Menu Close

Gap Analysis: What it is and what is its Significance

Business organizations around the world are constantly changing and rearranging their processes to meet the demands of the dynamic economy. The need of fixing and expanding their business processes to match the business objective is a continuous procedure. Gap analysis helps businesses in this aspect. With the help of gap analysis, businesses can get a detailed explanation of their processes and evaluate their position in the market.

Gap analysis is not limited to any single industry and can be applied in diverse areas like sales, productivity, financial performance, human resource management, cost control, quality assurance, employee satisfaction, market competitiveness, and many more. Before going further into the significance of conducting a gap analysis let us discuss what gap analysis is and its objectives.

What is Gap Analysis?

what is gap analysis, gap analysis
Gap Analysis

Gap analysis can be defined as – set of techniques to examine and describe the gap between the current performance and the desired future objectives.

It allows businesses to determine the best possible methods to achieve their goals and objectives. Using gap analysis, organizations can compare their present state of the business with the ideal state or the business objectives. This will help them find the shortcomings that are affecting the result and the opportunities that can help them expand the business further.

A gap analysis should be done frequently, especially when the stakes are high. This usually tells organizations about the progression and the direction of their business. It also helps organizations to determine that their resources are utilized effectively to meet the expectations of the business and its customers.

Significance of Gap Analysis

The most important aspect of conducting a gap analysis is that it helps in controlling the various aspects of a business. Here are 8 ways gap analysis can become significant in transforming your business:

  • By using gap analysis, organizations can identify the shortcomings or deficiencies of the business and find ways to overcome them.
  • It helps in quantifying these findings to help them make improvements for the future.
  • Through gap analysis, organizations can prioritize tasks and processes that needs to be changed or improved to achieve the desired objectives.
  • It assists leaders and the decision-makers like project managers of the organizations to make informed decisions about the allocation of resources, budget, and time in accordance with the business goals.
  • Gap analysis promotes the efficiency of your business by analyzing and evaluating the problems in the various business processes.
  • It forces business leaders to look at the entire business model objectively, which gives an in-depth look into their several processes as well.
  • Utilizing gap analysis also helps in managing the expectations of the workforce. Gaps between their expectations and work experience can seriously impact productivity.
  • An effective gap analysis improves the overall productivity of the business by managing the expectations of the entire business operation with reality.

Gap analysis is an effective project management tool to improve the whole business including the workforce. It provides clarity about your current position in the market and the direction you want to take. With gap analysis, organizations can track their progression and examine their steps to meet their visions and missions. Thus, adding value to the entire business.

Steps in Gap Analysis

Gap analysis usually involves 4 steps that organizations follow to analyze the progress of their business processes. These are as follows:

  1. Analyzing the current business position –
    Firstly, organizations need to analyze their current business position to find the areas they need to improve to attain their goals and objectives.
  2. Evaluating the current state of business with the business objectives with quantitative data –
    This step focuses on the organizational objectives and compares the current business position with the desired objectives in the form of quantitative data.
  3. Identifying gaps between the present state and the desired state –
    In this step, gaps are identified between the current business position and the desired position using quantitative analysis.
  4. Assess the quantitative data to formulate an improvement plan –
    In the final step of gap analysis, the data is utilized to devise solutions for the improvement of the current state of business to the desired one.

The aim of these steps is to bridge the gap between the present business state and the ideal business state. This requires a well-defined improvement plan that is approved by all the decision-makers of the business organization.


Organizations implement several tools to conduct a gap analysis. These tools help make the process easy and find effective solutions. Some of the most used gap analysis tools are:

  • SWOT analysis
  • Fishbone diagram
  • McKinsey 7S framework
  • Nadler-Tushman Model
  • PESTELE analysis


Gap analysis is a valuable framework to assess your business goals and objectives. To survive in the dynamically changing global economy, businesses rely on tools and techniques like gap analysis. There are different techniques that help organizations to transform their existing business to the ideal state. Gap analysis is one of the best methods of analyzing the gap between the present business position and the desired one.

Posted in Project Management

Related Articles