gap analysis

  

Definition
Technique for determining the steps to be taken in moving from a current state to a
desired future-state. It begins with (1) listing of characteristic factors (such
as attributes,competencies, performance levels) of the present situation ("what is"), (2)
cross-lists factors required to achieve thefuture objectives ("what should be"), and then
(3) highlights the 'gaps' that exist and need to be 'filled.' Also called need-gap
analysis, needs analysis, and needs assessment.

gap analysis is a tool that helps a company to compare its actual performance with its potential
performance. At its core are two questions: "Where are we?" and "Where do we want to be?"

Gap analysis is a tool used in wildlife conservation to identify gaps in conservation lands (e.g.,
protected areas and nature reserves) or other wildlands where significant plant and animal
species and their habitat or important ecological features occur

Analysis of the difference between the base documents and the required final PAS (as defined
by its scope) allowing identification of areas where new text is needed.

In information technology, gap analysis is an assessment tool that helps identify the differences between
the current condition and the desired state. A gap is sometimes called "the space between where we are
and where we want to be." A gap analysis highlights which requirements are not being met and provides
a foundation for measuring the investment of time, money and human resources that's required to
achieve the desired outcome.

In software development, for instance, a gap analysis can be used to document which services and/or
functions have been accidentally left out, which ones have been deliberately eliminated and which still
need to be developed. In compliance, a gap analysis can be used to compare what is required by law to
what is currently being don

In business and economics, gap analysis is a tool that helps a company to compare its actual

performance with its potential performance. At its core are two questions: "Where are we?" and "Where
do we want to be?" If a company or organization is not making the best use of its current resources or is
forgoing investment in capital or technology, then it may be producing or performing at a level below its
potential. This concept is similar to the base case of being below one's production possibilities frontier.

The goal of gap analysis is to identify the gap between the optimized allocation and integration of the
inputs (resources) and the current level of allocation. This helps provide the company with insight into
areas which could be improved. The gap analysis process involves determining, documenting and
approving the variance between business requirements and current capabilities. Gap analysis naturally
flows from benchmarking and other assessments. Once the general expectation of performance in the
industry is understood, it is possible to compare that expectation with the company's current level of
performance. This comparison becomes the gap analysis. Such analysis can be performed at the
strategic or operational level of an organization.

Gap analysis is a formal study of what a business is doing currently and where it wants to go in the future.
It can be conducted, in different perspectives, as follows:

1. Organization (e.g., human resources)

2. Business direction
3. Business processes
4. Information technology

Gap analysis provides a foundation for measuring investment of time, money and human resources
required to achieve a particular outcome (e.g. to turn the salary payment process from paper-based to
paperless with the use of a system). Note that 'GAP analysis' has also been used as a means for
classification of how well a product or solution meets a targeted need or set of requirements. In this case,
'GAP' can be used as a ranking of 'Good', 'Average' or 'Poor'. This terminology does appear in
the PRINCE2 project management publication from the OGC (Office of Government Commerce).

The need for new products or additions to existing lines may have emerged from portfolio analyses, in
particular from the use of the Boston Consulting Group Growth-share matrix, or the need will have
emerged from the regular process of following trends in the requirements of consumers. At some point a
gap will have emerged between what the existing products offer the consumer and what the consumer
demands. That gap has to be filled if the organization is to survive and grow.

To identify a gap in the market, the technique of gap analysis can be used. Thus an examination of what
profits are forecasted for the organization as a whole compared with where the organization (in particular
its shareholders) 'wants' those profits to be represents what is called the 'planning gap': this shows what
is needed of new activities in general and of new products in particular.

The planning gap may be divided into three main elements:

 Contents
 [hide]

1 Usage gap

2 Market

potential

3 Existing usage

4 Product gap

5 Competitive

gap

6 See also

7 Market gap

analysis

8 References

9 External Links

[edit]Usage gap
This is the gap between the total potential for the market and the actual current usage by all the
consumers in the market. Clearly two figures are needed for this calculation:

 market potential
 existing usage
 Current industrial potential
[edit]Market potential
The maximum number of consumers available will usually be determined by market research, but it may
sometimes be calculated from demographic data or government statistics. Ultimately there will, of course,
be limitations on the number of consumers. For guidance one can look to the numbers using similar
products. Alternatively, one can look to what has happened in other countries. [citation needed] The increased
affluence of all the major Western economies means that such a lag can now be much shorter.

at least the maximum attainable average usage (there will always be a spread of usage across a range of
customers), will usually be determined from market research figures. It is important, however, to consider
what lies behind such usage

[edit]Existing usage
The existing usage by consumers makes up the total current market, from which market shares, for
example, are calculated. It is usually derived from marketing research, most accurately from panel
research such as that undertaken by the Nielsen Company but also from ad hoc work. Sometimes it may
be available from figures collected by government departments or industry bodies; however, these are
often based on categories which may make sense in bureaucratic terms but are less helpful in marketing
terms.

The 'usage gap' is thus:

usage gap = market potential – existing usage

This is an important calculation to make. Many, if not most marketers, accept the existing market
size, suitably projected over the timescales of their forecasts, as the boundary for their expansion
plans. Although this is often the most realistic assumption, it may sometimes impose an
unnecessary limitation on their horizons. The original market for video-recorders was limited to the
professional users who could afford the high prices involved. It was only after some time that the
technology was extended to the mass market.

In the public sector, where the service providers usually enjoy a monopoly, the usage gap will
probably be the most important factor in the development of the activities. But persuading more
consumers to take up family benefits, for example, will probably be more important to the relevant
government department than opening more local offices.

The usage gap is most important for the brand leaders. If any of these has a significant share of the
whole market, say in excess of 30 per cent, it may become worthwhile for the firm to invest in
expanding the total market. The same option is not generally open to the minor players, although
they may still be able to target profitably specific offerings as market extensions.

All other gaps relate to the difference between the organization's existing sales (its market share)
and the total sales of the market as a whole. This difference is the share held by competitors. These
gaps will, therefore, relate to competitive activity.

[edit]Product gap
The product gap, which could also be described as the segment or positioning gap, represents that
part of the market from which the individual organization is excluded because of product or service
characteristics. This may have come about because the market has been segmented and the
organization does not have offerings in some segments, or it may be because the positioning of its
offering effectively excludes it from certain groups of potential consumers, because there are
competitive offerings much better placed in relation to these groups.

This segmentation may well be the result of deliberate policy. Segmentation and positioning are very
powerful marketing techniques; but the trade-off, to be set against the improved focus, is that some
parts of the market may effectively be put beyond reach. On the other hand, it may frequently be by
 default; the organization has not thought about its positioning, and has simply let its offerings drift to
where they now are.

The product gap is probably the main element of the planning gap in which the organization can
have a productive input; hence the emphasis on the importance of correct positioning.

[edit]Competitive gap
What is left represents the gap resulting from the competitive performance. This competitive gap is
the share of business achieved among similar products, sold in the same market segment, and with
similar distribution patterns - or at least, in any comparison, after such effects have been discounted.
Needless to say, it is not a factor in the case of the monopoly provision of services by the public
sector.

The competitive gap represents the effects of factors such as price and promotion, both the absolute
level and the effectiveness of its messages. It is what marketing is popularly supposed to be ab

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How to Create a Gap Analysis Document

By Seeta Shah Roath, Ed.D., eHow Contributor

updated: February 2, 2010

Creating a gap analysis document includes determining the desired skill levels in the required areas.
Selected skills depend on the needs of the particular company, person or group requiring the
analysis document. Skill areas may include general categories such as responsibilities, duties, tasks,
functions and knowledge. A comparison between the current and the required skills and
competencies provide the basis from which the skill gap is calculated. Recommendations provide
insights into required actions for bridging the gap.
Difficulty: Moderate

Instructions
Things You'll Need:
 Stated goals
 List desired skills sets
 List of current skill sets
Creating a Gap Analysis Document

1. 1
 Write down the stated goals of the gap analysis study. Expand each goal to cover all necessary skill
requirements. Include the required competencies in all necessary categories such as responsibilities, duties,
tasks, functions and knowledge.

2. 2
Make a list of desired skill sets. Use the list to create a word table of proficiency by placing each skill in the
first column and using subsequent columns to note desired proficiency levels. Note proficiency levels in the
range of "adequate" to "reasonably well" to "expert" or in increments of "1 to 10."

3. 3
Make a list of current skill sets. Use the list to create a second word table of proficiency by placing each skill
in the first column and using subsequent columns to note desired proficiency levels. Rate proficiency levels
with the same range chosen for Step 2.

4. 4
Create a graph using the findings of Steps 2 and 3. Use one curve to show the desired/required skill levels and
another to show existing skill levels. The difference between the two curves is the skill gap. Use shading and
labels on your graph to explain the differences between the two curves.

5. 5
Compose a section on recommendations for bridging the gap of each skill. Provide a detailed explanation of
how each gap may be closed and the required resources. Include all possible/necessary strategies and tactics
needed to bridge the gap between the desired skill levels and the current skill levels.

6. 6
Create a possible timeline showing the required actions for reducing the gap with dates for stages of
implementation. Stages could be (a) Contacting a training provider and examining offerings, (b) Selecting a
particular training program/course, (c) Enrolling in the program/course.

7. 7
Write a budget showing what the implementation of required actions will cost. Include all fees and resources
such as books, computerprograms and transportation.

8. 8
Write a summary conclusion that includes the main points of steps 1 through 7. Be sure to include skill lists,
findings and strategies. Show recommended actions for bridging the gap and mention required resources.

9. 9
Include an appendix if necessary. Place any lengthy documents here such as mathematical calculations and
tables used for plotting graphs.
 How to Do a Gap Analysis
By ShawnTe Pierce, eHow Contributor

GAP analysis is a process typically performed by Business Analysts and Project Managers for a
company or a line of business within a larger organization. Gap analysis is an assessment tool used
to find the deviation or gap between what exists versus what is needed or desired. This guide will
provide an outline template to help you perform gap analysis for your business needs.
Difficulty: Challenging

Instructions
Things You'll Need:
 All data pertaining to the product, process, technology, or service that exists
 All data pertaining to the desired end result of the product, process, technology, or service your business is
striving for
 Microsoft Excel

1. 1
Open a blank workbook in Excel. Click on "Start," "All Programs," "Microsoft Office," Microsoft Excel,"
"Office Button," "New," "Blank Workbook" and then "Create."

2. 2
Rename "Sheet 1" to "Currently Exists" by double clicking on the tab and typing the new name.

3. 3
Rename "Sheet 2" to "Desired Outcome".

4. 4
Rename "Sheet 3" to "GAP".

5. 5
 Figure 1.5

In the sheet named "Currently Exists" make a list of all measurable data related to the current product, process,
technology, or service.

6. 6

Figure 1.6

In the sheet named "Desired Outcome" make a list of what is expected or desired of the product, process,
technology, or service.

7. 7
 Figure 1.7

In the sheet named "GAP," list or highlight the differences between what the "Desired Outcome" sheet has
versus what the "Currently Exists" sheet has. This is the gap.
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Tips & Warnings

 GAP analysis can be performed on almost any product, service, project, or endeavor a
business wishes to analyze and improve upon. It is also a good marketing research tool. Based
upon what your gap analysis is used for additional sheets may need to be created as well charts,
graphs, and pivot tables to give a visual quantification of your analysis.
 GAP analysis is not a standard process and needs to be tailored to the needs of the
business. The goal is use the gap analysis to figure out what is needed to get what currently exists
to the point where it becomes what the company desires (what is needed to get from point A to point
B). GAP analysis can be a long process and is not recommended for someone who is not well
versed at analyzing data and quantifying it. While not a requirement, knowledge of project
management and business analyst skills is optimal to possess before attempting to do any gap
analysis. It is imperative to have all Critical Data related to where business currently is and where
the business wishes to be in order for the gap analysis to be thorough. Gap analysis is rarely a one
and done process. It may be revisited frequently due to changes in needs of the business. Gap
analysis is not a resolution, it helps to pinpoint the missing pieces so that a resolution can be made
from the analysis.
Gap Analysis Information
By Sam N. Austin,  eHow Contributor

A gap analysis is a basic business tool in document format used for examining a business situation in the
context of business goals. A gap analysis allows a business to compare the actual state of an aspect of
the business to see how far removed it is from the ideal state as reflected in the goals. Armed with this
information, the business can create a plan to close the gap between the actual state of the business and
the desired state.

Usage
1. To illustrate the way a business might use a gap analysis, a business might want to examine the
quality and features of one of its products in comparison to a similar product from a competitor.
The results of the product comparison would then be examined in terms of the product's stated
business goal. The product's goal might be stated as "to be comparable in quality but lower in
price than competitive products." If the competitive analysis shows that the price is not lower than
the competitor product, the business then can decide whether to work toward lowering the price
or to revise the stated business goal to eliminate the target of lower cost.

Strategic Goal
2. After the introduction, a gap analysis includes a section that states the overall business goal of
the business component under consideration. In the current example, the goals section might
describe the business reasons that drove the decision to make the product lower in cost than
competitive products. This section contains established, known information about the business
and its goals.

Current State
3. Once the big picture is established, a gap analysis document focuses on the actual state of the
business. If a product is superior in quality to competitive products, when the goal is to be equal
in quality, the analysis notes that fact. If a product is equal in price to competitive products, the
analysis notes that fact as well. In short, this section is a detailed, point-by-point analysis of the
business situation at hand with notes about how the situation compares to the desired state,
including where it exceeds expectations and where it fails to meet expectations.

Analysis
4. The analysis section goes beyond the "what" of the situation described in the previous section
and tries to account for the "why." For example, if the current state is that a product is intended to
be lower in cost than competitive products, but instead is at the same cost, the analysis section
should describe in detail why that is the case. For example, if the cost is higher than expected
because materials are more expensive than projected, that should be explained, with supporting
data. Or, if the cost is higher than expected because labor costs are higher, that should be
explained. For every point made in the current state section, the analysis section explains the
reasons and provides explanatory data. This data is used in the crucial plan section of the gap
analysis.
 Plan
5. The plan section of the gap analysis, the final section in the document, sets forth the particular
steps that will be taken to close the gap between the actual and desired states of the business
problem. The plan may include timelines and key dates, budget or personnel requirements and
any other elements necessary to close "the gap." A well-written gap analysis plan will be based
on the facts and analysis of the situation and will describe actions that can yield beneficial and
measurable results.

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