From present state to target state, gap analysis asks the question, “How do we get there?” In other words, it’s the process of determining where a business is, where it wants to be and how to get there. Also known as a needs assessment, gap analysis follows the following inquiry pattern:
- Present state: What area, product, financial or process do you want to improve?
- Target state: What do you want that area, product, financial or process to look like in the future? What’s your goal?
- Identifying the gap: What is preventing you from getting there? What areas, resources and capabilities that are lacking?
- Filling the gap: What are all the possible solutions that will enable you to reach your target state?
Implicit in gap analysis is a company’s ability to successfully conduct variance reporting, KPI reporting, business modelling, driver-based planning, allocations, what-if analysis and scenario playing, and access benchmarks, real-time data and historical data.