Study and Gap Analysis

In the management literature, gap analysis is the comparison of actual performance with potential performance. If a company or organization does not make the best use of current resources, or foregoes investment in capital or technology, it may produce or perform below its potential. This concept is similar to an economy's being below the production possibilities frontier.Gap analysis identifies gaps between the optimized allocation and integration of the inputs (resources), and the current allocation level. This reveals areas that can be improved. Gap analysis involves determining, documenting, and approving the variance between business requirements and current capabilities. Gap analysis naturally flows from benchmarking and other assessments. Once the general expectation of performance in the industry is understood, it is possible to compare that expectation with the company's current level of performance. This comparison becomes the gap analysis. Such analysis can be performed at the strategic or operational level of an organization.

Correct gap analysis should increase an organization’s production and performance, resulting in higher-quality products at a lower total cost. Gap analysis also measures the amount of time, money and resources needed to fulfill an organization’s potential and reach the desired state.