Gap Analysis: Uncovering the Path to Successful Performance


Report written by Nadežda Jakubková

There are several methods that can be used for assessing an organization’s performance. These typically focus on highlighting the company’s internal resources, strengths, competitive advantages, as well as its weaknesses. Examples of internal analysis tools used for such purposes include gap analysis, strategy evaluation, SWOT analysis and the McKinsey 7S Framework. Information gathered using these methods exposes an organization’s blindspots and highlights untapped opportunities. In other words, internal analysis reveals where an organization excels, what it is good at and where it needs improvement. In any business, there may be many different scenarios that warrant conducting an internal analysis.

So, when should you perform an internal analysis?

Let’s take a look at a few specific examples.

Scenario 1: New tech

Let’s say you are adding new software to your information technology (IT) portfolio. How do you assess the requirements? What tools do you use to determine whether the project is on track and if the existing processes are set up correctly?

Scenario 2: Compliance

Let’s say you would like to seek compliance with a specific international standard or you need to comply with a new industry norm. How do you determine the differences between your current setup and what the standard or norm is asking of you?

Scenario 3: Performance

Let’s say a department or a team has been having troubles meeting their key performance indicators (KPIs) or the team has not been very efficient lately. How do you go about determining the reasons behind the dip in performance? How do you help the team get back on track?

The list of examples could go on, but what they all have in common is that there is a current state within the company that requires action and a desired state the organization wants to reach. Once this need has been identified, the next question that arises is, naturally, which type of internal analysis should be conducted, as not all tools are created equal.

When to conduct a gap analysis

There is a constant battle between the reality we are currently experiencing and the reality we want to experience. We make plans which are supposed to get us to our desired destination, but often we do not even get close to achieving our vision. Instead of being motivated, inspired and on track with our goals, we become irritated because everything seems to take too long, and it doesn’t feel like we are getting anywhere close to where we want to go with everything else seemingly having a higher level of priority.

Enter the gap analysis.

Gap analysis is a process used by businesses as well as individuals in their personal lives. It helps us determine the gaps between a current state and a desired state. The most significant feature of the gap analysis methodology is that it is very action-oriented. It doesn’t turn the whole focus on the pure delivery of an evaluation or assessment report. Instead, its end result is a clear, thorough, step-by-step plan for an organization or individual to follow to reach their desired destination.

The benefits of conducting a gap analysis

The main benefit of conducting a gap analysis is that they are easy to understand and there are no overly complex requirements for their use. The most crucial part of the analysis is to provide a comprehensive and complete description of the current state and the desired state of the area of interest. Once both states have been defined, the organization can create an action plan which functions as a concrete and detailed script to get the organization to the state it is aspiring to reach. 

From a scope perspective, a gap analysis is best applied to areas of innovation like implementation of new technology and compliance programs as well as efficiency programs in sales, marketing and finance. When carried out correctly, a gap analysis will provide insights into an organization’s profitability, effectiveness, performance and competitive advantage. When used for performance-oriented projects, it uncovers the weaknesses and inefficiencies that need to be addressed and forces management to formulate a feasible future vision with respect to the area in question.

Gap analysis applied: A few examples

From the perspective of effectiveness, there might be issues with internal processes that bring out a need for improvement from within the company. In the first hypothetical scenario described above, the core issue is the dissatisfaction of the employees with the current IT system in a certain branch office. In this scenario, a gap analysis might expose that the IT system designed by the company’s headquarters does not support the business processes of the respective branch and that this is the underlying reason why the employees avoid using it. Additional information gained by the analysis could be that the headquarters is losing data and resources as the Excel sheet method the branch uses as an alternative is prone to errors, lacks efficiency, and the data is not stored centrally in one location. By the end of the whole process, a model of an IT system that supports the real business processes in the branch is drawn up and a plan is made as to how to implement the new system, step by step. 

The second scenario outlined above is about compliance with a new norm or an international standard and belongs to the category of external needs for change. Usually, this type of change comes with a predefined reality we want to reach (i.e. a benchmark). An example would be a leading organization releasing a note for all industry entities to comply with, such as the EU’s General Data Protection Regulation (GDPR). Benchmarking is about making comparisons between the current state of an organization and certain external criteria. In the case of the GDPR, a gap analysis can be used to determine the state of an organization’s IT systems in order to gain a better understanding of the scope of the changes that need to be made. At a later stage of the analysis, a structured, cohesive task list should be created that will take the company from the current state to the compliant state within an agreed upon timeframe. 

To boost sales and profits, a gap analysis could help identify where to look for new sales opportunities within the company’s product portfolio or why some products are not selling as well as others. Another example would be looking into profits and comparing them to the initial forecast. By using a gap analysis the organization might discover that the expenses were higher than expected, examine the reasons for this and then take the necessary steps to prevent this from happening again in the future. 

Organizations often use key performance indicators to track progress, motivate employees and evaluate performance. Just as described in the third scenario above, there are often gaps between the target and actual performance. In such a case, a gap analysis could help examine why there is a low rate of recurring sales, or why all sales representatives assigned to a specific region fail to meet their targets. It could also shine a light on the reasons why the positive-negative ratio of client feedback is not improving. Ultimately, these findings can then be used to create an action plan to improve the company’s performance and set the right kind of KPIs.

How to perform a gap analysis

There are numerous articles and sources on how to perform a gap analysis and each lists a different set of steps, or a different order of similar steps. The method explained below is inspired by ISO 27701.

 Step 1: Identifying a need for improvement

The first step is to look at the internal and external environment of the organization and identify the need for improvement. This need may come from the stakeholders from inside the company as well as from external stakeholders, such as the government or any entity which sets rules and regulations in the respective country or industry segment.

Step 2: All requirements considered

Once a need for improvement has been identified, it is important to define which kind of information needs to be gathered to gain a better understanding of the area in question. This involves defining all requirements needed to implement the change as well as selecting the right people for interviews to get a better picture of the processes that are involved in and affected by the change.

Step 3: Comparing the desired and the current state

The third step starts with an evaluation of the current state. The definition of this starting point involves going through all relevant documents, interviewing stakeholders, analyzing meeting notes, and highlighting areas for improvement. Doing this exercise helps to gain a better understanding of the shortcomings of the current processes, so they can be addressed properly later on. Based on the information gathered in the second step and the evaluation of the current state, the organization is then able to lay out the desired state (e.g. in case of an innovation) or the compliant state (e.g. in case of a need to become compliant with a new regulation).

Step 4: Prioritization

Now that the current state of the organization and the desired outcome have been identified, it is time to bridge the gap between them. To do so, a list of actions for all involved stakeholders needs to be created. Once the list has been completed, each item should be assigned a level of priority, as some actions need to be taken right away, some need to be taken in the near term and some can wait longer. Priorities should be divided into categories of high, medium and low and there should be a clear definition of what each category means. For example, high priority might mean that an action must be completed within the next month, medium priority could mean that an action can be performed within the next three months, and low priority items might need to be completed within six months.

Step 5: Implementation phase

At this point in the process, there is already an action plan in place. It is important to assign each action item to a specific owner. When going through the implementation phase, every task owner should create a list of findings and pain points that have been identified. All findings should then be included in a joint tracker, so that the teams can cooperate on implementing fixes and everyone is aware of the potential difficulties that may arise as well as which solutions can be applied to resolve them. It is essential that regular meetings be conducted throughout the implementation phase to discuss progress, findings and challenges.

Step 6: Monitoring and evaluating

This last step is often overlooked, as its main goal is to learn from mistakes made. To ensure the implemented fixes are not just a temporary band-aid and that true lessons have been learned, it is important to have regular check-ins and monitor the progress post-implementation. Questions to ask in this stage are, for instance: Have all steps been performed correctly? What additional actions should be taken? How do new findings need to be addressed? Have the implemented changes actually led to the desired outcome? What progress has been made?

Gap analysis in the translation and localization industry

So far, the examples and methodology described above can be applied to any business and any industry. Now, let’s take a look at some specific examples of how buyers and providers of language services can benefit from conducting a gap analysis.

Why buyers of language services should do a gap analysis

Overlooking international audiences

Localization managers evangelize the importance of localization in their organizations but sometimes, despite their best efforts, the need for localization nonetheless gets overlooked. However, there is one stakeholder who has a significant say in all this, and that is the client. Making the C-suite and other business representatives, as well as the developers and engineers, see how much revenue they are missing out on when they ignore the company’s potential international audiences, or when the localization program is unable to perform as well as it should, can be eye opening.

Nimdzi’s Project Underwear study into online buying behavior has shown that nine out of ten global users will ignore a product if it is not in their native language. The same logic applies when localization is done poorly due to internal or external constraints and inefficiencies. This can easily happen when, for example, internal stakeholders do not see what is needed to support the localization department (for instance, considering localization at the ideation and the production stage, instead of adding it as a very last step), or if the stakeholders have misaligned expectations.

Once a localization manager has identified a need for improvement, a gap analysis can be used to provide a clear picture for the C-suite and stakeholders in other departments to see where the program really stands and what value it could possibly bring to the organization if it were better supported. Providing such a straightforward and cohesive analysis could lead to better support, improved cooperation and mutual growth.

Product evaluation or quality assessment

An organization’s product might not perform as well as expected, or the product may be doing well but there are signs that it could be doing better. For both cases, product evaluations or quality assessments are in place, allowing the company to dig into why the product is not doing better and how it can be improved. The first two steps of a gap analysis would encompass a feedback analysis from all relevant stakeholders, as well as the preparation of surveys and interviews with a few select partners. Information on product popularity and assessment of multiple product features could be used as a baseline for product evaluation. The next step would then be to work on a realistic vision of the product and eventually design a plan for how to transform the vision into reality.

Impact on future changes

Regardless of the reasons organizations keep changing, some — if not most — changes will have an impact on the company’s localization program. Conducting a gap analysis can be useful for determining the scope and impact of these changes on the localization program. This way, the localization department can define ways to prevent some of the potentially negative effects and implement the right steps to ensure that the higher level changes in the organization drive the localization team’s agenda and boost the localization program.

Why providers of language services should perform a gap analysis

Addressing international standards and norms

Language service providers (LSPs) may find themselves overwhelmed by the need to comply with numerous standards and may have certain policies in place. But what if half of the necessary steps have already been documented? It is not uncommon for LSPs to have certain processes or protocols defined, written up, and neatly stored away, just to be able to tick a box or to dust them off and hand them over in case anyone asks for them — but without ever implementing them. Before starting from scratch in an effort to reach compliance with a new industry norm, it might be worth taking a closer look at these very processes and protocols that are just lying around gathering dust. A gap analysis could reveal how much of what already exists can be recycled and what needs to be iterated on to reach compliance with international standards such as ISO 27000 and other norms.

Internal policies

Another example of an external need for change could come from an organization that releases industry norms or notes. Typically, these norms or notes must be implemented within a short time frame (usually within 12 months or less), which adds an additional strain on the already heavy workload that comes with the implementation itself. For both cases, conducting a gap analysis could be beneficial, seeing as the LSP could simply assess its current state of the situation, define the scope of the change and then make a detailed plan to gain compliance.

(Not) Hitting KPIs

Many LSPs use KPIs to track their teams’ performances. KPIs commonly tracked by LSPs are, for instance, recurring deals, quality checks, positive versus negative feedback ratio, sales revenue, delivery time and nonconformities, to name but a few. While some may argue that adoption of KPIs is difficult, what is usually even more demanding is hitting the targets. Conducting a gap analysis could reveal the underlying reasons why the teams are not reaching their KPIs. The difficulty may lie in the frequency of KPI tracking and reporting. It could also be a matter of definition of a specific indicator. It might even be linked to geographic reasons (e.g. hitting sales oriented KPI in a certain region). There can be many reasons and, in a situation where the target is hardly ever reached, it is advisable to reassess the current KPIs. Using a gap analysis is one way to do exactly that, as the performance indicators are all about where a company currently is versus where it wants to be.

In search of improvement

The fact is that there is always something we can do better. Whether we’re speaking of internal processes that can be optimized to support the activities that drive the company’s growth or about a localization team becoming a true international revenue enabler. All the gaps between where we are and where we want to be can be uncovered, addressed and narrowed.


This report has been researched and written by Nimdzi's Localization Researcher, Nadežda Jakubková. If you want to learn more about this topic, reach out to Nadežda at [email protected].

13 January 2022

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