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In software engineering, a functional requirement defines a function of a software system or its component. A function is described as a set of inputs, the behavior, and outputs (see also software). Functional requirements may be calculations, technical details, data manipulation and processing and other specific functionality that define what a system is supposed to accomplish. Behavioral requirements describing all the cases where the system uses the functional requirements are captured in use cases. Functional requirements are supported by non-functional requirements (also known as quality requirements), which impose constraints on the design or implementation (such as performance requirements, security, or reliability). Generally, functional requirements are expressed in the form "system must do <requirement>", while non-functional requirements are "system shall be <requirement>". The plan for implementing functional requirements is detailed in the system design. The plan for implementing non-functional requirements is detailed in the system architecture.
As defined in requirements engineering, functional requirements specify particular results of a system. This should be contrasted with non-functional requirements which specify overall characteristics such as cost and reliability. Functional requirements drive the application architecture of a system, while non-functional requirements drive the technical architecture of a system.
In some cases a requirements analyst generates use cases after gathering and validating a set of functional requirements. The hierarchy of functional requirements is: user/stakeholder request → feature → use case → business rule. Each use case illustrates behavioral scenarios through one or more functional requirements. Often, though, an analyst will begin by eliciting a set of use cases, from which the analyst can derive the functional requirements that must be implemented to allow a user to perform each use case.
Origin of term 
A logistics conference paper in 1953 divided "requirements for data processing equipment into two groups: functional requirements and performance requirements." The concept of functional and non-functional requirements was first presented in 1982 at the Computer Software and Application conference (COMPSAC) by R.T. Yeh. Functional requirements are also addressed in detail by G.C. Roman in April 1985 edition of Computer titled "A taxonomy of current issues in requirements engineering" in which he addresses attributes of a functional requirement.
A typical functional requirement will contain a unique name and number, a brief summary, and a rationale. This information is used to help the reader understand why the requirement is needed, and to track the requirement through the development of the system.
The crux of the requirement is the description of the required behavior, which must be clear and readable. The described behavior may come from organizational or business rules, or it may be discovered through elicitation sessions with users, stakeholders, and other experts within the organization. Many requirements may be uncovered during the use case development. When this happens, the requirements analyst may create a placeholder requirement with a name and summary, and research the details later, to be filled in when they are better known.
See also 
- Dr E. W. Cannon, "Survey of Modern Methods of Data Processing" pg 12. Proceedings, Annual Logistics Conference, No. 4 held in Washington, D.C. 16-19 Mar 1953. http://handle.dtic.mil/100.2/AD0018453
- Roman, G.-C. (1985) "A taxonomy of current issues in requirements engineering" Computer, April 1985 Volume: 18 Issue: 4, pp. 14–23, ISSN: 0018-9162.
- R. T. Yeh (1982) "Requirements Analysis- A Management Perspective," Proc. COMPSAC '82, Nov. 1982, pp. 410–416.
- Wiegers, Karl E. (2003). Software Requirements (2nd ed.). Redmond: Microsoft Press. ISBN 978-0-7356-1879-4.
- Stellman, Andrew; Greene, Jennifer (2005). Applied Software Project Management (1st ed.). Cambridge, MA: O'Reilly Media. ISBN 978-0-596-00948-9.
- Sommerville, Ian (2006). Software Engineering (8th ed.). ISBN 978-0-321-31379-9.