Intranets and Extranets - Extranets

EXTRANETS

Extranets operate on the same general principle as intranets, but link an enterprise's internal networks to those of strategic business partners. That is, extra-nets link two or more businesses in an exclusive network open only to those parties. Extranets include everything from simple intra-firm electronic ordering systems to more complex and comprehensive information-sharing networks. Extranets were increasingly common as the move to digitally integrate data pertinent to sales and joint development blossomed. Business-to-business e-commerce pushed extranets to the forefront of business planning in the early 2000s.

Often referred to as business-to-business Webs, extranets typically evolve from intranets when the latter are opened up to suppliers and trading partners to eliminate inefficiencies in their business channels. By opening up the company's internal network to suppliers, for instance, corporate databases are rendered transparent so as to ensure adequate inventory control and optimal delivery schedules.

However, this arrangement is not without its complications. While businesses enjoy clear advantages by integrating portions of their networks with those of partnering firms, that integration can cause sticky problems between businesses that partner in some lines of business but compete in others. There is always the worry that the other firm may try to gain a bit more information and advantage from the arrangement. As a result, companies increasingly institute internal safeguards, in the form of security checks and network firewalls, to keep partnering firms confined to only those areas of the network that are pertinent to the partnership. To avoid the appearance of acting in bad faith, the establishment of security measures, proper use guidelines, and clear access limits is increasingly a part of the initial negotiating process when establishing an extranet partnership. The owners of data typically maintain control over, and set policies regarding, the level of protection their information requires.

By integrating suppliers, partners, and even customers into a cohesive network, extranets allow for quicker and more efficient responses to subtle or rapid shifts in market opportunities and phenomena. Extra-nets ideally put all parties into seamless contact with each other, regardless of their respective locations. More contentiously, extranets connect partners to such an extent that middlemen, such as wholesalers, are often cut out of the transaction process altogether, resulting in significant cost savings. Alternatively, extranets force such intermediaries to broaden their focus and offer value-added services in order to keep their businesses worthwhile to clients.

In addition to the growth of business-to-business e-commerce, the wave of business outsourcing in the 1990s was another impetus toward the development of extranets. Businesses increasingly located their primary areas of competence and then outsourced the rest of their operations in order to maximize efficiency and minimize costs to remain competitive. The continuing contacts between the original firm and its outsourcing partners called for an adaptation of Internet technologies specifically for business-to-business purposes, broadening the intranet concept to include partners whose borders were increasingly blurry. As Karl Wierzbicki explained in Computing Canada, "[t]he real benefit of an extranet will be its ability to bring together all of the extended enterprise, serving no longer as just an authorized conglomeration of corporate fact, but as the neural centre of corporate intelligence."

According to Telephony, extranets combine salespersons, catalogs, call centers, and technicians into a single, round-the-clock system through which full business services and deals can be conducted without regard to time or physical location. As a result of the advantages involved in developing extranets, companies were scrambling to build their own extra-nets as a value-added service, fearing that failure to take advantage of the possibilities of such electronic communications would leave them at a strategic disadvantage.