GAP Analysis

In this business analysis training, you will learn Gap Analysis. Topics covered in this session are:
• GAP Analysis
• Basic Process
• Stages
• Feasibility Study
• What is Feasibility Study?
• Why?
• Types
• ROI
• Feasibility Matrix
• Example
For more information, visit this link: https://www.mindsmapped.com/courses/business-analysis/business-analyst-training-for-beginners/

1. Business Analysis
Training
GAP Analysis

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Agenda
•GAP Analysis
•Basic Process
•Stages
•Feasibility Study
•What is Feasibility Study?
•Why?
•Types
•ROI
•Feasibility Matrix
•Example

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Gap analysis is a technique to identify the area of improvement in any process
ranging from Business to technology. The areas of improvement doesn’t
necessarily mean any new enhancement, it is either about finding a gap
between what is expected and what is really done.
What is Gap Analysis?

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Feasibility Study

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What is Feasibility Study?
An analysis and evaluation of a proposed project to determine if it (1) is
technically feasible, (2) is feasible within the estimated cost, and (3) will be
profitable.
•Feasibility study is used to determine the viability of an idea
•The objective of such a study is to ensure a project is legally and
technically feasible and economically justifiable
•It tells us whether a project is worth the investment
•It is also called as Feasibility Analysis

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Why do a feasibility study
•IT IS ALL ABOUT MAKING AN INFORMED CHOICE
•It is an analysis of the viability of an idea through a disciplined and
documented process.
•A feasibility study is a management-oriented activity & should tell
management:
•Whether the project can be done
•What are alternative solutions?
•What are the criteria for choosing among them?
•Is there a preferred alternative?
•After a feasibility study, management makes a go/no-go decision.
•A feasibility study:
•Gives focus to the project and outline alternatives
•Enhances the probability of success by addressing and mitigating factors
early on that could affect the project
•Provides quality information for decision making
•Helps to increase investment in the company
•Helps in securing funding from lending institutions and other monetary
sources

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What to Study What to Conclude
•Things to be studied during the feasibility study phase:
•The present organizational system (users, policies, functions,
objectives,...)
•Problems with the present system (inconsistencies, inadequacies in
functionality, performance,...)
•Objectives and other requirements for the new system (what needs to
change?)
•Constraints, including nonfunctional requirements on the system
(preliminary pass)
•Possible alternatives (the current system [status quo] is always one of
those)
•Advantages and disadvantages of the alternatives
•Things to conclude:
•Feasibility of the project and the preferred alternative

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Types of Feasibility -TRELOS
➢T -Technology and System Feasibility
“Can it be built?”
•Technologicalfeasibilityiscarriedouttodeterminewhetherthe
companyhasthecapability,intermsofrequiredtechnology,software,
hardware,personnelandexpertise,tohandlethecompletionofthe
project
➢R -Risk Feasibility
➢E-Economic Feasibility
“Will it make economic sense if it works and is built?”
“ Will it generate PROFITS?”
•Cost-basedstudy:Itisimportanttoidentifycostandbenefitfactorseg.
DevelopmentcostsandOperationalcosts.Thisisananalysisofthe
coststobeincurredinthesystemandthebenefitsderivableoutofthe
system.
•Time-basedstudy:Thisisananalysisofthetimerequiredtoachievea
returnoninvestments.Thefuturevalueofaprojectisalsoafactor.

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Types of Feasibility -TRELOS
Cont’d…
➢L –Legal Feasibility
•It includes study concerning contracts, liability, violations, and legal other
traps frequently unknown to the technical staff.
•Determines whether the proposed system conflicts with legal
requirements, e.g. a data processing system must comply with the local
Data Protection Acts.
➢O –Operational Feasibility
“Will it work?”
•Operational feasibility is mainly concerned with issues like whether the
system will be used if it is developed and implemented.
➢S–Schedule Feasibility
•A project will fail if it takes too long to be completed before it is useful.
•Schedule feasibility is a measure of how reasonable the project timetable
is.

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Economic Feasibility
•The bottom line in many projects is economic feasibility.
•As soon as specific requirements and solutions have been identified, the analyst
can weigh the costs and benefits of each alternative. This is called a cost-benefit
analysis
•The purpose of a cost/benefit analysis is to answer questions such as:
•Is the project justified (because benefits outweigh costs)?
•Can the project be done, within given cost constraints?
•What is the minimal cost to attain a certain system?
•What is the preferred alternative, among candidate solutions?
•Examples of things to consider:
•Hardware/software selection
•How to convince management to develop the new system
•Selection among alternative financing arrangements (rent/lease/purchase)
•Difficulties --discovering and assessing benefits and costs; they can both be
intangible, hidden and/or hard to estimate, it's also hard to rank multi-criteria
alternative
BENEFIT
COST

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Types of Benefits
•Benefits may be classified into one of the following categories:
•Monetary --when $-values can be calculated
•Tangible (Quantified) --when benefits can be quantified, but $-values can't be
calculated
•Intangible--when neither of the above applies
•Examples of particular benefits:
•Cost reductions
•Error reductions
•Increased throughput
•Improved time management
▪How to identify benefits?
•By organizational level (operational, lower/middle/upper management)
•By department (production, purchasing, sales,...)

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Types of Costs
•Project-related costs
•Development and purchasing costs:
•who builds the system (internally or contracted out)?
•software used (buy or build)?
•hardware (what to buy, buy/lease)?
•facilities (site, communications, power,...)
•Installation and conversion costs:
•installing the system, training of personnel, file conversion,....
•Operational costs (on-going)
•Maintenance: hardware (maintenance, lease, materials,...), software
(maintenance fees and contracts), facilities
•Personnel: operation, maintenance

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Return on Investment (ROI)
•ROI is a percentage that shows what return you make by investing in
something.
ROI = (Benefit –Cost) ÷Cost
•Example: A company invests in a project that costs $200,000. The benefit of
doing the project saves the company $230,000 in the first year alone. In this
case, the ROI = (230,000-200,000)/200,000 = 15%.
•So for ROI, Bigger is better.

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Operational Feasibility
ThePIECESframeworkcanhelpinidentifyingproblemstobesolved,andtheir
urgency:
Performance--Doescurrentmodeofoperationprovideadequate
throughputandresponsetime?
Information--Doescurrentmodeprovideendusersandmanagerswithtimely,
pertinent,accurateandusefullyformattedinformation?
Economy--Doescurrentmodeofoperationprovidecost-effective
informationservicestothebusiness?Couldtherebeareductionincostsand/or
anincreaseinbenefits?
Control--Doescurrentmodeofoperationoffereffectivecontrolsto
protectagainstfraudandtoguaranteeaccuracyandsecurityofdataand
information?
Efficiency--Doescurrentmodeofoperationmakemaximumuseof
availableresources,includingpeople,time,flowofforms,...?
Services–Doescurrentmodeofoperationprovidereliableservice?Isitflexible
andexpandable?

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Schedule Feasibility
•Wemayhavethetechnology,butthatdoesn'tmeanwehavetheskillsrequired
toproperlyapplythattechnology-Thelearningcurveoftheteammemberswill
impacttheschedule.
•Givenourtechnicalexpertise,aretheprojectdeadlinesreasonable?Determine
whetherthedeadlinesaremandatoryordesirable?Ifthedeadlinesare
desirableratherthanmandatory,theanalystcanproposealternative
schedules.
•Itispreferable(unlessthedeadlineisabsolutelymandatory)todelivera
properlyfunctioninginformationsystemtwomonthslatethantodeliveran
error-prone,uselessinformationsystemontime!Missedschedulesarebad,but
inadequatesystemsareworse

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Feasibility Analysis Matrix
•Howdowecomparealternativeswhentherearemultipleselectioncriteria
andnoneofthealternativesissuperioracrosstheboard?-UseaFeasibility
AnalysisMatrix!
•Inafeasibilityanalysismatrix:
•Thecolumnscorrespondtothecandidatesolutions
•Somerowscorrespondtothefeasibilitycriteria
•Thecellscontainthefeasibilityassessmentnotesforeachcandidate.
•Eachrowcanbeassignedarankorscoreforeachcriterion(e.g.,for
operationalfeasibility,candidatescanberanked1,2,3,etc.).
•Afterrankingorscoringallcandidatesoneachcriterion,afinalrankingor
scoreisrecordedinthelastrow

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Example of a Feasibility Matrix
Feasibility Criteria Wt. Candidate 1 Candidate 2 Candidate 3
Operational Feasibility
Functionality. A description of to what degree the
candidate would benefit the organization and how well
the system would work.
Political. A description of how well received this solution
would be from both user management, user, and
organization perspective.
30%
Score: Score: Score:
Technical Feasibility
Technology. An assessment of the maturity, availability
(or ability to acquire), and desirability of the computer
technology needed to support this candidate.
Expertise. An assessment to the technical expertise
needed to develop, operate, and maintain the candidate
system.
30%
Score: Score: Score:
Economic Feasibility
Cost to develop:
Payback period (discounted):
Net present value:
Detailed calculations:
30%
Score: Score: Score:
Schedule Feasibility
An assessment of how long the solution will take to
design and implement.
10%
Score: Score: Score:
Ranking: 100%

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What is a Problem Statement
Aproblemstatementisaclearconcisedescriptionoftheissue(s)thatneed(s)
tobeaddressedbyaproblemsolvingteam.Itisusedtocenterandfocusthe
teamatthebeginning,keeptheteamontrackduringtheeffort,andisused
tovalidatethattheeffortdeliveredanoutcomethatsolvestheproblem
statement.

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Thank you