GAP Analysis - Steps in the Process

 

There are six key steps toconducting an effective gap analysis.

1. Describe General Area

In this step we describe the general area that we want to analyse and improve. This may seem like an unnecessary step, but by performing it, we not only highlight what general area is under investigation, but also what areas are not under investigation.

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.

This helps to avoid scope creep and keeps the rest of the analysis very focused. For example, we might decide to analyse our online marketing efforts. This then implies that we are not investigating our offline advertising such as print and TV. By being very clear about what we are, and what we are not investigating, we keep everyone involved on the same page. A sales team might be focused on lead generation and conversion rates while the accounting department may be focused on efficiency and accuracy. The metrics that you use will be what is most important to the success of your business or department.

2. Identify Specific Improvement Areas

Identify the current state of your business. This involves documenting your current processes, resources, and technologies.

In this step we identify specific areas for improvement within the general area described in step 1. For example, if the general area we are investigating is our online marketing, then we may identify content creation and paid advertising as specific areas we’d like to improve. Set S.M.A.R.T goals of where you want to end up. S.M.A.R.T. goals are specific, measurable, achievable, relevant and time-sensitive. Being specific narrows down exactly what you want to achieve and removes any ambiguity. You want tasks to be measurable so that you can see the growth towards the goal. While goals should be aspirational, they need to be achievable, otherwise you may see a lack of motivation and frustration creep into morale. Relevant goals help you achieve the overall goals of the company while being time-sensitive gives you a deadline to measure progress and evaluate success.

3. Determine Targets

Now that we have identified our specific improvement areas, the next step is to set targets for each area. Determine the desired state. This is how and where you would like things to be.

A common input to this step (and the next step) is benchmarking, whereby a company will benchmark its performance in an area against its competitors performance in that same area. The results of this exercise will show areas of underperformance and these areas are then commonly chosen as the improvement areas for this step. Another commonly used input for this step is to analyse industry best practices.

What targets are set will depend on a combination of the time available to address the gap as well as the ambition of the organization.

                4. Determine Current State

Now that we understand where we want to get to, it is important to understand where we are before putting the action plan together.

By understanding where we are it makes it more likely we’ll create a realistic action plan. It also makes it easier to see if we are making progress towards our desired state, because if we don’t know where we started then it’s very difficult to measure progress towards our goal.

 5. Determine GAPs

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.

The difference between step 4 and step 3 is our “gap”, that is, the gap between where we are and where we want to be. Analyze gaps from where you are to where you want to be. Now is the time to evaluate the gaps and get to the root of the problem. This involves getting to the details of why you aren’t as successful as you want to be. The why could be a hiring problem, a training problem, a resources problem or something else. This is where you dig in to discover it.

 

6. Determine Action Steps

Now that we understand the gap, we use this final step to describe the improvement steps we will take to close the gap and get to where we want to be. In essence, this step is our action plan to get to where we want to be.

The action plan should be prioritized so as to deliver the biggest return on investment. One way to do this is to prioritize the most critical gaps first, or to target low hanging gaps first.

Gap Analysis Reports

Project management, process improvement, and business transformation teams within small to large businesses will often use gapanalysis 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.