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  • Requirement Specification vs. Functional Specification: What's the Difference?

Requirement Specification vs. Functional Specification: What's the Difference?

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When selecting an ERP solution, the requirement specification sheet and the functional specifications play an immensely important role in making the ERP project a success. Often the terms requirement specification and functional specification are used interchangeably. Many are not even aware that there is a serious difference between the requirement specification and the functional specification, which can lead to misunderstandings.

There are, in fact, two separate documents which differ fundamentally from one another in many aspects and which should therefore be clearly distinguished from one another.

In this article, we take a closer look at the differences between the requirement specification and the functional specification, what their purpose is and which components belong in each.


Requirement Specification and Functional Specification Defined

How to distinguish the two:

  • The specification sheet describes what the requirements are. It is created by the ERP customer.
  • The functional specification describes how the requirements are implemented. It's created by the ERP provider.

The Specifications - The Wish List:

In the specification sheet, the customer (client) lists all of his wishes and requirements and specifies his expectations of the ERP project. In other words, a specification sheet shows which functions and properties the desired system should have. It describes the current state and defines all target processes and target functions that need to be mapped. This makes it the heart of the ERP selection process and serves as the basis for obtaining offers from ERP providers.

The Specification: The Implementation

The requirements specification is created by the ERP provider (vendor) - it is the answer to the requirement specification and represents a working basis of the ERP project. It contains detailed descriptions of which functionalities on which the technical basis of the new ERP system will be based. The software provider also describes how he would like to implement the required functions. The ERP specification should be the basis of the contract. It is also used for later assessment and approval of the implemented solution.

What Belongs in the Specification Sheet?

A requirement specification includes at the least a description of the company and its goals, information on the current IT infrastructure, functional and non-functional requirements and a schedule for the ERP project. It is also advisable to include the market environment, your own products and services, unique selling points and contact persons in the specifications.

A specification sheet should be formulated in a solution-neutral manner, i.e. it should describe your requirements, but not the (technical) implementation. As a rule, various employees from the specialist departments are involved in drawing up the specifications. This is precisely why you should ensure that requirements and technical details of the implementation are not mixed together. Otherwise, the way for more suitable solution proposals may be blocked by potential ERP providers. You should therefore always convert detailed statements about technical functions into solution-neutral requirements.

Typical Components of a Specification Sheet:

  • Introduction and description of the company
  • Explanations of products, services and the market environment
  • Strengths and unique selling points
  • Current IT landscape including the number of users
  • Process-oriented description of functional and non-functional requirements
  • Schedule for the implementation of the ERP project
  • Contact persons for the various company divisions

What Happens After the Specification Sheet has Been Drawn Up?

The finished specification sheet is sent to all relevant ERP vendors. After this step, a pre-selection is usually possible, which already reduces the number of ERP solutions to be considered. This means that the long list becomes the short list. Workshops can now take place with potentially suitable providers, in which the processes and requirements from the specifications are examined in detail. It should not be a mere product presentation. Rather, the aim of the workshops should be to address the individual circumstances of your company.

This is followed by the ERP specification in which the provider shows what the technical solution to the requirements looks like. In combination with the offer, it often represents the contractual basis of the services to be performed. It also forms the basis of the ERP implementation. Accordingly, you should review the ERP specifications carefully.

Conclusion: Documented ERP Specifications are Indispensable in the Selection Process

The specification sheet plays a central role in the ERP selection process. It serves to become aware of your own requirements, to obtain a commitment from management, to keep strategic aspects in mind, and to uncover organizational optimization potential. It then supports the selection of the relevant ERP providers and a sharper focus on potential ERP systems. Ultimately, it makes a decisive contribution to evaluating the right provider. For these reasons, compile the specification sheet at an early stage. The free specification generator, ERP Planner.com, is a valuable resource. Register without obligation and begin creating your personalized specification sheet.

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