How do you use Gap Analysis in business analysis?

In simple terms, gap analysis is like taking a close look at where you are right now in a project, process, or system, and comparing it to where you want to be in the future. It's about spotting the differences between these two points. These differences can be about how well something is working, how good its quality is, what features it has, or what it's capable of doing. Gap analysis is like a roadmap that shows you where you stand, where you want to go, and what you need to do to bridge the gap between the two. It's a crucial tool for businesses to make sure they're on the right track to achieve their goals.

Gap analysis can be defined as a method, within a tool (business analysis)used to identify the gap between the current state at which the company is and the desired state. Current performance state vs target performance state. Since the business analysis looks at business needs and finding solutions to its problems, it use the tool gap analysis to identify the causes and come to a solution, I see the SWOT analysis a great one, because it looks at the S-Strength, W-Weaknesses, O-Opportunities and T-Threats , when a business analyst looks and compares the existing and the knowledge it has about the business, it sees what to focus on and what to eliminate to reach or get close to its goal ( business analysis)...

In addtion to this explanation, gap analysis also covers the internal assessment of a process, system or both that is not working properly or not producing the expected outcomes or results. It is a powerful tool to identify the required enhancements for a business process and/or system.

Consider a manufacturing firm dealing with high defect rates conducts gap analysis. Current defects cause customer dissatisfaction. The desired state is zero defects. Gap analysis pinpoints the difference and aids in developing strategies to enhance production processes, ultimately bridging the quality gap. Gap analysis acts as a navigation tool, directing organisations towards their goals by illuminating areas requiring improvement.

Conducting gap analysis involves four key steps: 1. Document Current Situation: Understand your project, process, or system through data collection, interviews, and analysis, identifying strengths and weaknesses. (SWOT Analysis) 2. Specify Desired State: Define clear objectives and success criteria by brainstorming and benchmarking. 3. Identify Gaps and Prioritize: Compare current and desired states, visualize gaps, and prioritize based on significance. Analyze causes, impacts, and risks. 4. Propose Actions: Suggest solutions to bridge gaps, considering costs, benefits, feasibility, and implementation plans. Mentioned a whole bunch of IIBA BABOK terminology there. All these techniques are explained in detail there.

Gap analysis in business analysis starts by documenting the current situation using methods like SWOT. Next, define the desired goals and success metrics. When you compare the current and desired states, visualize the differences and understand their root causes. Finally, propose steps to reconcile these differences, considering the costs and benefits, and draft an implementation plan. It's a methodical approach to identify and bridge operational discrepancies.

In a practical example, let's consider a retail company. The current state might reveal declining sales, customer complaints, and outdated inventory management. In contrast, the desired state envisions increased sales, satisfied customers, and streamlined inventory processes. Gap analysis would help identify the gaps—like inefficient inventory management—and propose actions, such as implementing an inventory tracking system. This way, the company can bridge the gap and move closer to its goals.

You have various methods for gap analysis: 1. Business Model Canvas: Evaluates key business elements like value, customers, channels, and revenue, revealing gaps in your business model. 2. PESTLE Analysis: Examines external factors (political, economic, social, technological, legal, environmental) influencing your project. 3. McKinsey 7S Framework: Assesses internal project elements, like strategy, structure, and skills, identifying any misalignments. These methods help you pinpoint gaps, adapt to market changes, and improve your organization's performance.

Let's consider a retail company conducting a gap analysis using the Business Model Canvas. The company's current business model relies heavily on physical stores and has limited online presence. However, they observe a shift in customer behavior towards online shopping. Current State: Predominantly brick-and-mortar stores, limited online sales. Desired State: A balanced model with a strong online presence. By analysing the gap, they identify the need to invest in e-commerce infrastructure, improve digital marketing, and enhance customer support for online shoppers. This shift helps them bridge the gap between their current and desired states, adapting to changing market trends.

Gap analysis offers several benefits in business analysis: Clarity: It helps define project scope, requirements, and objectives clearly. SWOT Analysis: Identifies strengths, weaknesses, opportunities, and threats in the current state. Prioritization: Helps prioritise gaps and actions based on their impact. Cost-Effective Solutions: Provides cost-effective strategies to bridge the gap. Progress Monitoring: Enables ongoing monitoring and measurement of project progress. Value Creation: Enhances projects, processes, or systems, creating value for stakeholders and the organisation.

1. Clarification of Scope and Objectives: Gap analysis helps define project scope and objectives, ensuring everyone understands what needs to be achieved. 2. SWOT Analysis: It identifies strengths, weaknesses, opportunities, and threats (SWOT) in your current state, offering insights for strategic planning. 3. Prioritization: Gap analysis prioritizes gaps and actions, focusing on areas with the most significant impact on your project's success. 4. Feasible Solutions: It provides realistic and cost-effective solutions to bridge gaps and reach desired goals. 5. Progress Monitoring: Gap analysis allows you to track and measure project, process, or system performance over time, ensuring you stay on the right track.

Let me share a personal example that underscores the real value of gap analysis. In a previous company, some colleagues mistakenly viewed it as a mere compliance document. They missed its true significance. We were working on a complex project, and I realized that gap analysis could be our guiding light. I explained how it could help us pinpoint critical areas, save time, and keep us aligned with our goals. It was more than a checkbox; it was a dynamic tool for informed decisions. This experience taught me that gap analysis isn't just paperwork; it's a powerful ally in bridging gaps, seizing opportunities, and achieving our goals. As you dive into business analysis, remember that gap analysis offers more than meets the eye.