Resources - ICAG | ACCA

GAP ANALYSIS

Nhyira Premium, IBL

GAP ANALYSIS

In a business or a company, GAP analysis compares the actual performance with the potential performance. Sometimes it is referred as need-gap analysis, need analysis or need assessment. A company will determine the factors that define its current state, list down the factors needed to reach its target state and then plan on how to fill the gap between the two states. This is important because it helps to identify if a company is performing to its potential and if not performing, why it is not performing to its potential. This helps to identify flaws in resource allocation, planning, production etc.

SWOT Analysis vs GAP Analysis

SWOT analysis and GAP analysis can be used in different contexts and they might give a different meaning in those contexts. Below is a breakdown of SWOT analysis vs GAP analysis in the context of a company.

  • SWOT analysis evaluates a company against its peers, while GAP analysis is an internal evaluation to identify performance deficiencies.
  • SWOT analysis is done for long-term planning while GAP analysis is often done to reach short term goals.
  • SWOT analysis is often a comprehensive study evaluating many aspects and many competitors. GAP analysis can be very simple and targeted towards fine-tuning one process.

Applying gap analysis

Gap analysis can be conducted in situations such as the following –

  • In a system such as a computer software application the gap analysis maps functions or features that exist in the system now versus the functions required in the future. Could gap analysis help in developing a user interface? It could be the data that a system provides to an interface such as an instrument panel or control dashboard now compared with the data that will need to be displayed in the future.
  • What about a set of operations forming a business process? In this case, gap analysis is assessing needs or gaps between activities or procedures of a current business process, and steps that will be needed in the business process at some future time.
  • In the context of strategic planning gap analysis focuses on organizational objectives and associated performance metrics. It evaluates how well an enterprise meets agreed targets, using specific performance indicators now against the targeted performance outcomes, using these same metrics at some point some time ahead.

Gap analysis involves comparing what is
with what should be

In summary gap analysis consists of –

  • listing of key factors such as performance levels of key value drivers as well as the overall level of corporate performance of the current strategies or “what is”, and
  • stating factors involved driving outcomes for the future “what should be”, and then,
  • highlighting the gaps that exist and need to be filled.