Gap Analysis

Gap analysis, also known as need gap analysis, is an analytical tool designed to measure the difference between the actual state or performance of an organization at a given moment in time and its desired or potential state or performance in the future. The gap analysis framework is used to calculate what is needed to reach the desired outcome and help devise actions and strategies aimed at reaching this objective. For example, when used to measure the performance of an organization, gap analysis compares the gap between its real level of performance and its potential performance. There are many ways to use gap analysis, however, and it may be adapted to many different situations.

Gap analysis involves several steps, which include creating a list of factors that reflect the actual state of an organization, the outcome desired, and a strategy that includes the steps needed to reach this outcome.

Background

Gap analysis measures needs and gaps. In this context, a gap refers to the difference between the actual state of an organization or project, and where the organization or project could be or its decision-makers desire it to be. It can also be used to compare an organization against another one to see if it is in a better or worse position than the other. Therefore, the gap can be positive or negative in relation to that against which it is measured. Gap analysis, then, is used to assess a "where we are" point in the present, and a "where we desire to be" point in the future. On the basis of these assessments, what needs to be done to achieve the desired state can be determined and a plan set to achieve this. The information used to develop the implementation strategy or plan is meant to close the gap. In most situations, organizations are dynamic and always oriented toward the future, so that there will always be another gap—or several more—to close.

Gap analysis is frequently used by business firms, but also by government and community-oriented or nongovernment organizations. The information is used to develop an implementation strategy or plan that serves as a road map. Gap analysis specialists recommend that the plan be developed through three general stages that answer questions such as "What is it?" and "What should it be?"

Gap analysis surged in the 1980s. It has often been used with a , and has appeared in tandem with SWOT in much of contemporary organizational literature. Despite its popularity, critics have argued that it can be harder to use and, thus, less widely implemented than other more flexible and adaptable forms of organizational analysis. Nevertheless, its advocates have argued it can be used to measure a variety of organizational long duration projections and is a useful complement for any type of business strategy and policy.

Overview

Although SWOT analysis is one of the most fundamental and popular organizational analytical tools, some experts have argued that a gap analysis is more organic—that is, better able to adapt to circumstances—than its SWOT counterpart. As its name indicates, a SWOT analysis charts the strengths, weaknesses, opportunities, and threats of an organization, and little else. In that sense, then, a gap analysis is a useful complement to the SWOT, since it provides the opportunity to strategize the ways in which to diminish threats and weaknesses and expand strengths, while taking successful advantage of all opportunities.

There are many approaches to a gap analysis. It may be, for example, highly quantitative or, on the contrary, of a qualitative or conceptual approach. Although it allows the analysts to focus on what they find most preferable or appropriate, it is also structured, usually relying on the development of data and charts.

Gap analysis can be used for many purposes, such as to measure usage, production, performance, and processes, from the actual to the ideal. An organization may decide to implement a gap analysis, such as changing market conditions, to implement new technology or strategies, and many other reasons. The focus of gap analysis may be wide and encompass a whole organization or field, or narrow, and focus solely on a specific department or issue.

Experts recommend that to successfully undertake a gap analysis, it is of vital importance to first define a goal. Many organizations, for example, decide to use benchmarking or standards for best practices to develop their analysis. This information may be readily found published in document form as appropriate to industry or field.

To develop a gap analysis, there are three general steps that usually seek to answer a prompting question:

• Actual State. The organization determines the actual state ("what is"), including the issue it wants resolved or improved. It is important at this point to pay particular attention to an organization’s weaknesses, which can be previously determined by way of a SWOT analysis.
• Future State. This is meant to be the goal or the ideal condition visualized for the organization. This stage is used to delineate the desired future state or aims ("what it should be"). Useful guiding questions at this stage are "Where should we be at the end of this year/period?" and "How far are we from where we want to be?" At this stage, the approach may be general or more specific, depending on how clearly the organization visualizes its future stage. It may be that this has not been clearly defined yet.
• Needs / Solutions. The most important steps at this stage include identifying and describing the needs gap between the current situation and the ideal situation. It is often divided into (a) Elements deemed to cause the gap and (b) Solutions, actions, and proposals meant to solve it. In short, this stage serves to develop the action plan to bridge the first two stages. It is useful to develop it by answering the question, "How do we reach the desired objective?"

Finally, a well-designed and thoughtfully implemented gap analysis plan can help with organizational effectiveness and allow an organization to reexamine and set its goals, as well as determine whether it is on the right path to success.

Bibliography

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