Image of a group of colleagues meeting in a boardroom with a woman at a white board writing and using postiks to identify gaps.

Completing a Fit-Gap Analysis: Organizational Development

Companies can use a fit-gap analysis to identify areas where they fall short of their potential and create improvement plans. The process involves understanding how gap analyses work, looking at examples, and following a step-by-step guide to perform one for your business.

Using a fit-gap assessment to advance organizational development

Businesses can use fit-gap analysis to identify areas where they can improve and reach their full potential. By analyzing this information, they can create a strategy to improve. Our step-by-step guide provides examples and explains how to conduct a gap analysis for your company.

For technology and systems changes, a process fit-gap analysis compares a company’s operating or business requirements to system capabilities to determine where functionality gaps exist. This process benefits organizations unhappy with a specific system but unsure why.

What is a gap analysis?

A gap analysis assessment is conducted to identify the differences between your current business state and where you want to be. The analysis involves answering a few key questions, such as:

  • Where are we currently?
  • Where do we wish to be?
  • How can we close the gap?

The process helps you identify gaps in your company and improve business efficiency, product quality, and profitability. Once the gap analysis is complete, you can better allocate your resources and focus on improvement areas.

Why would I do a gap analysis?

A gap analysis formally examines a business’s or project’s current state and plans. It can cover a range of perspectives, such as business processes, resources, product management, market expansion, information technology, and business direction.

Regarding management, gap analysis is a tool that compares current performance levels to desired future performance levels. Factors impacting performance include capital investments, resource planning, technology, and more. By identifying the gaps between current resource allocation and optimized resource allocation, a gap analysis paves the way for improvement.

Improvements can be made by measuring the difference between current requirements and capabilities and documenting and enhancing that difference. Real-time data will also provide a better understanding of the project’s progress.

Fit-gap analyses are adaptable to different situations.

Your team can leverage the process analysis results to distinguish between technical/system limitations and other issues, such as poor alignment of business processes or inadequate training. One of the advantages of conducting a fit-gap analysis is that it can provide clarity on a wide range of issues, from complicated IT challenges to more straightforward problems that require objective metrics to guide decision-making.

For instance, if you require visual data reporting tools to produce reports but your existing software does not allow data presentation on multiple criteria in a user-friendly format, a fit-gap analysis could help you pinpoint the lacking areas of functionality. In another scenario, suppose your organization wants to add a new product to its portfolio but lacks the technical resources. A fit-gap analysis could help uncover the resource needs and any research functionality gaps in that case.

What is fit-gap analysis?

A straightforward procedure known as the fit-gap analysis involves recognizing the processes and outcomes, comparing them with the desired results, and implementing the necessary changes, whether process, systems, or training.

Fit-gap methodology

The fit-gap methodology determines the compatibility of the newly planned system or business process with the organization’s needs. It evaluates the components that align with the business goals and identifies the gaps that require attention. The primary objective of this analysis is to identify the most appropriate practices that align with the organizational objectives, including the daily operational systems within the organization. These systems are evaluated for their efficiency in achieving the intended purpose. When a system or scenario does not meet the requirements, it is called a gap. Generally, these are prioritized by severity – high, medium, and low.

Identifying a suitable system or process for the organization is relatively easy. The real challenge is when a gap is detected during the analysis. Additionally, a fit-gap analysis can assist in prioritizing problems based on their severity level.

Image of a group of colleagues meeting in a boardroom with a woman at a white board writing and using postiks to identify gaps. The woman is showing how the company can bridge the gap with her hands spaced appropriately.

With its focus on alignment and identifying potential areas for improvement, fit-gap analysis can provide a robust framework for organizations seeking to optimize their performance.

How to perform a fit-gap analysis?

Conducting fit-gap analysis involves:

  • Identifying organizational processes and outcomes.
  • Comparing them to ideal results.
  • Making necessary changes to improve the systems.

Although the process may seem straightforward, it can take time to execute correctly. Thoroughly examining every detail of the procedures to identify even the slightest issues is crucial. Minor issues can indicate more significant problems that could harm the organization’s operations.

The following are the steps to perform fit-gap analysis in your organization:

Step 1: Identify current processes

Identify the organization’s primary processes that operate regularly, including more extensive processes handled by different personnel. Sub-processes may be the cause of more extensive procedures not functioning correctly. During the process of fit-gap analysis, it is imperative to identify and evaluate all processes that require a thorough assessment, regardless of their scale and complexity. This entails comprehensively evaluating each process, considering their merits, and identifying gaps. Such a meticulous analysis is essential in ensuring the intended outcome is achieved, and the organization’s goals are met. As such, it is vital to ensure that all processes are scrutinized with the utmost care and attention to detail to minimize the chances of any errors or oversights.

Fit gap by department

You might want to break this down by function (i.e., supply chain transformation). An example is below, which you can use as a guideline:

  • Strategy
  • Research and Development
  • Marketing
  • Sales
  • Finance
  • Human Resources
  • Supply Chain
  • Information Technology
  • Facilities Management

Step 2: Identify existing outcomes

Conducting a fit-gap analysis is vital to ensuring an organization’s efficient operation. This analysis evaluates processes and their results, requiring a reliable system that performs according to expectations.

Step 3: Identify desired outcomes

When implementing a system or process, the ultimate goal is to achieve an ideal outcome. To assess the process efficiencies, you would complete a fit-gap analysis to compare the actual performance against the intended ideal. This method enables organizations to pinpoint discrepancies and improvement areas and develop a plan for reaching the desired state. This analysis allows organizations to understand their procedures better, streamline operations, and attain strategic goals.

Step 4: Detect and record the gaps

Gap analysis is performed on processes that do not produce the desired outcomes. Identify the reasons for the process’s failure and any issues with its operation, such as management, administration, or risk management. Document the gaps for future reference.

Prioritized gap list

Once you have identified the gap and the department, you may prioritize based on the business’s needs. For instance, if there are gaps in recruitment and retention, you may want to prioritize Human Resources.

For instance, Human Resources would have several recruitment processes, which would generate several sub-processes for analysis:

  • Interview
  • Job Offer
  • Training
  • Pay & Benefits
  • Performance Reviews
  • Exit Interview – this one is key to understanding why people are leaving

Step 5: Bridge the gaps

First, it is a priority to understand the root cause of the problem. Once the cause has been determined, solutions can be implemented. These solutions may range from introducing new software to appointing a new team or addressing previously overlooked risk management issues. By taking these measures, the gaps are identified, and problems are resolved effectively and efficiently.

Step 6: Continuous improvement and review

After addressing all gaps, monitoring the underlying causes and seeking to improve organizational processes is crucial. It’s essential to stay vigilant and identify potential issues to rectify them. Continuously committing to process improvement will drive efficiency and keep a competitive edge in today’s fast-paced business environment.

When to use fit-gap analysis?

Conducting a fit-gap analysis can be helpful for your organization whenever a problem needs to be resolved. In this discussion, we will explore several common business problems for which a fit-gap analysis is a suitable solution.

  • Assessing the suitability of your current business processes
  • Identifying the underlying cause of any gaps in your processes
  • Analyzing the impact of each gap on your organization
  • Prioritizing each process gap based on its importance
  • Documenting the attributes of all fit-gap findings across all business systems, i.e., including Collaboration tools (email), ERP, SAP, Oracle, WMS, Finance, and CRM solutions
  • Implementing necessary changes and updates to improve decision-making
  • Determining which systems should be maintained as the standard in your organization or retired or indeed replaced with other solutions
Teamwork process gap analysis in an office, Brainstorming and identifying ways to bridge the gap

For example, a market gap analysis can help companies enhance their reputation, understand their marketing spend, or apply for a loan by determining their impact on the local economy. Insights obtained can be utilized for their campaign or loan application.

What are some of the benefits of fit-gap analysis?

  • Examining your system’s capabilities against the requirements allows you to assess whether your system can fill the gaps and provide the necessary solutions.
  • Fit-gap analysis enables you to identify the specific areas in your organization that require additional attention and support to ensure the system operates efficiently.
  • Identifying reasons for gaps is crucial as it highlights the areas where process gaps occur frequently. It emphasizes the significance of paying extra attention and care to resolve the process. The ultimate goal is to fix the process once and for all.
  • After identifying the gaps, it is essential to prioritize the solutions instead of fixing everything. You should evaluate the severity and importance of each problem and allocate resources to address them individually.
  • As part of the fit-gap analysis process, it is important to document both the gaps and the solutions identified. This documentation serves as a valuable reference when similar process gaps are encountered in the future, providing potential solutions and a framework for bridging those gaps.

Learn how to use fit-gap analysis in your organization.

Know how a fit-gap analysis can help your organization. Begin by creating a list of requirements for each department or business unit. If applicable, this list should include all functionality needed to meet operating objectives, including efficiency goals and regulatory requirements. Prioritize the list based on the organization’s standard criteria.

Next, compare your system’s capabilities to your requirements. For a comprehensive assessment, involve functional users to obtain their input. Be systematic and thorough in your evaluation.

If the fit-gap analysis indicates that your current system cannot meet your organization’s needs, consider the following options.

  • First, you can change your business process to align it with the system’s capabilities. This can be a helpful compromise to close the gap.
  • Second, you can improve the configuration by understanding your options and making appropriate changes. This may require contacting a vendor or specialist. Apply effective change management practices to increase the chances of obtaining the desired implementation.
  • Third, if a new system is the best solution, document the business requirements formally to prepare for the system selection process and commence your digital transformation.
  • Lastly, remember to offer additional training for your personnel. Whether a change to your system is required or not, training can improve efficiencies and enhance all your business processes.

Types of fit gap analysis (with examples)

Several methodologies can be employed to conduct a fit-gap analysis, concentrating on a specific aspect, such as processes, systems, or resources.

We will explore distinct forms of gap analysis and share corresponding templates for each one. Additionally, we will discuss the ideal circumstances in which to utilize each technique. The included example templates are designed for

  • Process gap analysis
  • System gap analysis
  • Resource gap analysis

Process gap analysis

A process gap analysis aims to identify gaps in your organization’s processes. The Cascade process gap analysis template facilitates tracking and visualizing these gaps, with consideration given to their criticality, category, origin, and additional notes for each gap identified.

Fit-gap analysis template from Cascade

Fit-gap analysis template from Cascade

Image Source: Cascade – offers free templates

This template may be helpful if your business processes are causing inefficiencies or not yielding the desired outcomes. Conducting a process-based gap analysis is recommended when the root cause of the inefficiencies can be attributed to the design of the processes rather than the systems that facilitate them. For example, workflows may be incomplete or isolated, and handover touchpoints must be more clearly defined. Once the process gap analysis is complete and the necessary process transformation has been implemented, it would be advisable to review the supporting systems.

System gap analysis

Your organization can conduct a system gap analysis to pinpoint system deficiencies. The analysis will cover the system category, the cause, additional information about the gap, and any necessary updates to align the system with business requirements.

The gap analysis template can significantly benefit organizations, particularly when their existing systems hinder productivity and efficiency. This could indicate that while business processes are well-established, the technologies supporting them are not performing optimally.

A system overhaul may be necessary if there are difficulties with third-party integrations or outdated technology. This template can facilitate the transformation process by clearly defining the existing system gaps.

Resource gap analysis

Unlike the process or system gap analysis, a resource gap analysis focuses on the future. Its objective is to recognize the resources required to execute upcoming projects or programs and compare them with the current resources obtainable within the organization.

A resource gap analysis can be helpful when you anticipate future projects but lack the resources to meet the needs. It’s most suitable when your business needs are aligned with your organization’s systems and processes or have been updated through previous gap analyses, but the workforce or resources are inadequate. Based on the findings, you can hire reskilling or cross-training to better prepare your team for upcoming challenges.

Fit gap analysis tools, software, and templates.

Various software solutions are available to help with fit-gap analysis, and you can get free templates if you’re interested in starting this process. Here are a few companies: Smartsheet and Lucidchart.

Other factors and tools to take into account include:

  • The DMAIC model, a roadmap for Six Sigma, is utilized to enhance the quality of results produced by a company’s processes. The acronym DMAIC stands for Define, Measure, Analyze, Improve, and Control.
  • ISO standards, such as ISO 9001, are globally recognized standards for quality management. They assist organizations of all sizes and sectors in improving performance, meeting customer expectations, and demonstrating their commitment to quality. The requirements of these standards specify how to establish, implement, maintain, and constantly improve a quality management system (QMS). By implementing ISO 9001, your organization will have demonstrated effective processes and trained personnel to deliver flawless products or services consistently.
  • The American National Standards Institute (ANSI) governs US-based entities’ standards and conformity assessment.

Common fit-gap analysis challenges and how to overcome them

During a fit-gap analysis, there are various challenges that one might encounter. These challenges could include the following:

  • Change management – Identifying and bridging gaps could result in significant operational, cultural, and strategic changes requiring extensive change management efforts.
  • Resource and financial limitations – The organization’s ability to assess all areas might be restricted by budget or resource constraints. Therefore, splitting the gap analysis into phases or staggering it to obtain a comprehensive view may be necessary.
  • Knowledge dependency – Conducting a fit-gap analysis requires specialized personnel who comprehend the business vision and can assess current processes and systems gaps.

Fit-gap analysis encourages continuous improvement and best practice

Businesses can achieve continuous improvement by performing a fit-gap analysis, which is an effective tool for identifying areas of improvement and aligning them with expected business outcomes. To make the most of this tool, remember to follow these best practices:

  • Ensure your business strategic plans and goals are SMART – specific, measurable, achievable, relevant, and timely – to evaluate whether current processes align with expected business outcomes.
  • Choose the suitable assessment procedure or template depending on the type of gap analysis required for the business in question.
  • Implement the identified improvements and remember that training is crucial to this process.
  • Document the identified gaps and develop timely action plans to address them.
  • Focus on improving efficiency and reducing suboptimal performance and utilization as the primary result of the gap analysis.

Fit gap analysis summary notes

The process of fit gap analysis is a strategic exercise aimed at aligning solutions with an organization’s processes, operations, and goals. By identifying and evaluating the gaps between the current and desired state, this technique can assist in bridging these gaps and achieving organizational objectives. This methodology enables a thorough analysis of the organization’s requirements, thereby facilitating the identification of areas that need improvement. With its focus on alignment and identifying potential areas for improvement, fit-gap analysis can provide a robust framework for organizations seeking to optimize their performance.

Carrying out a fit-gap analysis is crucial to streamlining an organization and ensuring its processes align with its business objectives. Though executing this process poses specific challenges, it plays a vital role in evaluating and taking corrective measures to maintain organizational coherence.

The analysis helps generate solutions to address the gaps. It provides direction on which solutions to prioritize for execution. Consequently, a fit-gap analysis is a powerful tool for conducting a status check, making appropriate changes, and enhancing an organization’s overall effectiveness.

Are you struggling to navigate organizational change? We understand that it can be a daunting process. That’s why we offer long-term collaborations to help you succeed. Contact us today and see how our support can make all the difference.

About Noirwolf

Noirwolf is a management consultancy based in Leeds, UK. Our team of skilled consultants specializes in providing customized solutions for businesses that require senior-level business consulting support on specific global projects or a retained basis. We offer expert manufacturing and supply chain transformation consulting services, including strategy developmentorganization design, digital transformation, process optimization, change management, risk management, performance benchmarking, and supply chain technologies like SAP/ERP. We aim to help you achieve successful business transformation through our supply chain digital transformation and change management services. Contact us today to discover more about how we can help you achieve your goals.

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