When a system is distributed in nature, it is desirable to establish requirements and concepts for each distributed component. This is especially important when components are being developed by different teams.

The requirements established for a particular component include the functionality partitioned for that component as part of the system level concept, along with interfaces defined to interact with other system components. Both the requirements and the interface specifications usually specify performance constraints as well as functionality.

This set of component level requirements serves as the point of negotiation between development teams, and permits teams to proceed somewhat independently on their respective components.

Note that if the system itself is not distributed in nature, the system level concept will be complete and there will be no need for a component level concept phase.