present challenges can one get a clear picture of the situation.
3. Devising the Action Plan: Now that you know the present and future expectations, you can think of the how factor in form of a plan. How will you implement the action plan drafted to meet this gap? The solutions may include a number of steps like hiring more employees, procuring extra machines and equipment, offering perks and incentives to get the best out of the employees and so on.
It can be inferred that for a business to achieve growth, periodic gap analysis efforts play an important role in measuring performance and defining the key activities that need to be completed to attain the desired future state.
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