A Guide to Gap Analysis

It’s often easy to lose sight of your goal in business. Core values get buried by endless new projects and mounting processes. As a result, it becomes tricky to know whether your performance meets your long-term goals. When this happens, gap analysis can help.

Maybe you want to see if your existing systems still meet your goals. Maybe you’re planning your next steps, or deciding where to focus resources. Or maybe you’re working out which features should make it into your product.

With gap analysis, you make sure that what you’re doing currently aligns with the future you’re chasing. But how? Here’s a handy guide to gap analysis.

What is gap analysis?

Gap analysis is a way of comparing your current business performance to your long-term goals.

Also known as ‘needs analysis’, ‘needs assessment’ and ‘needs-gap analysis’, gap analysis is a way to determine two key things. First, where you’re falling short of your goals. Second, what you need to do to get back on track.

It does this by giving you a view of any differences (the ‘gap’) between your current state and where you’d like to be.

When can you use it?

Gap analysis reports are most commonly used by product managers and process improvement teams.

For instance, in software development, you can use gap analysis to identify missing functionality. (And whether the omission is accidental, deliberate, or otherwise.) Then, you can make a plan that ensures your ‘should have’ features aren’t buried or forgotten. (Provided, you choose to use the MoSCoW method.)

Meanwhile, in business process improvement, gap analysis is a good way to identify which processes need attention. This is because you can compare current processes to future productivity goals.

It’s useful when checking your compliance, too. You simply compare your current measure to the future rules you need to follow. Then, you can use gap analysis to evaluate your IT systems and technology stack. Are they addressing your pain points adequately?

Essentially, you can use gap analysis to evaluate any tool, method, workflow or resource in your business. And you can do so in four steps.

Step one: identify your current state

First, you need to have a clear overview of your current state. That is, you need to know where you currently stand. What is the state of your program, processes or organisation?

Getting this overview means collecting both quantitative and qualitative data where applicable. You’re aiming for the big picture overview of the area you’re looking to analyse. For instance, it can be helpful to examine your KPIs and the return on investment of your resources.

In short, what’s happening currently?

Step two: outline your desired future state

Next, you need to outline where you want to be. For example, if you’re analysing your product development, what does the finished product have/look like/do? Or, what legislation and practices do you need (or want) to follow? What’s your growth or profit target?

When determining your future goals, remember to be reasonable, and choose attainable targets.

A good way to start with step two is to look at your mission statement, your strategic goals, and your improvement objectives. What have you already outlined as your future goals?

Another place to look is at your user stories, customer feedback, or your product roadmap. What was the plan for the product or program when you started?

Step three: identify the gaps

Once you’ve got a clear idea of where you are and where you want to be, you can look for the gaps. That is, look for the differences between your current operations and your desired future outcomes.

So, a business process improvement effort might start by looking for inefficiencies and low ROI for resources. Is a process broken or overly complex? Meanwhile, a product manager in software development might look to see if features are missing.

Compare what you want with what you have. If you then determine that a gap exists, dive deeper. What’s causing it? If there are many contributing factors, list them. For every gap you find, analyse why the gap exists.

Step four: plan to bridge the gap

Finally, conclude your gap analysis by proposing how to address every cause you’ve outlined. Then, you can plan the steps you’ll take to bridge the gaps in your business, processes or product.

For example, you might be able to boost process efficiency by deploying new tools, like automation software. Or, you might need to schedule more code reviews to ensure code quality stays up. Maybe you need to hire another team member to help with an increased workload.

When outlining how to close each gap, also consider potential hurdles, and include how to navigate them. Remember to consider the costs of implementing each fix — some may cause more disruption than others or demand extra resources. If this happens, look for alternative solutions or ways to mitigate the costs.

The guide to gap analysis

As a final titbit of advice, make sure you follow through with your plans to close the gaps. It’s also a good idea to take it easy and avoid trying to plug too many gaps at once. This helps reduce disruption.

And that’s how to complete a gap analysis. So, is it time you reviewed your business’s future?

Originally published at https://www.parkersoftware.com on August 21, 2019.