Business gap analysis and risk mitigation

Business gap analysis allows for risk mitigation through defining the present state, the desired state, and the gap that defines risk.

Before you begin a business gap analysis, you must be as clear as you can be about the present state and the required state. Only then can you have some understanding about the gap confronting you and the risks involved.

Business gap analysis can start with the desired state, expressed in a requirement document. This can be complicated, and may require the services of a business analyst. Gap analysis for risk mitigation may involve detailed, backward-chaining through logical sequences of actions and intermediate states. Such procedures can show you how to reach a desired state from the present state, and the risks involved at each stage. 

To illustrate how gap analysis is used in the context of a major supermarket, we will illustrate how various forward and backward-chaining gap analyses might be used in the context of Tesco PLC. 

Sales gap analysis report

Any business analyst working for a supermarket needs to know how to produce a sales gap analysis report. But he or she should also stress to the company how useful gap analysis can be in other areas, including team planning, technical, and educational.

Customer loyalty gap analysis

In developing the Tesco Clubcard the desired state was greater customer loyalty. From there it was straightforward to realise that loyalty can only be achieved if there is something to keep customers returning to Tesco. The Clubcard has two advantages here:

(i) It is a permanent, physical reminder in the customer's wallet.

(ii) The customer can only make significant amounts of Clubcard points by returning frequently to Tesco.

It is also important to determine the risks involved. For instance, people dislike having to carry lots of cards around. Other supermarket firms, like Waitrose and Marks & Spencer, have missed a trick by not attacking Tesco in this area. An advertising campaign that stressed the irritation that people associate with Clubcards could hurt Tesco. Also, a negative advertising campaign could stress that money saved is used to reduce costs and improve the quality of products.

HR, skills sets, and gap analysis

A high priority for senior management should be to find out how human resource management can use gap analysis. For supermarkets, like Tesco, human resources (HR) are of the highest priority. Gap analysis can be used to determine the gap between the current and desired skills sets of employees. This can be used to enhance employee development. Because Tesco has so many products and services, from grocery distribution to banking, the demands made on the HR gap analysts are many and varied.

The starting point fro HR gap analysis is the CV of the staff member. This provides the best objective knowledge of the current state of the employee.  For particular skills, from mental arithmetic to customer empathy, specific tests and questionnaires may have to be developed. These can supplement the information in the CV.

There are several kinds of documents, checklists and spreadsheets that would make the HR gap analysis easier. These include:

• gap analysis best practices 
• need gap analysis in human resource
• skills gap analysis tools

Business process gap analysis

There are many paper and software tools that can be used for business process gap analysis on process improvement (see left margin for gap analysis tools).

Many of these tools are available free on the internet. Also, try searching for useful gap analysis techniques in Google by name. For example:

• Parasuraman Zeithaml gap analysis model 

If you are planning an ISO gap analysis, or a gap analysis for CSAA, you should contact the body involved to see if you can obtain useful tools, documents or other items. Make sure to specify the standard number (e.g., ISO 140012004, ISO 17799,...).

Security controls gap analysis

Gap analysis and risk mitigation go together like bread and butter. Sample requirements documents for security procedures can be obtained from security firms, or even the police. These often stress technology solutions, but don't forget the human side of security control. 

Other users of Gap analysis

Supermarkets like Tesco are not the only users of gap analysis. If you are looking to perform a supermarket Gap analysis, don't just look at material on gap analysis in supermarkets. Look at a wide range of material on Gap analysis in completely different institutions (like  telecommunications or politics).