Business versus software requirements

Business requirements

Business requirements describe WHAT the software must do to generate value for the buyer. For example:

• The software should be able to combine purchase orders from multiple locations to get volume discounts and reduce costs.

• The software must be able to detect and prevent duplicate payments of invoices.

Business requirements are used to select and buy the software.

Software requirements

Software requirements describe HOW the software will work. For example:

• How the chart of accounts will be configured to roll up information.

• How approval workflows will be executed.

• How business processes will run, e.g., converting a sales order to a manufacturing order and then producing the goods.

From one perspective, a business is a collection of business processes that deliver specific outputs. Software requirements are used during implementation to configure the system to execute those processes to deliver the desired process outputs. (Note that software requirements are also used when coding software, but that is an entirely different situation.)

Why it matters

The difference between business requirements and software requirements is the difference between WHAT the software must do to create value for you and HOW it works.

When you buy ERP software, you are interested in WHAT the software can do to create business value. You really don’t care HOW it does it, as long as it meets your business requirements. That is why buying ERP software is always a business decision rather than an IT decision.