Introduction

All information technology systems will have both advantages and

disadvantages. A new system will usually seem better to some users,
because it is different to the system currently in place. This new system may
purport to have better functionality than the 'legacy' system. Other users may
like the familiarity of the 'legacy' system and may fear possible changes being
introduced. Gap analysis is one method used to compare legacy and
proposed information technology systems. Gap analysis allows an
organization to recognize the features and functionality of the legacy system,
compared with the requirements of the new system.

A gap is often said to be "the space between where you are and where
you want to be." Gap analysis may be defined simply as the difference
between what is needed and what is available. Gap analysis is a comparison
process of two systems, and is undertaken as a means of bridging the space
between them. Gap analysis provides a foundation for measuring investment
of time, money and human resources required to achieve a particular
outcome (for example, to turn the payroll process from paper based to
paperless with the use of automation). Note that 'GAP analysis' has also been
used as a means for classification of how well a product or solution meets a
targeted need or set of requirements. In this case, 'GAP' can be used as a
ranking of 'Good', 'Average' or 'Poor'

The diagram below uses Ansoff's matrix bridge the gap using strategies:
The lower line is where you'll be if you do nothing. The upper line is where you
want to be.
 In information technology, gap analysis is an assessment tool to help
identify differences between information systems or applications. A gap is
sometimes called "the space between where we are and where we want to
be." A gap analysis helps bridge that space by highlighting which
requirements are being met and which are not. The tool provides a foundation
for measuring the investment of time, money and human resources that's
required to achieve a particular outcome.

In software development, for instance, a gap analysis can be used to

document which services and/or functions have been accidentally left out,
which ones have been deliberately eliminated and which still need to be
developed. In compliance, a gap analysis can be used to compare what is
required by law to what is currently being done.

The difference between requirement analysis and gap analysis.

In business and economics, gap analysis is the assessment of business
resources by comparing actual performance with its potential performance.
The goal of the gap analysis is to identify gaps in optimized performance. This
provides a company with insight into potential improvement. Such analysis
can be performed at the strategic or operational level of an organization. Gap
analysis is the study of what a business is doing currently and where it wants
to go in the future. Note that "GAP analysis" has also been used as a means
for classification of how well a product or solution meets a targeted need or
set of requirements. In this case, "GAP" can be used as a ranking of "Good,"
"'Average" or "Poor."

Gap analysis and new products

The need for new products or additions to existing lines may have
emerged from portfolio analyses. At some point a gap will have emerged
between what the existing products offer the consumer and what the
consumer demands. That gap has to be filled if the organization is to survive
and grow.

To identify a gap in the market, the technique of gap analysis can be

used. Thus an examination of what profits are forecasted for the organization
as a whole compared with where the organization wants those profits to be,
represents what is called the 'planning gap'. This shows what is needed of
new activities in general and of new products in particular. The planning gap
may be divided into three main elements:

1. Usage gap

This is the gap between the total potential for the market and the actual
current usage by all the consumers in the market. Clearly two figures are
needed for this calculation:

 Market potential

The maximum number of consumers available will usually be determined

by market research, but it may sometimes be calculated from demographic
data or government statistics. Ultimately there will, of course, be limitations on
the number of consumers. For guidance one can look to the numbers using
similar products. Alternatively, one can look to what has happened in other
countries.

The maximum potential individual usage, or at least the maximum

attainable average usage (there will always be a spread of usage across a
range of customers), will usually be determined from market research figures.
It is important, however, to consider what lies behind such usage.

 Existing usage

The existing usage by consumers makes up the total current market, from
which market shares, for example, are calculated. It is usually derived from
marketing research, most accurately from panel research such as that
undertaken by the Nielsen Company but also from ad hoc work. Sometimes it
may be available from figures collected by government departments or
industry bodies; however, these are often based on categories which may
make sense in bureaucratic terms but are less helpful in marketing terms.

The 'usage gap' is thus:

usage gap = market potential – existing usage

This is an important calculation to make. Many, if not most marketers,

accept the existing market size, suitably projected over the timescales of their
forecasts, as the boundary for their expansion plans. Although this is often the
most realistic assumption, it may sometimes impose an unnecessary
limitation on their horizons. An example is the original market for video-
recorders, which was limited to the professional users who could afford the
high prices involved. It was only after some time that the technology was
extended to the mass market.
 In the public sector, where the service providers usually enjoy a
monopoly, the usage gap will probably be the most important factor in the
development of the activities. But persuading more consumers to take up
family benefits, for example, will probably be more important to the relevant
government department than opening more local offices.

2. Product Gap

The product gap, which could also be described as the segment or

positioning gap, represents that part of the market from which the individual
organization is excluded because of product or service characteristics. This
may have come about because the market has been segmented and the
organization does not have offerings in some segments, or it may be because
the positioning of its offering effectively excludes it from certain groups of
potential consumers, because there are competitive offerings much better
placed in relation to these groups.
This segmentation may well be the result of deliberate policy.
Segmentation and positioning are very powerful marketing techniques; but the
trade-off, to be set against the improved focus, is that some parts of the
market may effectively be put beyond reach. On the other hand, it may
frequently be by default; the organization has not thought about its
positioning, and has simply let its offerings drift to where they now are.
The product gap is probably the main element of the planning gap in
which the organization can have a productive input; hence the emphasis on
the importance of correct positioning.
 3. Competitive gap
What is left represents the gap resulting from the competitive
performance. This competitive gap is the share of business achieved among
similar products, sold in the same market segment, and with similar
distribution patterns - or at least, in any comparison, after such effects have
been discounted. Needless to say, it is not a factor in the case of the
monopoly provision of services by the public sector.
The competitive gap represents the effects of factors such as price and
promotion, both the absolute level and the effectiveness of its messages. It is
what marketing is popularly supposed to be about.

Service quality gap

The issue of service quality can be used as an example to illustrate gaps.
For this example, there are several gaps that are important to measure. From
a service quality perspective, these include:

 Service Quality Gap.

Indicates the difference between the service expected by customers and

the service they actually receive. For example, customers may expect to wait
only 20 minutes to see their doctor but, in fact, have to wait more than thirty
minutes.

 Management Understanding Gap

Represents the difference between the quality level expected by

customers and the perception of those expectations by management. For
example, in a fast food environment, the customers may place a greater
emphasis on order accuracy than promptness of service, but management
may perceive promptness to be more important.

 Service Design Gap.

This is the gap between management's perception of customer

expectations and the development of this perception into delivery standards.
For example, management might perceive that customers expect someone to
answer their telephone calls in a timely fashion. To customers, "timely
fashion" may mean within thirty seconds. However, if management designs
delivery such that telephone calls are answered within sixty seconds, a
service design gap is created.

 Service Delivery Gap.

Represents the gap between the established delivery standards and

actual service delivered. Given the above example, management may
establish a standard such that telephone calls should be answered within
thirty seconds. However, if it takes more than thirty seconds for calls to be
answered, regardless of the cause, there is a delivery gap.

 Communication Gap.

This is the gap between what is communicated to consumers and what is

actually delivered. Advertising, for instance, may indicate to consumers that
they can have their cars’ oil changed within twenty minutes when, in reality, it
takes more than thirty minutes.

IMPLEMENTING GAP ANALYSIS

Gap analysis involves internal and external analysis. Externally, the firm
must communicate with customers. Internally, it must determine service
delivery and service design. Continuing with the service quality example, the
steps involved in the implementation of gap analysis are:
  Identification of customer expectations.
 Identification of customer experiences.
 Identification of management perceptions.
 Evaluation of service standards.
 Evaluation of customer communications.

A : Where we are today, or the current situation.

B : Desired performance level.
C : What we need to get there, or the proposed action required to cross the gap.

The identification of customer expectations and experiences might begin

with focus-group interviews. Groups of customers, typically numbering seven
to twelve per group, are invited to discuss their satisfaction with services or
products. During this process, expectations and experiences are recorded.
This process is usually successful in identifying those service and product
attributes that are most important to customer satisfaction.

After focus-group interviews are completed, expectations and experiences

are measured with more formal, quantitative methods. Expectations could be
measured with a one to ten scale where one represents "Not At All Important"
and ten represents "Extremely Important." Experience or perceptions about
each of these attributes would be measured in a similar manner.

Gaps can be simply calculated as the arithmetic differe nce between the
two measurements for each of the attributes. Management perceptions are
measured much in the same manner. Groups of managers are asked to
discuss their perceptions of customer expectations and experiences. A team
can then be assigned the duty of evaluating manager perceptions, service
standards, and communications to pinpoint discrepancies. After gaps are
identified, management must take appropriate steps to fill or narrow the gaps.