Updated May 31, 2023
Introduction to Extranet
Many of us are well aware of the internet. The Internet is like a revolution, and the dot com(.com) boom has changed our lives mentally or emotionally, bringing products closer to customers and financially by providing jobs worldwide. Continuing on the internet lines, we have an intranet, a private network only accessible to authorized users. “intra” means internal, and “net” means to network. Moving to the following term, “our” topic of discussion in the article, i.e., Extranet. A theoretically defined extranet is a communications network involving standard internet protocols like the TCP/IP (Transport Control Protocol and the Internet Protocol) used for information sharing outside the closed “intranet” group.
What is Extranet?
Now that we are introduced to the extranet “theoretically,” let us move ourselves to understand it deeper and get the hang of the word and its relevance in our lives, personally or professionally. An organization primarily utilizes an extranet, a private network, to selectively share authorized information with external stakeholders who are not part of the organization. These stakeholders can be suppliers, vendors, business stakeholders, partners, or other businesses. Now you would be wondering how the Extranet and the Internet are different, though both subscribe to sharing authorized information outside the organization.
Let us take that question to answer first and then holistically look into the Extranet. In Extranet, one would require authorized login credentials to view some extra information. For example, only if a person logs in to your travel booking site can they investigate how much money is in their wallet, which otherwise one won’t be able to access and see. Some individuals perceive the Extranet as the organization’s way of sharing information with external stakeholders, reflecting the organization’s state of mind.
Now that authorized stakeholders have been presented with a few extra pieces of information, which might be confidential, through an extranet, one would need to enforce security and privacy more stringently. The security steps that can be a bit more stringent are firewall server management, digital certificate issuance, messages getting encrypted while transferring, or even using VPNs to tunnel through a private network. An extranet is helpful when connecting their business with customers and other stakeholders through a private network.
Applications of Extranet
Now that we have learned how one can utilize the great utility of the Extranet, let us first look at the implementation in the transfer of data over the Extranet and then go into wherein the industry Extranet is used widely. In the scenario of an Extranet, organizations establish the connection through Virtual Private Networks. Virtual Private Networks (VPN) is a technology that extends a private network over a public network, which essentially means that through a public network, one can transmit data as if connected to a private network. A few pointers which one needs to know about how data is exchanged are:
- In an Extranet, IPSEC-compliant routers perform encapsulation exclusively at the network boundaries.
- The encapsulation of packets and IP addresses uses an encryption key.
- Only IPSEC-compliant routers will decode the packet transferred.
- The transfer of this message is accomplished through a process known as tunneling.
IPSEC (Internet Protocol Security Architecture) is an additional TCP/IP protocol security layer. It adds 2 new pieces of information to the IP packet, namely “New IP header” and “IPSEC authentication user.”
Now coming to the application of Extranet. They are used widely but are not restricted to the below-mentioned companies.
- Organizations that exchange large amounts of data through Electronic Data Interchange (EDI).
- Exclusively share only specific product catalogs with active wholesalers.
- Organizations that collaborate with other organizations for a joint development effort.
- Development of training and use by different companies only when authorized.
- In banks, one bank manages the entire online platform for all the affiliated banks.
- Sharing exclusive news only to restricted companies, let’s say, about growth, plans for the year, etc.
In terms of business models, an extranet enhances collaboration and increases efficiencies. It provides an upper edge to stay ahead in the competition and allows better negotiations with the suppliers.
Advantages of Extranet
In an overall sense, Extranet provides a common model for any kind of business, irrespective of the fact that’s how big or small that party is. The benefits can be broken down into 4 categories broadly, according to the way they serve individuals or groups, and they are:
- The benefit to employees and suppliers:
- Market intelligence in real-time.
- Improvising channel management.
- Invoicing information access.
- The benefit to suppliers and partners:
- Integration of supply chain.
- Delivery of sales information to partners.
- Development and usage of web-based Electronic Data Interchange
- The benefit to partners and customers:
- Reduction of time to market.
- Improved partner collaboration.
- Improvement in procurement
- Having quicker rollouts.
- The benefit to customers and employees:
- Improving sales force effectiveness.
- Enhancement of productivity.
- Ease of online tracking or order entry.
- Availability of online customer support.
Though we have gone through the benefits of having an Extranet, they weigh a lot more in the professional world as many organizations during the 1990s and 2000s have moved towards getting all the advantages of an Extranet in one place. Nevertheless, to maintain equilibrium, we need to address some disadvantages when setting up our infrastructure for the intranet.
For example, when using an extranet, the decrease in data interaction is significant due to the vast reduction in face-to-face interaction. There might also be some access issues because everything is over the internet, and nothing can be accessed offline. Also, hosting an extranet on its server requires huge bandwidth and, as a result, high investment during the setting up phase. All in all, one should surely weigh in using Extranet for growing their business and give their infrastructure a thought for food!
This is a guide to What is Extranet? Here we discuss the introduction, applications, and advantages of the Extranet. You may also have a look at the following articles to learn more –