what are functional requirements

What are Functional Requirements? [With Examples]

Estimated read time: 10 minutes

Do you need information on what are functional requirements in software engineering?

You have come to the right place.

Getting functional requirements right will help your company build great new apps. This is why it is so important to get right.

Do you plan to undertake a software development project? If so then you are likely thinking about all the parts that make up the puzzle, and this includes functional requirements. What are the functional requirements? How do you create an effective functional specification document?

In this article, we explain functional and non-functional requirements. We elaborate on functional specification documents.

Utilizing use-case models, the level of detail required for functional requirements, and creating FSDs are the topics that we will discuss here. We will also provide some examples of functional requirements to help you get a clear picture of what they involve.

Functional Specification: Its Importance

Several considerations will crowd your mind as you plan your project. You will need to plan key aspects like human resources, methodologies, technology stack, tools, etc. You might face roadblocks though if you don’t manage these requirements efficiently.

According to a Project Management Institute (PMI) conference paper, clearly defined requirements significantly influence the success of software projects. On the other hand, requirements management failure can derail projects. Such failures can result in the following:

  • Unclear requirements;
  • Requirements without inputs from users;
  • Frequent changes to requirements;
  • Unrealistic or overambitious requirements.

To avoid these, you need to put in a robust requirements management process. Define functional requirements as part of the process you outline. You need to adequately plan for this activity as part of the software development lifecycle.

Functional requirements spell out what an application software will and won’t do. They define this in terms of specific functionalities that the system will deliver. Successful project teams define functional requirements in great detail. These definitions include system outputs based on inputs, and they include specific system behavior.


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The Various Kinds of System Requirements

Functional requirements aren’t the only kinds of system requirements. You will also need to define non-functional requirements (NFRs). Let’s briefly understand how they differ.

As we stated, functional requirements define what a software system will deliver based on certain inputs. A system delivering its functional requirements does what its users expect.

However, will it do its job well? This is where a non-functional requirement enters the scene. NFRs define how well a software system should work. The following are a few examples of NFRs:

  • Usability;
  • Availability;
  • Performance;
  • Scalability;
  • Maintainability;
  • Security.

A software application can deliver its functionalities without meeting NFRs, however, that application won’t offer the right user experience and sustained value. 

You can read more about the differences between functional and non-functional requirements in this article. 

What are Functional Requirements Documents?

A functional specification document (FSD) carries plenty of importance. You create this document to describe the functional requirements of your software application.

An FSD goes into great detail to describe what an application software will do. Functional requirements describe the different functionalities of the system and describe the corresponding system behavior. Your FSD should include the following details:

  • The scope of the system;
  • The functionality offered by the application system;
  • How the user interface of the system will look like;
  • Descriptions of users’ tasks;
  • The interactions between users and the application system;
  • The outputs produced by the system based on user inputs;
  • Dependencies of the application system on other systems;
  • The criteria for using the application.

Let’s consider an example to understand the level of detail an FSD will have. Assume that you are undertaking a web development project. You need to plan the following:

  • How users will navigate the website;
  • The position of the website content;
  • The layout of various web pages;
  • How you will position the user interface elements;
  • How different web pages will tie together to provide a high-quality user experience (UX).

In other words, the FSD will need to include website wireframes

What are Functional Requirements and their Use Cases?

You might have also come across the term “use cases” often in the context of functional requirements. Do they mean the same thing, or, are they mutually exclusive? Let’s clarify this.

As a University of Houston-Clear Lake article shows, there are plenty of synergies between them. You might use a use-case model to describe the proposed functions of a system. It might also help you to describe the interfaces, and it helps to explain the system to both users and developers.

You need to create a use-case model that’s easy to understand. This will help both customers and the development team to understand it. Consequently, you will use diagrams to create use cases.

As you can see, an FSD and a use-case model have the same purpose. Your FSD will likely have more texts. A use-case model relies more on diagrams.

Ideally, we recommend that you use both an FSD and use-case models. This will help you communicate business requirements in complex projects. 

Common Examples of Functional Requirements

How you document functional requirements depends on your project. You need to provide sufficient details though. Take a look at the following examples of functional requirements, which makes the importance of details obvious:

Business rules: This is the core of your application software, and you need to document them comprehensively.

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Corrections, adjustments, and cancellations of transactions: The complex nature of these functions makes details imperative;

Approvals and other administrative functions: Ambiguity in such functions will impact the integrity of the application, therefore, provide sufficient details.

User authentication: Requirements concerning this function require plenty of details so that you can meet all relevant information security regulatory requirements.

Authorization and user privileges: You need to document different user roles, access levels, and rules.

Maintaining audit trail: Application systems need to maintain transaction audit trails. If you are in a heavily-regulated industry, then audit trails become even more important. You need to document these requirements at a granular level.

Interfaces: Which other applications will your planned application interface with? What are the triggers, inputs, and outputs? Elaborate on this in the FSD.

The requirements for certification: An application system might need different certifications depending on the industry. Some certification requirements arise from regulatory requirements too. Explain these requirements in detail when creating a functional specification document.

Reports: Provide sufficient details about the reporting capabilities needed in the application. Explain the types, categories, frequencies, and granularity of these reports.

Data retention: How should your proposed application system handle the archival, retrieval, and retention of historical data? What parameters should you consider? Provide sufficient details concerning these.

Compliance requirements: Your proposed application might need to comply with several regulations. These could include data privacy, information security, transparency, and various other aspects. Document them in detail.

You will use the functional requirements to create your cases for functional testing too. That’s another reason to include sufficient details.

How to Create an Effective FSD (Functional Specifications Document)?

We now talk about creating effective FSDs. You need to take the following steps to create a functional specifications document that helps your software development team:

1. Gather business requirements

You need to gather business requirements methodically. This task requires effective project management, therefore, onboard a project manager before this task. You need a software architect and a team of business analysts too.

As we have explained in our guide about creating an MVP, you need to take the following steps:

  • Conduct market research and research about your product idea.
  • Meet relevant stakeholders including business users in structured “Discovery” sessions and understand their needs.
  • Use appropriate requirements-gathering tools.
  • Understand what constitutes “value” for users.
  • Get clarity about the desired functionality of the application system.
  • Get a grip on the metrics that the end-user cares about, which will help you to measure the success of your application.
  • Use tools like “Pain and gain map” to understand the pain points of users.
  • Decide features to offer.
  • Prioritize features using tools like the prioritization matrix.

2. Document business requirements

For the next step, you need to document the business requirements. You are creating the FSD in this step. The lead business analyst in your team needs to lead this effort.

You need to undertake a series of steps, which are as follows:

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  • Utilize appropriate tools like Microsoft Office to create the functional spec.
  • Use an FSD template suitable for your project. You can use the process asset library in your company. Alternatively, you use other authoritative FSD templates.
  • Write the FSD in a language as clear as possible. Avoid all jargon, and ensure that the team understands the FSD.
  • Document the user stories with as many details as you can.
  • Create use cases and use-case models. These increase the effectiveness of the requirements document.
  • Create flow diagrams of various user actions.
  • Include mockups where applicable.
  • Document all dependencies.
  • List all the system dialogs that are needed.
  • Document error-reporting requirements.
  • List all user roles and corresponding access levels.
  • Include validation rules for all transactions.
  • Follow the relevant best practices to write project specifications.

3. Have a structured review of the functional specification document

You need an effective functional requirements document as input to the development process. This requires a thorough review. Institute a structured review process.

The project manager should lead the review process, and the project manager should involve the architect, business analysts, the development team, and testers. Choose the right people for this review since it requires significant review expertise. There could be multiple iterations of this process depending on the methodology you use.

4. Get the FSD approved by the appropriate stakeholders

Now that you have completed the review process, it’s time to get the functional specification document signed off. The project manager needs to discuss with the relevant project stakeholders for this.

You need to follow appropriate project management processes to ensure clear documentation of the project scope. An approved FSD is one of the first deliverables in a project. Changes to the requirements should follow a formal change management process.  

Summing Up

Documenting functional requirements effectively is key to the success of your software development project. You need to follow a structured process to elicit requirements from business users.

Document them effectively, and institute a robust review process. Finally, follow the requirements sign-off and change management processes effectively.

If, you as a business CEO or CTO, are looking for experienced software development professionals to assist you in the successful implementation of different software development stages including requirement gathering, development, management, etc. DevTeam.Space can help you.

We are a field-expert community of software engineers and project managers experienced in building market-competitive software solutions. Write to us your initial project requirements and one of our account managers will get back to you for further assistance on the onboarding process.

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Frequently Asked Questions on What Are Functional Requirements

What are examples of functional requirements?

Administrative functions.
Business Rules
Authorization levels.
For more examples, read this article.

What are the functional requirements of a system?

They are a set of rules that define how a system will function and ultimately how it can be used.

Where to find functional requirement examples?

You can find an article detailing software development functional requirement examples on the DevTeam.Space blog.


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