What is Gap Analysis? Importance of Gap Analysis in Business Organization

“Proper preparation prevents poor performance.”

In management literature, gap analysis involves the comparison of actual performance with potential or desired performance. If an organization does not make the best use of current resources, or forgoes investment in capital or technology, it may produce or perform below its potential.

Whether it is a small, medium-sized or larage business, Being applicable to any type of a business, the gap analysis, also known as need analysis, need-gap analysis and needs assessment, is an effective tool in the hands of a business management for making a comparison between the current performance and the desired performance level of a business organization. Quantifying and comparing the gap existing between the current functioning state of a business entity with that of a future state business requirements, the gap analysis leads to add value to the business.

Gap analysis aids greatly in determining the performance disparity or a significant difference between two situations as to how a business is being managed in an actual manner and what should be the expected level of performance of a business to be attained. Not only that, it helps in identifying the areas of a company’s operations that do not meet the desired stage of performance. This will not only enable a business to improve its current functioning state, but will also lead it to performing better in the future provided that the related activities are constantly being monitored.

Considering an area where there is a complete or partial absence of something, that is, data, information, performance, productivity, utilization of resources, is one of the most important things to do for a business management. It’s also of great significance for a business management to identify the gap between the aspects, where we are now and where we want to be in the future, a business management employs the gap analysis technique to bridge that gap. In this way, comparing the actual performance of a business with that of desired potential performance can lead a business to the effective utilization of organizational resources, investments and capital. It’s through the gap analysis that the improvement in any process ranging from a business to technology can be made in a successful manner.

Allowing business leaders to quickly diagnose the problems and enabling them to find the ways for strategies or action plans to be implemented accordingly in order to bring changes and developments in the areas that need to be improved, gap analysis can be applied to a variety of situations. In fact, the correct gap analysis can help a business to perform better in terms of services and production.

Gap analysis facilitates greatly in understanding the business priorities and needs by helping the business leaders to identify deficiencies or shortcomings to be eliminated, as such, the results being associated with gap analysis depend upon the people’s willingness to implement the changes having been identified. However, it must be noted that in the absence of gap analysis, the situation of a business is as though it is not performing better or it is doing something miss, that is, making best use of current resources, investments, capital or technology.

Written by:
K. A. Fareed (Fareed Siddiqui)
Writer, Trainer, Author, Blogger, Software Developer
BBA, MBA-Finance, MPhil-Financial Management, (PhD-Management)
MA-English, MPhil-English
Post Graduate Diploma in Computer Applications and Programming
Certificate course in English language proficiency
Level 1 – Leadership and Management ILM – UK
Pursuing CMA-USA
Individual Member of Institute of Management Consultants of India


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