Gap Analysis Definition | US News

Gap analysis is a process of assessing the performance of a business or business unit to determine whether business requirements or objectives are being met and, if not, what steps should be taken to meet them.

A gap analysis is also referred to as a needs analysis, needs assessment or needs-gap analysis.

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Gap analysis aims to meet a set of expectations or goals. Its purpose is to help businesses identify any shortcomings that they might have. With this knowledge, they are better positioned to overcome these and other issues and improve their business operations. There are just four simple steps in conducting gap analysis. To track the progress throughout the analysis, start with a template that lists each of these four steps. Under each step, list the individual action items to take, to reduce or eliminate the identified gaps.

Step one: Identify the current situation or state of affairs.

  • Define what is important for the business or department.
  • An IT team might be focused on data security and cyber risk, while a marketing team might emphasize the implementation of strategies to promote brand awareness and drive sales.
  • The metrics used will reflect what is most important to the success of the business or department.

Step two: Set SMART goals that reflect expectations or results.

  • SMART is an acronym that stands for goal descriptions: specific, measurable, achievable, relevant and time-sensitive.
  • Being specific helps to narrow down exactly what is to be achieved and removes ambiguity or the need for debate about what the goal is.
  • Making a goal measurable enables the business or unit to see and define the growth towards the goal.
  • The advantage of an achievable goal is that it enforces motivation among employees involved in reaching that goal while minimizing frustration and low morale.
  • Relevant goals help in the achievement of the goals of the business or unit.
  • Being time-sensitive enforces a deadline to measure progress and evaluate success.

Step three: Analyze gaps from the current state to the expected state.

  • A thorough evaluation of the gaps gets to the root of the issues or problems.
  • Get to the details of why the business or unit is not as successful as it could or should be.
  • Keeping an open mind allows for the discovery of the answer. The “why” could be a brand image problem, a supply chain issue or an employee training problem, among other issues. Explore every angle.

Step four: Formulate a plan to close the gaps.

  • What needs to happen to reach the goals that have been set?
  • List all actionable items that bridge the gap between the current and expected state.
  • Monitor all steps that have been taken to ensure that the gap has been narrowed or closed. Continue to measure the outcomes towards closing the gap.
  • Articulate these outcomes to the rest of the organization, as they can learn by example and apply a similar process in their own gap analysis.

Gap analysis is not just another task or exercise that management consultants offer. Every business needs to go through this process – perhaps on a scheduled basis, such as biannually, even when the business is running smoothly, or on an ad hoc basis, when a problem or issue arises. The benefits of doing so can be multiple. The following are a few examples of a more extensive list of benefits.

  • Make better decisions. Closing a gap in an organization or unit gives the business the advantage of having experience in gap analysis, making it better prepared to close gaps that may appear in the future.

  • Benchmarking. Closing the gap between the success of a business versus its competition means comparing the results of specific progress or a product against external criteria. This helps a business gain a competitive advantage.
  • Boost productivity and the bottom line. There is a direct correlation between gap analysis and a business’s organizational efficiency. Efficiency, in turn, directly affects profitability and the bottom line.

  • Keep the business forward-looking. To survive in a competitive world, a business should continuously look for gaps in its customer base, its brand image, marketing and public relations initiatives, and its social media presence. It should always be fresh, current and at the forefront of its industry’s product and/or service offerings.

  • Optimize organizational structures. A business should continuously review organizational structure, staffing and role descriptions. Gap analysis helps to discover if additional personnel, committees or teams would benefit an organization or, alternatively, if a reduction in personnel could reduce redundancy.


Before beginning to formulate a gap analysis and template, a business should reflect on the journey it has been on throughout its history to get to where it is currently. Do not just focus on the bad but determine what is going well and what strategies have worked. Then determine what may be holding the business back, what other businesses in the industry are doing that may be worth considering and where there is room for improvement.

The “gap” in the gap analysis method refers to the space between where an organization or division is and where it would like to be.

Gap analysis can occur within any division of an organization. In IT, gap analysis is used by project managers and process improvement teams as the starting point for an action plan to produce operational improvement. In business development, a gap analysis helps in benchmarking actual business performance so it can be measured against optimal performance levels. Human resources gap analysis breaks down the current workforce and skills compared to the workforce needed to reach key business goals, as it identifies upcoming personnel and skill deficiencies within the organization.


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