When we first started working from home, we immediately jumped on the online software bandwagon. Online meetings, instant messaging, document collaboration, presentation tools, invoicing, inventory management, spreadsheets, CRM, and so many more tools came into our lives, completely upending the traditional way we ran businesses for years before Covid. For most people, this was the first time they’d heard about digital transformation—an umbrella phrase that can refer to a host of digitisation practices, whether you’re moving from paper-based ledgers to online ones, setting up a website and online store for the first time, or you’re revamping your existing CRM setup to something more employee-friendly.
Adopting online software to help with everyday business operations is a great thing. The problem, however, lies in how you choose these software tools. Most SMEs evaluate a handful of specialised systems, try a couple of them out, and then pick the one they think suits them best. Often, this works out well. However, over and over again, we see customers who switch to Zoho say that the solutions they had in the first place (and have been using for years) weren’t well suited. This can happen when the business grows exponentially—too quickly for the software to keep up.
But sometimes, the business realises that the system never catered to their requirements to begin with, and that there were errors in their initial assessments between software providers. That’s where a business requirements document comes in handy.
What is a business requirements document?
A business requirements document is an exhaustive description of what you need as a business to run everyday operations effectively. If you’re gathering requirements because your current software or system isn’t working well for you and you want to find a new software, then this document should address existing challenges and what you’ll need to overcome them.
Types of business requirements
In a strictly theoretical sense, business requirements are categorised into four distinctive types. Though you don’t have to necessarily categorise your requirements into these buckets, understanding what they entail will help ensure you consider requirements from multiple perspectives and gather a comprehensive list. To help clarify each type, imagine you’re a SME owner looking to invest in accounting software.
This refers to the features of the app—payroll, invoice templates, email integrations, and payment gateways.
These outline what activities and projects you need to do in the background to implement that specific software system. Tasks may include using APIs to integrate the accounting app with your CRM or customising the app’s setup to reflect your business’s phrases and branding.
This includes system and technical elements you need to have or implement for the software to work well for your business. For example, if the accounting software offers only Android mobile apps, you and your team need to have Android devices they can use for work. If the software only runs on certain computer operating systems or browsers, then you need to have those all sorted.
These apply when you already have a digital accounting system in place and you need to transition your data onto the new software. Consider whether you’ll need to import data or if you’ll start from scratch. Do you perhaps have millions of customer records that you can’t manually move over? In that case, you’ll need data migration services or tools.
Breaking your tasks down into these categories can help you gather requirements across all the departments and people who will implement and use the new system. This way, you’ll address everyone’s concerns thoroughly and avoid running into undesirable problems later.
How to gather requirements
Who gathers requirements and how they do it depends on the type of software you need and the size of your business. If you’re keen to have software custom developed for your business, you’ll approach a vendor who offers software development as a service. In this case, the vendor (and their business analyst) will discuss your requirements with you and prepare a comprehensive document. They will then review it with you before handing it over to their development team to get started. In such a scenario, the business analyst becomes the interpreter between the client (you and your business) and their internal teams.
Large companies usually prefer to hire an agency to build a system for them, but this approach takes a lot of time and money, neither of which small businesses can afford to dole out frivolously.
Most small businesses instead choose to sign up for online software. If this is you, you’ll still need a requirements document, though how you go about it will be slightly different. As an SME, you’ll gather your own requirements by using your inherent knowledge of your business. Apply the four types of requirements so you cover every possible need.
We also recommend talking to your team, if you have one. Even if you’re a five-person business and you, as the owner, know exactly what everyone’s doing, you may still have knowledge gaps regarding how your fellow team members do things. This is crucial because it's these specific workflows that will define some of your functional and operational requirements.
Once you have a proper list of requirements, run it by your team to make sure everyone’s on the same page. You can then use that document as a base for when you evaluate software. Your primary goal with this requirement gathering exercise is to understand every nook and cranny of your business operations and to document them in such a way that everyone in your team can read and resonate with them.
How to conduct requirement interviews
Now, if you’re a small business with four employees, this is fairly easy. But as you grow your business and your staff count, this process will become more cumbersome. Here are a few strategies to tackle that:
Identify every person involved in your business. If you run a 10-person law firm and want to find an accounting system, ask yourself:
Who's making decisions? The business owner and senior consultants in managerial roles.
Who'll be affected? Your accountant, who will need complete access to the software and its data; junior consultants, who will have to use the software daily to draw invoices and submit documents; and senior consultants, who may have to review invoices and manage payroll details for their team.
Who is the software for? All employees as well as regular clients who will receive invoices from your software.
It’s important that everyone is comfortable using the new accounting system. That’s why it’s important to interview everyone (or in case of larger teams, a representative of each team/department) so you can know what’s essential for them, what's missing from the existing system, what they like about existing process, and what they’d like to have in a new system.
How to write a requirements document
Firstly, make an outline. Jot down the key points that you want to elaborate on. Outlining helps you identify areas where you need more clarity. This is a good time to note these areas down and, if necessary, go back to the interview stage. Good requirement documents take time. Chances are, you’ll conduct multiple interviews with your business stakeholders before you have enough information.
Once you’re happy with your outline, start expanding on it. This doesn't mean you have to explain each requirement in different ways. Rather, make it simple and straightforward. In our law firm example, because it’s a small business and the consultants’ interaction with the software itself is rather limited, their requirement document could be as simple as a nested bullet point list.
Thirdly, share your requirements document draft with the stakeholders you spoke to earlier. That’s your target audience. If they agree to every point in the document, you can then go on to evaluate software products based on that, but it’s critical to get the go-ahead from your team.
Finally, implement any changes and suggestions that your stakeholders offered. Revise your document as many times as necessary to make it entirely representative of your business’s true requirements.
What's the role of a requirements document in choosing software?
It might seem like an unnecessarily lengthy and extensive process to write up a requirements document, especially if you're a small or mid-sized business. However, it's an important part of choosing business software that you'll be using long-term. It does take some initial involvement and patience, but once you have it, it'll be an invaluable part of your process.
Rule out what you don't need
Reading through feature pages of software vendors can be overwhelming and distracting. What the vendor prioritises may not always be what you need most. If you have a solid list to help you know exactly what to look for, the evaluation process is easier on you.
Locate what you need easily
Related to the first point, having a list also helps you ask the right questions when you're on a sales or discovery call with the vendor. Instead of it being a one-sided demo or information dump, you can be more engaged in the discussion and drive the conversation to address your specific concerns and needs.
Make trials easier to navigate
Your requirements document initially narrows down your options to two or three highly-suitable vendors. The next step is to try them out and see how they fit into your processes. Having a comprehensive list of all your technical, transitional, and operational requirements helps you navigate the software and look at how it caters to your needs. If you don't have that clarity early on, you might unconsciously try to change the way you work to fit with the software.
Gain more confidence about your final choice
From our experience, we find that businesses often need more than one person to sign off on software decisions, and instinct isn't always a good reason to make a final choice. When you have a comprehensive requirements document, you can verify that the software you choose checks all the boxes you need. For businesses with well-defined hierarchies, it's handy to get managerial buy-in.
Shorten evaluation times
The most important benefit of having a requirements document is that it drastically reduces the time you spend evaluating a software. Because you know exactly what you need, you won't waste time discussing additional functionality that may or may not apply to your use case.
The first step in making big influential decisions about technology is making small ones. Choose to write a requirements document. Discuss your business operations with your team members, outline exactly how everything happens, and explore how you can do the same things better. Consider the tools and processes you'll need to work more efficiently, and then evaluate the costs and benefits of implementing those changes. Not everything you think you need may work properly for your business. When that happens, you'll have to go back and evaluate your requirements and find an alternative solution. It may take a few tries, but the more comprehensive your requirements, the fewer the tries and the less money you'll spend before finding a solution that truly works for your business.