What is Extranet?

Introduction to Extranet

Many of us are well aware of the internet. Internet is like a revolution and the dot com(.com) boom has not only changed our lives mentally or emotionally bringing products closer to customers but also financially by providing jobs throughout the world. Continuing on the lines of the internet, we have an intranet, which is a private network only accessible to authorized users. The word “intra” means the internal and “net” means to network. Now moving to the next term which is “our” topic of discussion in the article, i.e. Extranet. Theoretically defining extranet, it is a communications network that involves common internet protocols like the TCP/IP (Transport Control Protocol and the Internet Protocol) and used for information sharing outside the closed “intranet” group.

What is Extranet?

Now that we are introduced to the term extranet “theoretically” let us move ourselves to understand it deeper and get a hang of the word and its relevance in our lives, be it personally or professionally. An extranet is nothing but a private network that is typically used by an organization to share only a part of authorized information with other stakeholders outside the organization. These stakeholders can be suppliers, vendors, business stakeholders, or partners, or even any other business. Now you would be wondering on how extranet and internet is different, though both subscribe to sharing of authorized information outside the organization. Let us take that question to answer first and then holistically look into 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, they would be able to investigate how much money is there with them in their wallet, which otherwise one won’t be able to access and see. Some people do think extranet as a “perceived state of mind” of the organization sharing information to outside stakeholders.

Now that a few extra information, which might be confidential to authorized stakeholders, its been presented through an extranet, one would require security and privacy in a more stringent fashion. The security steps which can be a bit more stringent are firewall server management, digital certificate issuance, messages getting encrypted while transferring, or even using VPNs which helps in tunneling through a private network. All in all, extranet does come in helpful when one needs to connect their business with customers and other stakeholders through a private network.

Application of Extranet

Now that we have learned on how one can utilize the great utility of 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 Extranet, the connection is made 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 they are connected through a private network. Few pointers which one needs to know about how data is exchanged are:

• In Extranet, the encapsulation is done at the boundary of networks only and only through IPSEC complaint routers.
• An encryption key is used for the encapsulation of packets and IP address.
• Only IPSEC compliant routers will decode the packet transferred.
• The process through which this message is transferred is known as tunneling.

IPSEC (Internet Protocol Security Architecture) is nothing but an additional security layer for the TCP/IP protocol. It adds in 2 new 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 not restricted to below mentioned companies.

• Organizations which exchange a large volume of data through Electronic Data Interchange (EDI)
• Exclusively share only specific product catalogs with active wholesalers.
• Organizations that collaborates with other organizations for a joint development effort.
• Development of training and used by different companies only when authorized.
• In banks, one bank managing the entire online platform for all the affiliated banks.
• Sharing of exclusive news only to restricted companies, let say about growth, plans for the year, etc.

As a matter of business models of an extranet is concerned, the collaboration is enhanced, and efficiencies provided are increased as well. Having an extranet does provide an upper edge to stay ahead in the competition and also 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 of Extranet can be broken down into 4 categories broadly, according to way they serve individuals or group 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.

Conclusion

Though we have gone through the benefits of having Extranet, and obviously they weigh a lot more in the professional world as many organizations during the 1990s and 2000s have moved towards the way of Extranet to get all the advantages of Extranet in one place. But nevertheless, for equilibrium to be maintained we have some disadvantages to take care of when we set our infrastructure for intranet. For example, there is decreased data interaction when one uses extranet as the face to face interaction is reduced vastly. There might be some access issues as well because of the fact that everything is over the internet, that offline nothing can be accessed. Also hosting extranet on own server requires huge bandwidth and as a result, high investment during setting up phase. All in all one should surely weigh in the use of Extranet for growing their business and give his infrastructure a though for food as well!

Recommended Articles

This is a guide to What is Extranet?. Here we also discuss the introduction and application of extranet along with advantages. You may also have a look at the following articles to learn more –

1. Ethernet vs Internet
2. Uses of Internet
3. What is Internet Application
4. Internet Control Message Protocol