A gap analysis is a method of assessing the performance of a business unit to determine whether business requirements or objectives are being met and, if not, what steps should be taken to meet them.
The “gap” in the gap analysis process refers to the space between “where we are” as a part of the business (the present state) and “where we want to be” (the target state or desired state).
In information technology, gap analysis reports often are used by project managers and process improvement teams as the starting point for an action plan to produce operational improvement.
Performance gaps can be measured across multiple areas of the business, including customer satisfaction, revenue generation, productivity and supply chain cost.
Small businesses, in particular, can benefit from performing gap analyses when they’re in the process of figuring out how to allocate resources.
In software development, gap analysis tools can document which services or functions have been accidentally left out; which have been deliberately eliminated; and which still need to be developed.
In compliance initiatives, a gap analysis can compare what is required by certain regulations with what currently is being done to abide by them.
In human resources (HR), a gap analysis can be done to examine which skills are present in the workforce and what additional skills are needed to improve the organization’s competitiveness or efficiency.
The first step in conducting a gap analysis is to establish specific target objectives by looking at the company’s mission statement, strategic business goals and improvement objectives.
The next step is to analyze current processes by collecting relevant data on performance levels and how resources are presently allocated to these processes. This data can be collected from a variety of sources depending on what is being analyzed.