ComputerLink articles by Brian Pitre

Extranets: The Future Contributor to E-Business

The evolution of e-business thus far has consisted of three waves. The First was the Internet itself. The second was the development of Intranets, and the third was the development of Extranets.

An Extranet is a private network that uses Internet protocols and the public telecommunication system to securely share part of a business’s information or operations with outside suppliers, vendors, partners, customers, and/or other businesses.

Research recently conducted by the Meta Group found that while 80 percent of companies are using the Web to conduct business with consumers, only 43 percent use it to deal with business partners, and only 52 percent use it to deal with suppliers.

Organizations are adopting Extranets more and more because these systems are based on Internet technology and offer ubiquity of access between people and companies. Therefore, it isn’t necessary for a company’s operating system, database or Web browser to be the same as those of the company that it is communicating with, thus making communication between companies everywhere very simple.

Extranets let the company’s suppliers get sales reports at any time, day or night, and they can enable real-time inventory access. Properly designed systems allow these customer support functions to be “outsourced to the customer.” By outsourcing to the customer, a company is allowing others outside of the organization to access information within its internal systems. Extranets can dramatically reduce the information being processed by internal personnel, which is likely to be the highest cost resource in any organization.

Extranets extend collaboration outside of the organization and therefore require security of the information and offer privacy to those users who register and use the system. Well-built security systems can provide various levels of accessibility to outsiders. This means that internally, an organization can determine what information is available to whom.

In information-based environments such as legal, medical, and engineering, Extranets provide the hub of information and applications necessary to handle complex situations requiring an exchange of information over geographically dispersed partners. They can provide Online consultations, scheduling, notification, and can be easily used for collaboration.

Other types of organizations such as high technology and software companies find Extranets invaluable for software distribution, engineering changes, and collaboration in product development. Extranets are also used to deliver financial applications in banking and stock trading. Today’s Online stock trading, banking, and bill payment systems are prime examples of functional Extranet systems.

Extranets can also be designed for the delivery of administrative services and procurement. They can perform e-commerce functions as an alternative for Electronic Data Interchange (EDI). Extranets are sometimes defined as networks that link business partners to one another over the Internet by tying together their corporate Intranets. There is a rapid paradigm shift occurring from classic EDI into the new Internet/Extranet e-commerce model. One example of this shift comes from Boeing, who has deployed EDI for 12 years and was able to attract 73 trading partners. By comparison, one year after they launched their e-commerce initiative on the Web, they were able to conduct business with over 300 companies.

What do organizations gain with Extranets? First, they gain the strategic advantage of speed and accuracy of information. Second, they recognize a return on investment for improved speed of and lower cost of transactions. In every case, the influence of speed is affecting all businesses and the Internet itself feeds the speed and growth of information.

The Gartner Group points out that “the Web already has the potential to replace, rather than simply supplement, traditional methods of conducting business.” Remaining competitive, regardless of what business you are in, requires embracing the Internet, Intranets, and Extranets in your organization.