What Are Functional Specification in SAP?

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　　To speak at macro level that is at project manager or at senior levels.  The Functional Spec (Specification) which is a comprehensive document is created after the (SRD) Software Requirements Document. It provides more details on selected items originally described in the Software Requirements Template. Elsewhere organizations combine these two documents into a single document.
　　The Functional Specification describes the features of the desired functionality. It describes the product's features as seen by the stake holders, and contains the technical information and the data needed for the design and development.  
　　The Functional Specification defines what the functionality will be of a particular area that is to be precise a transaction in SAP terminology.
　　The Functional Specification document to create a detailed design document that explains in detail how the software will be designed and developed.  
　　The functional specification translates the Software Requirements template into a technical description which

a) Ensures that the product feature requirements are correctly understood before moving into the next step, that is a technical development process.
b) Clearly and unambiguously provides all the information necessary for the technical consultants to develop the objects.

At the consultant level the functional spects are prepared by functional consultants on any functionality for the purpose of getting the same functionality designed by the technical people as most of the times the functionalities according to the requirements of the clients are not available on ready-made basis.
　　Let me throw some light on documentation which is prepared before and in a project:

1) Templates
2) Heat Analysis
3) Fit Gap or Gap Analysis
4) Business Process Design
5) Business Process Model
6) Business Change & Impact
7) Configuration Design, which is just 5 % of Total SAP- have different names -
8) Future Impact & Change Assessement
9) Functional Design (Module Wise)
10) Risk Assessement
11) Process Metrics and Many More-- Which has impact on Business and its work flow

Note * Things differ from one implementation to another, and it always depends on the type of business which is opting for SAP.
　　
　　I hope this document will help, but will welcome all the help we can improve this document.