What are Functional Specifications?

Functional specifications (functional specs), in the end, are the blueprint for how you want a particular report and transaction to look and work. It details what the report will do, how a user will interact with it, and what it will look like. By creating a blueprint of the report or transaction first, time and productivity are saved during the development stage because the programmers can program instead of also working out the logic of the user-experience. It will also enable you to manage the expectations of your clients or management, as they will know exactly what to expect.

A key benefit of writing up a Functional Spec is in streamlining the development process. The developer working from the spec has, ideally, all of their questions answered about the report or transaction and can start building it. And since this is a spec that was approved by the client, they are building nothing less than what the client is expecting. There should be nothing left to guess or interpret when the spec is completed.

Functional Specification
A functional specification (or sometimes functional specifications) is a formal document used to describe in detail for software developers a product's intended capabilities, appearance, and interactions with users. The functional specification is a kind of guideline and continuing reference point as the developers write the programming code. (At least one major product development group used a "Write the manual first" approach. Before the product existed, they wrote the user's guide for a word processing system, then declared that the user's guide was the functional specification. The developers were challenged to create a product that matched what the user's guide described.) Typically, the functional specification for an application program with a series of interactive windows and dialogs with a user would show the visual appearance of the user interface and describe each of the possible user input actions and the program response actions. A functional specification may also contain formal descriptions of user tasks, dependencies on other products, and usability criteria. Many companies have a guide for developers that describes what topics any product's functional specification should contain.
For a sense of where the functional specification fits into the development process, here are a typical series of steps in developing a software product:


Requirements:
This is a formal statement of what the product planners informed by their knowledge of the marketplace and specific input from existing or potential customers believe is needed for a new product or a new version of an existing product. Requirements are usually expressed in terms of narrative statements and in a relatively general way.

Objectives: Objectives are written by product designers in response to the Requirements. They describe in a more specific way what the product will look like. Objectives may describe architectures, protocols, and standards to which the product will conform. Measurable objectives are those that set some criteria by which the end product can be judged. Measurability can be in terms of some index of customer satisfaction or in terms of capabilities and task times. Objectives must recognize time and resource constraints. The development schedule is often part or a corollary of the Objectives.
Functional specification.: The functional specification (usually functional spec or just spec for short) is the formal response to the objectives. It describes all external user and programming interfaces that the product must support.
Design change requests: Throughout the development process, as the need for change to the functional specification is recognized, a formal change is described in a design change request.

Logic Specification:
The structure of the programming (for example, major groups of code modules that support a similar function), individual code modules and their relationships, and the data parameters that they pass to each other may be described in a formal document called a logic specification. The logic specification describes internal interfaces and is for use only by the developers, testers, and, later, to some extent, the programmers that service the product and provide code fixes to the field.

User documentation:
In general, all of the preceding documents (except the logic specification) are used as source material for the technical manuals and online information (such as help pages) that are prepared for the product's users.
Test plan: Most development groups have a formal test plan that describes test cases that will exercise the programming that is written. Testing is done at the module (or unit) level, at the component level, and at the system level in context with other products. This can be thought of as alpha testing. The plan may also allow for beta test. Some companies provide an early version of the product to a selected group of customers for testing in a "real world" situation.

The Final Product:
Ideally, the final product is a complete implementation of the functional specification and design change requests, some of which may result from formal testing and beta testing. The cycle is then repeated for the next version of the product, beginning with a new Requirements statement, which ideally uses feedback from customers about the current product to determine what customers need or want next.
Most software makers adhere to a formal development process similar to the one described above. The hardware development process is similar but includes some additional considerations for the outsourcing of parts and verification of the manufacturing process itself.

Source: Saptechies.com