Difference between Business and Functional Requirement

By Tim Ackroyd on

So I was in a Conference Call the other day, and a debate broke out on subject of "Requirements". I am here to say, "Requirements are Requirements!". A requirement is simply a requirement to do something, whether that is for business, some function, some performance objective, for testing or QoS purposes, or any other purpose. We simply just put an Adjective or Noun in front of the term "Requirement". Please! Let's not make this more complicated than it should be. Instead, learn how to write effective requirements!

So let's talk about Business Requirements and Functional Requirements which are two distinct types of requirements that play a crucial role in the development and implementation of projects. They serve different purposes and are used in different phases of the project lifecycle.

Requirements can be Current Mode Operations (CMO) or Future Mode Operations (FMO). I often refer to these as "As Is" and "To Be" respectively.

Business Requirements

Definition:

  • Business requirements define the high-level needs and objectives of an organization. Remember! these objectives can be CMO or FMO. They focus on the broader goals and desired outcomes without specifying how these goals will be achieved.

Purpose:

  • Provide a clear understanding of what the organization aims to achieve.
  • Guide the project in the right direction by setting overall objectives.
  • Align with the strategic goals of the business.

Characteristics:

  • Typically expressed in non-technical language.
  • Address the "why" and "what" questions.
  • May include statements about increasing revenue, improving customer satisfaction, or entering new markets.

Example:

  • "The company looks to improve customer satisfaction by reducing response time to customer inquiries."

Functional Requirements:

Definition:

  • Functional requirements are detailed specifications that describe how a system, product, or service should behave. Note that these can be "technical" or "non-technical". They provide a clear picture of the specific features and functionalities that the system must have to meet the business requirements.

Purpose:

  • Guide the business team in building products, methods, and procedures, to specified features and functions.
  • Guide the development team in building the system according to the specified features and functions.
  • Serve as a basis for testing and validation.
  • Provide a detailed roadmap for the implementation phase.

Characteristics:

  • Detailed and specific, often using technical language, but using business language when developing non-technical requirements.
  • Address the "how" questions.
  • Enumerate the features, capabilities, and constraints of the system.

Example:

  • "The system should allow users to log in with a unique username and password, and upon successful login, users should be able to view their account information, update information, and perform transactions."

Relationship:

  • Business requirements set the overall direction and goals for a project, providing a strategic view.
  • Functional requirements are derived from business requirements and provide the detailed specifications for the implementation of the project.

Basically, business requirements focus on the what and why, providing the context for a project, while functional requirements focus on the how, detailing the specific features and functionalities needed to fulfill the business requirements. Both are essential for successful project delivery, with business requirements guiding the overall vision and functional requirements guiding the detailed implementation.

When we refer to Non-Functional Requirements, we are focusing on Performance and Quality purposes. I will talk more on these requires later. However, the whole idea of realizing anything is understanding the "What" and "Why", as well as understanding the "Will" "Who" and "How". The better the Requirements, the better the Delivery.

Happy Modeling!

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