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GAP Analysis - how often do you perform it?

Gap Analysis ExampleGAP Analysis, as we all know, measures where your company stands against where your company wants to be, should be or needs to be.

It is a great tool for clearly delineating issues; finding problems and using the results to formulate corrective measures.

Do you do GAP Analyses, and if so, how often?

Answers

Topic Expert
Regis Quirin
Title: Director of Finance
Company: Gibney Anthony & Flaherty LLP
LinkedIn Profile
(Director of Finance, Gibney Anthony & Flaherty LLP) |

Basic GAP analysis should be performed monthly. The period-to-period trend observed would indicate if deeper analysis would be necessary.

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

Regis, question.

How basic is basic (what are you looking for/at)?

Is this just a financial GAP or a full-fledged company wide "basic"?

Is a 30-day window enough time to see improvements?

Is the time involved (see what is basic question) worth the ROI on a monthly basis (see 30-day window question)?

Topic Expert
Linda Wright
Title: Consultant
Company: Wright Consulting
(Consultant, Wright Consulting) |

At my former financial services company, as we rendered statements regarding performance to plan quarterly, that's when we did detailed segment gap analysis.

Bryan Frey
Title: VP Finance/Corp Controller
Company:
(VP Finance/Corp Controller, ) |

At my former top tech company we did gap analysis with every close, and the bigger the period (i.e. quarterly, annually) the deeper the analysis. We would look at period over period monthly, vs. year-ago period, and do analysis on most of the primary angles of the budget/forecast. That is, by region, by product, etc.. Then we would do commentary against the biggest movers/offenders. This was just part of business as usual - that is, explain why the numbers differ from what we anticipated. I would say that things heated up the later we got in the year b/c you have less wiggle room with each passing month.

Chris Shumate
Title: Accounting Manager
Company: Dominion Development Group, LLC
LinkedIn Profile
(Accounting Manager, Dominion Development Group, LLC) |

I must admit to being ignorant, or maybe uninformed depending on one’s opinion, but what is a GAP Analysis? I work for a construction GC that also has a property development segment. Are GAP analyses related somehow to SWOT analyses? What resources would you recommend for one to become more knowledgeable in GAP analysis?

Topic Expert
Regis Quirin
Title: Director of Finance
Company: Gibney Anthony & Flaherty LLP
LinkedIn Profile
(Director of Finance, Gibney Anthony & Flaherty LLP) |

There are many different types of analysis approaches, but they all answer the same question - Am I where I thought I would be? I believe Bryan is primarily speaking about variance analysis, i.e. financial results to financial plans. Non-production services are a little different and GAP and Variance Analysis are closer for them.

But GAP analysis looks at more of the operations utilization component. Scorecards and Variance analysis are great at pointing to problems.

For your situation, your variance analysis may show revenues are down as business is slow, but from an Operational side that means your truck utilization is down. GAP analysis focuses on the truck utilization. What can you do to improve utilization or reallocate the resource?

Hope that helps.

Anders Liu-Lindberg
Title: Regional Finance Business Partner
Company: Maersk Line Northern Europe
LinkedIn Profile
(Regional Finance Business Partner, Maersk Line Northern Europe) |

It is all very much interrelated I would say (variance analysis, GAP analysis etc.). If we start by looking at grand scheme of things you start by creating a strategy for your business. That strategy will contain both financial and non financial measures. In terms of following up on the strategy the GAP analysis will be useful looking at both the financial and non financial parameters you want to achieve. The variance analysis is more of a financial tool where you identify whether or not your actuals are on level with your budget and/or forecast.

In my company the senior management team would review our performance each quarter and perform a sometime formal, sometime informal GAP analysis. Then we implement corrective actions to close the GAPs. In terms of the financial variance analysis we apply a controlling framework that guides our work each month end. The level of detail we look into is determined by how much our actuals vary from our forecast.

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