Gap Analysis for Business Analyst (updated 2023)

Posted on by

First thing first, let’s take a quick look at the formal definition of Gap Analysis:
Gap Analysis refers to comparing the present state of any product, process, application, business, or organization to the desired future state and identifying what needs to be done to bridge that gap.

You will learn:

  • the basics of Gap analysis (along with examples)
  • how to conduct a thorough gap analysis
  • situations where gap analysis can be best applied
  • evaluate gap analysis tools
  • best practices for conducting a gap analysis

Now, let’s dive right into it.

A. Basics of Gap Analysis

With the advent of newer technologies and constantly changing business priorities, there is a constant need to change and modify an organization’s current processes and systems.

Gap analysis is structured research that aims to determine an enterprise’s current or actual state/performance/capability (also called the as-is state). It also involves carefully documenting the improvements (characteristics, features, performance, etc.) needed to achieve the desired state (also called the to-be state).

One should note that Gap analysis concentrates on ‘what needs to be changed’ rather than ‘how’ and results in giving quantifiable data against it.

A thorough gap analysis of any process gives quantifiable data and a realistic overview of what is actually needed to achieve the envisaged state. Based on this data, the management of a company can:

  • convince all the relevant stakeholders about the scope of the work
  • prioritize the features they wish to get implemented
  • take informed decisions about the cost, effort, and resources required to achieve the future state
  • ensure that the future state meets the strategic objectives/vision of the company

Gap analysis is also known as ‘needs analysis’ and ‘as-is and to-be analysis’.

B. Situations where we could use Gap Analysis 

Gap analysis can be performed either at the macro level or the micro level as well, for instance:

  • An organization trying to ascertain what changes are required to make them a leader in their line of business
  • A company looking to enter a new field of specialization
  • A department wishing to improve its monthly productivity
  • A team trying to achieve a work-life balance for its members
  • An individual who wants to upgrade her current technical skill-set

C. Domains where we could use Gap Analysis 

Gap Analysis is very versatile and can be implemented in quite a wide range of domains and categories as an analysis technique. Let’s take a look:

  • People related
    • Knowledge gap of an individual or a team
    • Unclear roles
  • Processes/products/applications
  • Quality improvement
  • Productivity improvement
  • Policy and procedures restructuring
  • Skill augmentation
  • Feature improvement
  • Technical
    • Incorporate new technologies
    • Improve efficiency
    • Increase usability
    • Reduce response time

The above list is just indicative, and a person’s imagination only limits the diversity of gap analysis usage.

D. How to conduct Gap Analysis

Gap analysis is a multi-stepped process, and we shall now look at each of the fundamental steps.

Step 1: Define the Future State

Disciple: Which road should I take?

Master: Where do you wish to go?

Disciple: I don’t know.

Master: Then take any road. It doesn’t matter!

So you see, knowing what you wish to attain is essential.

For successful gap analysis, the first step is to precisely define the goal, its features, characteristics, and the tangible benefit of achieving the desired future state. The goals should be SMART i.e., Specific, Measurable, Attainable, Relevant, and Time-bounded.

One can start by drawing a table or a matrix with three columns, and the desired future state can be written in the second column. For e.g., the monthly productivity of the team should increase by 20% so that they can develop more functionalities.

Step 2: Identify the Current state

 The second step is to identify the current state of affairs around the outlined goals. To gather details about the current state of an organization or project, you can use historical data, existing documentation, current metrics, review and appraisal details, and feedback. You can also speak to the individuals working within the area that will undergo a change and get first-hand information.

The current state should be documented in the first column of the table.

Example: As per the current performance metrics, the team can develop 35 story points in a month.

 

Step 3: Describe the Gap

 As the last step, the gap between the current state and the future state should be defined, and all the factors contributing to the gap should also be listed. These elements should be described in the third column of the table.

Example: The team should finish 7 more story points per month. Factors limiting the team’s productivity could include mediocre technical expertise, no incentives for top performers, and a lack of team dynamics.

 Additional Step: Bridging the gap

 This additional step contains all the suggested solutions to fill the gap between the current and the future states and can be listed in an extra column on the extreme right of the table.

Examples of proposals to bridge the gap:

  • The team should undergo technical training to augment their current skill set
  • Introduce rewards and recognition program within the team
  • Team bonding activities like team lunches and monthly team outings should be planned

Note—The above gap analysis steps are the primary ones. Secondary or intermediate steps may also be added depending on the analyzed process/product/system.


E. Gap Analysis Tools

Following are some of the most frequently used tools that assist in conducting a thorough gap analysis.

Gap Analysis Tool 1: SWOT Analysis

SWOT is about meticulously listing down the Strengths (qualities), Weaknesses (negatives), Opportunities (elements in your favor), and Threats (risks) around your project/goal/situation and then analyzing each of these factors to see their impact on your project.

SWOT is by far the most widely used gap analysis tool. Let’s look at how to do a gap analysis using SWOT:

  1. Reflect and state ‘why’ SWOT is performed and ‘what’ outcome is expected from this activity
  2. List down all the relevant stakeholders that can contribute to the discussion around the above statement and then invite them.
  3. Draw a 2 x 2 matrix on a whiteboard and label each of the sections as ‘Strengths’, ‘Weaknesses’, ‘Opportunities’, and ‘Threats’
  4. Conduct a brainstorming session with the members, asking them the following questions about their objective (desired state)
    1. List solid and positive internal characteristics that shall help in attaining the objective [Strengths]
    2. List the areas/resources/processes that diminish the chances of success in the attainment of the objective [Weaknesses]
    3. List the external conditions or situations that make achieving the objective easier [Opportunities]
    4. List factors that could pose a risk to the success of the objective [Threats]
  5. Analyze the above factors and see how you can use your strengths to exploit opportunities while avoiding Threats.

Related Article: SWOT analysis: Examples, Tips and Best Practices

 

Gap Analysis Tool 2: Spreadsheets

Spreadsheets are very handy as a tool for conducting gap analysis, especially for investigations involving calculations and numbers.

Using spreadsheets, you can write your present numbers on the left and desired ones on the right and then find the delta or the gap between the two. Moreover, you can also create quick mathematical models defining your constants (rent, machinery) and your variables (materials, utilities) and then see how changing your variables impacts your overall profit margins or percentage.

 

Gap Analysis Tool 3: 5 Hows / Questionnaire

Similar to the 5 Whys technique, the 5 Hows involves deliberate questioning to get into the specific details of how to solve a problem.

Here’s the procedure to conduct 5 Hows analysis:

  1. Gather the relevant team members who are working on the process or project that needs to change or improve
  2. Specifically, define and explain the desired state of things (to-be state to all the team members
  3. Ask the members, ‘How’ will you attain the future envisaged state? Encourage brainstorming and open discussion amongst the team members to cross-check and validate every answer
  4. Based on the initial answers, ask the team members 4 more times. Each answer should be noted, and this forms the basis of the next ‘How’
    Asking ‘How’ repeatedly will get you past apparent ways to achieve the desired state and see the activities or tasks that need to be done at the root level. However, even after asking How 5 times, if you still perceive you are not finding the fundamental tasks, you should ask more ‘Hows’.

You should note that every answer should be backed by knowledge, statistics, or details and should not be superficial. That’s why the presence of relevant members is imperative to the success of the 5 Hows analysis.

Another alternative to 5 Hows is sharing a ‘Questionnaire’ with the relevant members and asking them to fill in their responses within the questionnaire. Sharing questionnaires is useful when the members are not co-located or cannot get into a meeting/conference.

 

Gap Analysis Tool 4: Fishbone Analysis

Fishbone Analysis, commonly known as the cause and effect diagram and Ishikawa diagram, is another root cause analysis technique. Fishbone Analysis works on the principle of ‘cause and effect’, which states that every action has an impact, and we have to perform the right move to have the desired result.

To use Fishbone for conducting the gap analysis, we can follow the below steps:

  1. Write the desired state or goal at the head of the fish, facing right
  2. On the left, list the major activities that need to be done and features to be developed to attain the desired goal. These activities/features are written at the end of every rib of the fishbone diagram.
  3. Take one activity/feature (effect) and analyze the sub-activities/tasks (cause) that should be performed under it. Then, write these sub-activities/tasks on the branches of the respective rib.

Like the 5 Hows analysis, the fishbone analysis results should be discussed in a meeting and cross-validated before they are finalized.

 

Gap Analysis Tool 5: McKinsey 7S

McKinsey 7S is a model that states that “for an organization to continue to perform well, there should be harmony and alignment amongst seven elements, namely structure, systems, strategy, staff, skills, style and shared values”.

The seven elements are closely interrelated, and changing one aspect will directly or indirectly impact the remaining six elements. The McKinsey 7S technique helps direct the gap analysis by depicting what factors need to be analyzed and aligned while bringing a change.

Since all the models’ names start with the letter ‘S’, and the tool was developed by two McKinsey consultants, its name is McKinsey 7S.

The following steps should be followed while conducting gap analysis using the McKinsey 7S tool:

  1. The future state of the system/process that needs to change should be appropriately identified
  2. Based on the nature of the suggested change, it should be categorized under one of the seven elements described above.
  3. Now, the remaining elements should be taken one at a time. What modifications/changes should be made to this element to attain the desired state positively should be analyzed.

Apart from the generic techniques discussed above, the gap analysis can also be performed using some other specialized tools and methods like Nadler-Tushman’s congruence model and Burke-Litwin Causal Model.

F. Gap Analysis Tips and Best Practices

Before doing a serious gap analysis exercise, it’s worthwhile to consider and implement some of the following tips and best practices:

  1. Gap analysis results in preliminary action items required to bridge the current and desired state gap and get the analysis rolling. However, analysts should never substitute it for a more detailed analysis that they should carry out once the respective project (of implementing the change) has started.
  2. The analysts should perform gap analysis at the preliminary stages of any change-related project.
  3. When obtaining information about the elements involved in gap analysis, always use more than one tool (discussed above) and combine the results obtained. This practice will ensure a holistic view of the scope of the change.
  4. All the data obtained around the change should be quantifiable so that it can be verified if needed. E.g., the effort of 500 person-hours, the implementation cost of $65,000 rather than ‘huge effort’ and ‘a lot of money’.
  5. While collecting information, the concentration should be on processes, workflows, information, and interdependencies rather than individuals. E.g. ‘We need to implement a process that evaluates the product after every stage’ rather than ‘we need to remove inefficient people like Mike’.
  6. Last but most importantly, the end goal/future state and the respective scope of the change have to be carefully defined, as any mistake in doing so might turn the analysis in an altogether different direction.

FREE KIT DOWNLOAD: Get BA Documents Template Toolkit!!

Our free Template Toolkit contains the following professional, pre-formatted, and ready-to-use Business Analyst Document templates:

  • Use Case Document Template
  • Requirement Traceability Matrix (RTM) Template
  • Requirement Management Plan Template
  • Project Vision Document Template
  • Test Case Template

Comments are closed.