In management literatures, 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.
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 may reveal areas that can be improved. Gap analysis involves determining, documenting, and approving the difference between business requirements and current capabilities.
Gap analysis naturally flows from benchmarking and from other assessments. Once the general expectation of performance in an 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 at the operational level of an organization.