Knowing the difference between business requirements and functional requirements means understanding your business needs versus practical user expectations and features.
Knowing the key differences will prevent project failure.
But why do software development projects fail?
Flawed requirements gathering triggers 70% of failed projects!
Also, nearly half of the projects need rework because of sub-par requirements gathering, which is why we built our custom software tool to gather requirements.
Distinguishing clear business goals from a particular task on a system will prevent potential failure and lead to business success instead.
Let us show you the differences between a business requirement vs functional requirement.
Business and Functional Requirements Key Differences
Business requirements explain the “what” and “why” of an intended development project, whereas functional requirements explain the “how” of the same project. Business vs functional requirements focuses on different measurable steps to achieve desired outcomes in project planning.
Requirements gathering follows a process leading from business requirements to user to product requirements, which is where functional (and non-functional requirements) play a role in final product development. So, let’s define what each requirement is before comparing the two.
But first, let’s define why you need both requirements types to define a project’s scope.
What Is a Requirement in the Software Development Process?
A requirement lays the foundation for specific tasks, features, and business objectives in software development. It outlines user expectations and lets a project team know what to develop to complete acceptance criteria for working business processes.
We explain more about requirements in a complete guide to requirements-gathering in 2024.
How to Gather Business and Functional Requirements Without Business Analysis Experience
How do business analysts gather requirements? Business analysts use requirements-gathering frameworks or software tools to help them collect requirements for complete business analysis with well-defined requirements. Such requirements must fit a company’s objective or need.
Fortunately, our new system helps you gather requirements in an easy-to-use guided process. The benefits of using Requiment include easy access to output reports, learning how to create wireframes, an update easily function to adapt requirements during development, and task generation tools.
Our demo videos explain how the tool works, so sign up today for a free trial on Requiment, letting you become the business analyst who solves your business problem.
Business vs Functional Requirements in Software Engineering
The business requirements vs functional differences are outlined in this comparison table.
What Are Business Requirements?
A company’s business requirements define business objectives, business goals, and business needs. It’s the initial requirement you gather before collecting user requirements and system requirements. A high-level business requirement describes the purpose of software development.
A business requirement is the first requirement you collect. It has high-level requirements, whereas functional requirements include detailed specifications for tasks, features, tools, and interactions.
Business Requirements Example
A business requirement extends beyond the typical business goal. They define what the software must achieve to align itself with high-level business objectives. Here are business requirements examples for what the software should achieve:
- Analytics and Reporting – Generate reports and analytics for informed decisions by management.
- Compliance and Security – Adheres to security industry standards and complies with relevant regulations.
- Customer Support – Includes features for users to contact customer support and receive help.
- E-Commerce Functionality – Enable users to browse products, add to cart, and check out.
- Integration With Third-Party APIs – Integration with payment gateways and shipping providers.
- Inventory Management – Track and manage the inventory and report when items are low.
- Mobile Compatibility – Responds and functions on various mobile devices.
- Multi-Lingual Support – Accommodates multiple languages for a diverse user base.
- Notification System – Send user email notifications or other methods for important updates.
- Offline Capability – Offers limited functionality to offline users and syncs data when reconnected.
- Performance – Maintains acceptable response times and manages concurrent user amounts.
- Scalability – Handles increased data volumes and user loads as the business grows.
- Search Functionality – Provides efficient search capabilities to help users find relevant information.
- User Authentication – Allow users to create accounts for user registration, login, and recover data.
- User Roles and Permissions – Provides varying access levels for user roles, like manager or admin.
Business Requirement Characteristics
A business requirement outlines what the business needs software to do, but each requirement also has characteristics relevant to company objectives for the software project, including:
- It’s connected to the organisation’s strategic direction.
- Simple, non-technical language describes the requirements.
- Provides a high-level overview of the “what” and “why” of a requirement.
- The requirement is quantifiable and allows objective evaluation of the project’s success.
- It fosters collaborative efforts shown as stakeholder requirements.
- It follows a business rule that governs all development processes or data entry.
- Shows the software project’s value proposition and how a solution contributes to revenue growth.
Business Requirements Benefits
A business requirement document has advantages for software development and business growth, including:
- Provides a roadmap of project objectives and sets project management timelines.
- Determines what features are necessary for stakeholder needs and expectations.
- Outlines use cases for the supplemental specification document in functional requirements.
What Does a Business Requirements Document (BRD) Include?
A business requirements document (BRD) is part of formally imposed documents. A business requirements document must include the different requirements intended to meet a business need. The document will contain different information vs functional requirements.
Some requirements types and information outlined in a business requirements document include:
- Business rules
- Compliance requirements
- Functional requirements
- Legal requirements (compliance requirements)
- Market requirements
- Non-functional requirements
- Project life cycle
- Project scope
- Regulatory requirements
- Software requirements
- Stakeholder requirements
What Are Functional Requirements?
Functional requirements define the building blocks for precise software functions, interactions, responses, and system behaviours. These requirements help the development team design specifications for how the system behaves and performs functions to achieve a desired result.
Functional Requirements Example
Functional requirements are the technical specifications that outline how a feature works. A functional requirement specifies system behaviour, features, and interactions, such as:
- Add to Cart – A function that allows users to add items to their shopping cart with item numbers.
- Checkout Process – Method for users to enter shipping information and select a payment method.
- Data Validation – The application validates user inputs to ensure data accuracy and prevent errors.
- Error Handling – Provides clear error messages and allows users to resolve issues.
- Integration With Payment Gateways – An interface with third-party payment gateways to process or cancel transactions.
- Inventory Tracking – Updates inventory levels in real-time for accurate stock management.
- Notification System – Sends users order confirmation emails or shows on-screen notifications.
- Password Reset – Enables users to reset passwords with an email link.
- Payment Processing – Securely manages payment information and validates transactions.
- Product Catalog – An application displaying product lists with descriptions, prices, and images.
- Reporting – Generates sales reports and data processing for revenue data reports.
- Search Functionality – Users can search with keywords to retrieve relevant system results.
- Social Media Sharing – Enables users to share product details or purchases on social media platforms.
- User Authentication – The system validates user credentials and grants or denies access.
- User Registration – The tool that lets users create accounts with passwords and emails.
- User Roles – Functions guided by user roles and permissions, such as data processing or entry.
Functional Requirement Characteristics
Some business and functional requirement examples seem to overlap, but that’s where the characteristics guiding them help distinguish the two from each other. Here are some characteristics to identify functional requirements:
- The requirement has a technical language to describe complex behaviour.
- It outlines user interactions and the corresponding system responses.
- Participates potential growth and software evolution.
- Describes what the system displays on different websites or application pages.
- Identifies dependencies between system components and features.
- Also requires collaborative efforts among all stakeholders, including testers and business analysts.
- Changes according to project developments, user feedback, and technology advancements.
Functional and Non-Functional Key Difference
Non-functional requirements play a role in the technical specifications for a software development project. However, both describe the “how” aspect of requirements. A non-functional requirement defines how the system must perform during the functional requirements features and tasks.
Functional Requirements Benefits
Functional requirements specification has advantages for a software development project, including:
- Clear project and feature communication and expectations between stakeholders.
- Early risk identification for risk management among developers and project managers.
- Developing optimal usability with refined user experience (UX) and user interface (UI).
What’s the Difference Between Functional Specifications and Requirements?
A functional requirement describes how the final product aligns with business requirements or a business objective. However, a functional specification includes detailed requirements with technical descriptions to show how the initial requirement or high-level objective will be met.
Discover more about these differences in our article “What are functional and non-functional requirements.”
What Does a Functional Requirements Document (FRD) Include?
Functional specifications are instrumental to a project’s success and are part of other formally imposed documents. The document shows how to achieve desired outcomes on a software system.
Functional requirements documents (FRD) outline types of requirements for a software system and the technical aspects or specifications involved in the user experience and interface. The document won’t include non-functional requirements (NFRs), as you have a separate document for those.
Some requirement types and information in a functional requirements document for a software project include:
- Computer system roadmap
- Design requirements
- Layout requirements
- Legal requirements
- Product features
- Prototype
- Story map
- Technical requirements
- User experience (UX) design
- User interaction (UI) design
- User stories
- Workflow diagram
NB: Legal requirements are in BRDs and FRDs because your company could risk fines if you don’t have the relevant compliance and regulatory requirements. A successful project shouldn’t risk fines, which could place your software or computer system at risk for failure.
How to Gather Business Requirements vs Functional for Documented Representation
Business vs functional requirements-gathering uses similar techniques with some differences. Let’s see how to collect business requirements before diving into functional requirements-gathering.
Our effective requirements documentation best practices for beginners outline more about how to gather them.
How to Gather Business Requirements
Gathering a company’s business requirement results from techniques allowing internal stakeholders to share the company’s direction and strategic plans. Additionally, external stakeholders inspire changes to business requirements. Ultimately, you gather business requirements with the following techniques:
- Benchmarking
- Brainstorming or mind-mapping sessions
- Context diagrams
- Document analysis
- Facilitated workshops
- Focus groups and interviews
- Questionnaires and surveys
- Stakeholder interviews
How to Gather Functional Requirements
Functional or non-functional requirements-gathering uses the same techniques as business requirements-gathering. However, you can use these additional techniques to gather requirements for features, attributes, or functions:
- Market and competitor observations
- Prototyping
- Reverse engineering
- Scenario designs
- Use cases
- User feedback
- User personas
Discover more about requirements-gathering in our requirement-gathering template checklist.
Summing Up Business and Functional Requirements Differences
Business requirements vs functional have well-defined differences to distinguish the two. The success of your project depends on knowing the key differences between business and functional requirements. Project managers also require detailed specifications and requirements for each.
Let our experts at Requiment or Pulsion Technologies help you gather requirements for any level. Speak to our digital strategy consultants or book a demo with our Requiment team today. Our about us page tells the story of how Pulsion created Requiment to serve requirements-gathering needs in business.
Let us serve your business needs, requirements gathering, and software development.
Business or Functional Requirements FAQs
What’s the Difference Between a Business Rule and a Functional Requirement?
A business rule describes what developers must do and why, whereas a functional requirement describes how developers align system behaviours and functions with the business rules.
How Do I Turn Business Requirements Into Functional Requirements?
Follow these steps to transform business requirements into functional specifications:
- Identify the business need or goal.
- Break the business requirement into smaller, more specific parts.
- Identify the particular features, actions, and processes to meet the business need.
Which Requirements Document Lists Specific Functionalities?
A functional specification document (FSD) describes the functions and behaviours a system must use to respond to user inputs. It uses technical language with highly-detailed information for developers to visualise the precise behaviour and features of specific functions.
What Are BRD and FRD in Agile Methodology?
The Agile development methodology uses business requirements documents (BRDs) and functional requirements documents (FRDs) to define the project’s direction, flexibility, and system features. The BRD describes high-level business needs, whereas the FRD defines how those needs will be met.
Understand more about the differences in balancing flexibility and specificity in requirements gathering.