Gap analysis: What it is and why it’s important in project management

Ever felt like your digital space is a jigsaw puzzle with pieces that just won’t fit? That’s where gap analysis swings into action. Imagine you’re playing your favorite video game, and there’s this secret level you just can’t unlock because you’re missing the key. This is exactly what happens in web design; only here, the ‘secret level’ is your project’s full potential, and the ‘key’ is understanding what’s missing or needs tweaking.

In the digital realm, our arena is constantly morphing. What worked yesterday might be your bottleneck today. By the end of this read, you’ll harness the power to pinpoint the ‘not-quite-right’ in your projects and pivot your strategy from “this works okay” to “this is exactly what we need.”

We’ll walk through the maze of benchmarking, sidestep the pitfalls of current state assessment, and leap towards the ultimate strategic planning. Consider this a map to buried treasure where X marks the spot of unmet potential. Ready to dive in? Let’s chart the course and spot those hidden gaps!

Key takeaways

  • Definition and Application: Gap analysis is a process for comparing actual performance against expected performance to identify current strengths and weaknesses, and it plays a crucial role in project management by highlighting areas for improvement and better process creation​
  • Benefits of Gap Analysis: Conducting a gap analysis helps to uncover inefficiencies and allocate resources more effectively, ensuring that a company has the necessary means to fulfill its mission and improving overall business efficiency​
  • Versatility Across Business Areas: It is a versatile tool that can be applied in various business scenarios, including assessing why products don’t meet sales expectations, identifying resource shortages, or discovering new market opportunities​.
  • Strategic Planning: Gap analysis aids in strategic planning by helping to establish a clear understanding of the organization’s current state, setting realistic future goals, and identifying the gaps that need to be bridged to achieve those goals​

How can we define gap analysis?

In short terms, gap analysis is a process that a project manager uses to compare actual performance versus expected performance. Any organization is going to profit a lot from this, regardless of if a company is meeting expectations or using its resources in a good way.

Using a gap analysis template means that we understand how a company is doing and what is the current activity. This analysis is usually done when you want to know how the project is progressing. It is vital to do this often, especially when the stakes are large.

Here are some details that will help you understand better what is a gap analysis:

  • A method used to explain performance.
  • Good to compare present situations with expected ones
  • Used to discover strengths and weaknesses
  • Can help in creating better processes
  • Shows all activities to the stakeholders

Because it can be used by project managers to find issues and communicate them moving forward, knowing what a gap analysis stands for is important. There are different methodologies, tools, and data sources, such as win loss rates, used for gap analysis, though we will be mentioning the most common steps later on.

How can a gap analysis help you?

benefits Gap analysis: What it is and why it's important in project management

The main use of gap analysis is to control different aspects of a project with data. This is important because:

  • A gap analysis is going to assist you in finding any shortcomings to overcome. It can be easier to quantify or identify them and in the long term, and is going to assist in making improvements.
  • Doing a gap analysis will improve the efficiency of your business. It will pinpoint anything unusual that is going on. Once done, you will be able to focus more on your resources and energy on what needs to be changed.
  • Using gap analysis tools can also help you have an overview of the entire company or at least particular functions. This helps managers see if the organization has enough resources to meet its mission.
  • You can also use gap analysis as a means to compare performance with potential. Knowing details that show how much a certain product or person has gone off down the line is essential.
  • Gap analysis process means that you will have more data on how to improve. For example, when it is used in manufacturing it can help manage resources. What we mean by resources is money, material, or human resources.

Gap Analysis Examples

examples Gap analysis: What it is and why it's important in project management

Even though the business world has a lot of areas, from sales, to customer service, and so on, we can still use gap analysis often. Here are some examples that show the range of how companies can use a gap analysis:

  • When a company launches a product, it can also do a gap analysis in order to determine why the sales did not work as expected.
  • When the productivity of an organization is not meeting expectations a gap analysis can help a lot and find what needs to be changed.
  • If a company is low on supplies or resources, it can do a gap analysis often in order to find the reason why.
  • A gap analysis can also be used to identify if a product meets the target needed.
  • It can also help to find gaps in the market by comparing forecasts.
  • Another use can be to check the product portfolio in order to find new sales opportunities. In short terms, this means that a company can discover new products to sell.
  • Another thing they can do is to understand why certain products are not selling.

How to perform a gap analysis

Check this gap analysis template and see the four steps that are being described. From now on, you will know exactly what you must do when doing a gap analysis.

Identify current state

how-to-perform Gap analysis: What it is and why it's important in project management

The increase in data use helps organizations check how they are performing. Different information coming from a sales department or production house can all be tracked now.

This helps in creating specific data points that a company can use to check their position and performance. Understanding where you are right now helps in creating a more realistic action plan.

You will also be able to check if progress is being made towards the desired state. If you do not know where to start, it is going to be quite difficult to measure progress towards a certain goal.

Identify your future state

As a project manager, you need to find goals that your company is trying to achieve. Setting goals means you will know the exact direction where your company wants to go towards. Start using the gap analysis template given to you and see how it works.

A future goal is probably one of the best things that you can set for an organization. This is because, in order to reach it, a lot of effort needs to be performed. When you are doing a gap analysis for your strategic plan, check all details. A good place to look at are the targets on your plan.

These targets can be from two to five years out. Always ask yourself where you are now compared with them and go back to the data that you collected.

Identify the Gaps

If you know where you are heading and where you started, the space between those two points is the execution part. You can also call it a gap. Dig deeper and determine the details for why the gap happened. Ask yourself questions that are applicable for your business. Try to answer them precisely and do not lie to yourself.

Be specific about it. If your revenue per employee is $50,000 less than the plan you did, why did it happen? Are there any issues in your workflow, with your customers or with the price range?

Identify how you will bridge the gap

After you get a hold on the gaps that exist, your next move should be to analyze the differences. It is important to understand why they are happening and what you can do in order to achieve your goals and objectives.

Decide on what you must change and determine the steps needed for that. Create an end date for when you want the gaps to be resolved. If you do not have an end date for a certain process, it can be overlooked, or completely ignored. Choose a completion date, even if it is far away in the future. The last step is to set the milestone to ensure your success.

FAQs about gap analysis

1. What is a gap analysis and why is it important?

A gap analysis is a procedure that determines the discrepancy or “gap” between a process, system, or organization’s desired and existing states. It assists in determining areas that need improvement and those that need immediate attention to reach the intended objectives.

Gap analysis is crucial because it gives businesses a clear image of what needs to be done and assists them in successfully allocating resources to close the gaps found.

2. How do you perform a gap analysis and what are the steps involved?

To conduct a gap analysis, you must first determine the intended state and the existing state, then compare the two to find gaps. The steps consist of:

i) Determining the analysis’s scope
ii) Determine the comparison criterion
iii) Compile information about the existing situation and ideal scenario.
iv) Examine the information to find any gaps
v) Create a strategy to close the gaps.

3. What are the key benefits of conducting a gap analysis?

The following are the main advantages of conducting a gap analysis:
i) Identifying areas for improvement
ii) Improving strategic planning and decision-making;
iii) Efficient resource allocation;
iv) Improving organizational performance;
v) Increasing competitiveness; and
vi) Better aligning goals and objectives with the organization’s overall mission and vision.

4. How do you identify gaps in a process, system, or organization?

You must contrast the present state with the desired state in order to find gaps in a process, system, or organization.

Data analysis, stakeholder interviews, and benchmarking against industry standards can all be used to achieve this. You can find the gaps and create a strategy to close them once the current and ideal states have been established.

5. What are the common challenges faced while conducting a gap analysis?

The following issues are frequently encountered when conducting a gap analysis:

i) Determining the intended state
ii) Gathering pertinent data iii) analyzing the information
iii) Lack of stakeholder support and difficulty ranking the gaps are also factors.
vi) A lack of resources to fill the holes that have been found.

6. What are the different types of gap analysis and how are they used?

There are several distinct kinds of gap analyses, including:
i) compliance gap analysis,
ii) market gap analysis,
iii) skills gap analysis
iv) performance gap analysis

Although skills gap analysis is used to find gaps in employee knowledge and skills, performance gap analysis is used to find gaps in performance levels.

While compliance gap analysis is used to find gaps between legal requirements and the current level of compliance, market gap analysis helps detect gaps between client needs and already-existing products or services.

7. How do you prioritize the gaps identified during a gap analysis?

You can use a variety of criteria, including the influence on organizational goals, the level of urgency, the implementation cost, and the feasibility of implementation, to rank the gaps that were discovered during a gap analysis.

You can properly deploy resources and take care of the most urgent problems first by prioritizing the gaps.

8. How can a gap analysis help organizations in decision-making and strategic planning?

By clearly identifying the existing state, the desired state, and the gaps between them, a gap analysis can aid companies in decision-making and strategic planning.

To close the gaps that have been found, this information can be used to create efficient plans, distribute resources, and organize priorities. Organizations may make data-driven decisions that are in line with their aims and objectives by using gap analysis.

9. What are some best practices for conducting a successful gap analysis?

Some best practices for conducting a successful gap analysis include:
i) Establishing the study’s scope and objectives;
ii) involving key stakeholders in the process;
iii) gathering accurate and relevant data;
iv) objectively analyzing the data;
v) prioritizing the gaps are some best practices for performing a successful gap analysis.
vii) Creating a strategy to close the gaps
vii) Involved parties are informed of the conclusions and action plan.
viii) Tracking development and making necessary changes to the strategy.

10. How often should a gap analysis be conducted in an organization?

The size, complexity, and rate of change of an organization all affect how frequently gap analyses are conducted there.

It is typically advised to perform a gap analysis regularly, such as annually or biannually, or whenever there is a big change in the organization, like a merger or acquisition.

Gap analyses should be conducted regularly to keep the company focused on its goals and objectives and to identify areas for improvement.

Ending thoughts on these Gap Analysis Tips

When you set goals, you want to be clear and precise with them. Be realistic and do not go for something exaggerated. Understand all the details and how they are going to impact you. Changes done by your team or organization can for sure impact others. Think about the effects that are going to happen when you are creating your recommendations.

After you did this gap analysis template, make sure you try to come up with your own. Add details that are more specific to you. If you do not do this, you might risk that the solution will not be the best for you.

If you enjoyed reading this article on gap analysis, you should check out this one about project management framework.

We also wrote about a few related subjects like Kanban app, what is a war room, project management books, project management principles, project management goals, project management metrics, IT project manager, project management skills and project management methodologies.

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