What is an Extranet?

The concept of communication between business partners using telecommunication channels is not new and one that has been with us for a number of decades. Electronic Data Interchange (EDI) has been with us since the 1970s. The idea is that if two businesses want to communicate their business electronically, they would need to both adhere to an implementation of EDI standard and they would be connected by a very private proprietary network for the communication. These private networks tend to be very expensive to set up and to maintain. The consequence of this is that the smaller and the medium enterprises (SMEs) are generally excluded from the possibility of online business transactions using EDI. If a SME wants to business electronically with a large corporate, it is forced to adhere to the same implementation of EDI that the corporate has.

Over the past few years however Internet has emerged to be the popular platform for electronic communication. The idea of Extranet (extended Intranet) is to enable the business community to conduct their business electronically using public communication network of Internet in place of the proprietary networks. In comparison, use of Internet for communication makes the Extranet a highly cost effective method of electronic communication that brings the SMEs into the realms of online business with trading partners and provides them with potential competitive edge. Extranet is an attempt to use the public lines of Internet for connectivity off the campus or head office and in essence this means that standards such as TCP/IP are adhered to for the communication.

I suppose a rough presentation of Extranet could be a Web-based Wide Area Network. One could compare and contrast the two in terms of their Bandwidth. With both WAN and Extranet bandwidth limitation is a major issue. WAN uses expensive-to-set up proprietary lines or leased lines for connectivity and consequently does not need to adhere to open standards such as TCP/IP.

Inherently these lines are particularly private and security is very high. Extranet is an attempt to extend the internal networks to off-the-site business partners in a secure manner through the use of public telephone lines or the Internet. This security requires implementation and is somewhat limited in contrast to that with proprietary networks that are inherently private and very secure.

It enables a number of trading partners and customers that have common interest to come together in a tight business relationship. Although cost effectiveness is a very important factor, a major significance of Extranet is its ability as a non-proprietary tool to enable the evolution of electronic business.

Extranet is an attempt to extend the Internal networks to the business partners that are located outside the firewall. Intranet is the company-wide internal system that serves the needs of internal community. Extranet partitions the secure and sensitive sectors of the Intranet from the rest of the web services that could be extended to the external community. Features of Extranet are:

• Enhanced communication:
• Company-wide business and value-added communications
• Email
• Program sharing
• Better business partner communication and transaction
• Better productivity:
• Just-in-time provision of information to business partners and customers
• Better management of information and reduction in information overload through customisation of information
• Provision of extensive training material that is accessible remotely
• Reduction in manufacturing cycle time
• Collaborative working environment in particular for knowledge workers
• Collaboration in design with business partners
• Reduced design cycle time and cost
• Elimination of paper publishing cost overheads
• Online retailing and sales
• Better delivery of information:
• Making better use of legacy systems through information integration and using standard delivery systems
• More user-friendly (in comparison with EDI) interfaces, less regimented, more ad-hoc, less structured
• Effective security:
• Conducting E-Business in secure environment through use of encryption
• Protection of Web-based resources using firewall and password protection

The same web-based infrastructure of Intranet is used including web browser, email client, web server, application server, database server, middleware, firewall, etc.

One major issue with the extranet is the security. Opening the Internal networks to the outsiders brings with it the potential security threats. There are two ways of implementing Extranets:

• Direct leased lines can be implemented between the business partner and the corporate network. This is in particular an expensive option to implement and to maintain.
• A secure link or a tunnel could be set up to connect the outsider to the corporate networks called the Virtual Private Network or VPN. This connection is not an "always-on" and is on-demand. A VPN is a device that uses encryption and communication protocols to create a secure on-demand link, called a tunnel between the client and the server over the Internet. This is a much more cost effective option.

Extranets are easy to implement and is a strategy for connecting the wider business community in a collaborative and informative environment. There are a number of issues that need attention when implementing an Extranet:

• Effective implementation requires a high degree of coordination between the various involved parties. According to the nature of business partnership, potential users require access to personalised and targeted information.
• The success of Extranet depends strongly on the extent of security measures
• There should be virtual boundaries between private and sensitive corporate resources and those that business partners are allowed to access. This requires strategic management consideration and decision making.
• No system can be completely secure. Implementation of secure systems requires extensive resources in terms of hardware and software. A collaborative strategic and technological thinking is therefore required to pitch the security level to the sensitivity of the information and potential Return On Investment (ROI).
• A number of different strategies should be considered for the implementation including in-house-development at the IT department of the corporate and out-sourcing the business and the technological solution. Out-sourcing in particular has been a very feasible strategy with a number of companies such as Microsoft and Netscape offering Extranet solutions.
• Extranets amalgamate resources from a number of varied sources including legacy systems and databases, specialised knowledge-based systems, transaction processing systems, etc. Interconnection between these systems can be a major issue.

One of the strategies in deploying an Extranet by the corporate is to allow hte trading partners, in particular the SMEs, access to the internal networks. What are the benefits of this strategy for the corporate?