Difference between requirements, wants and needs?

Question: What are requirements? What is the difference between requirements, needs, and wants?

Response: 

Requirement: A requirement is a condition or capability needed by a stakeholder to solve a problem or achieve an objective.

In other words, requirements indicate the characteristic of the process that are essential for meeting the goals of the business.

Needs: Needs are the capabilities a stakeholder deem necessary to achieve objectives, and approved by the sponsors.

Requirements are subset of needs.

Wants: Wants are important but not essential to achieving the business goals or resolving the business challenges. Wants are based on the actual day to day experiences of the people. However, they represent an ideal stake of how people would like things to be in the business. During SDLC some wants may become requirements and vice verse.

For example: Let’s consider a company trying to venture in the insurance market.

The new company needs new business, underwriting, and policy administration, but has budget for only new business system.

In this scenario, apart from the new business system the company has to have underwriting, and policy administration system to run its operations, but so far because of constraints sponsors were able to establish only the new business process and solution. Therefore, new business, underwriting, and policy administration are the needs of the new insurance company but the new business system is the current requirement.

In case the sponsors thinks that a capability for the customer to do changes to the policy online will be better instead of calling the company, but they are constrained. In this scenario online system is a want and capability of calling the company is a need, and a requirement for the IT department.