What is an extranet, and how can I use it?

Good com­mu­ni­ca­tion sets the foun­da­tion for effective teamwork. This applies to com­mu­ni­ca­tion within companies, as well as to com­mu­ni­ca­tion with people outside of the company. Re­gard­less of whether an exchange concerns orders from a supplier, pro­duc­tion in­struc­tions for selected customers, or clar­i­fy­ing details by phone or e-mail - it all takes time. An extranet provides an op­por­tu­ni­ty to give in­for­ma­tion to a selected group of people. But what is an extranet exactly? How does it work, and for what purpose can you use it?

The word extranet is composed of the Latin "extra" (outside) and the English “net”. It refers to a con­trolled private computer network that uses the internet to connect a specified group of external users and give them access to a computer network. An extranet serves to provide resources that are made available to the au­tho­rized users, but not to the public. Possible external users are business partners, suppliers, and selected customers. By setting up an extranet, it’s possible to simplify the exchange of in­for­ma­tion across company bound­aries – this applies in par­tic­u­lar to com­mu­ni­ca­tion between the company's own employees and external parties.

Whether for private companies, uni­ver­si­ties, or as­so­ci­a­tions – by setting up an extranet, you create a com­pre­hen­sive in­for­ma­tion network that can be in­te­grat­ed into business processes in various ways:

• Data trans­mis­sion: An extranet enables elec­tron­ic data exchange (or "EDI") of documents such as order forms or delivery notes between business partners. In this way, data can be exchanged across company bound­aries and processed directly without manual entry. This means that data transfer can be carried out in­de­pen­dent­ly of mer­chan­dise man­age­ment systems.
  
  
• Data main­te­nance: Data can be updated and made available to au­tho­rized users within a short period of time. This ensures a high degree of top­i­cal­i­ty and trans­paren­cy in data pro­cess­ing.
  
  
• Co­op­er­a­tion: An extranet enables the joint use of software ap­pli­ca­tions and co­op­er­a­tion with other companies.
  
  
• Trans­mis­sion of in­for­ma­tion: News that is of interest to a selected group of people can be made available to them within a short time.
  
  
• Knowledge man­age­ment: Sharing of training programs or joint de­vel­op­ment of certain ap­pli­ca­tions in co­op­er­a­tion with other companies.

Companies can also integrate ad­di­tion­al functions into the extranet to fa­cil­i­tate the exchange with external parties. Possible functions would be a search engine, a personnel directory, or a messenger service. In­ter­ac­tive functions (such as con­duct­ing surveys and votes) are also possible.

Tech­ni­cal­ly speaking, the extranet is struc­tured like the internet. Com­mu­ni­ca­tion takes place via a col­lec­tion of about 500 network protocols, which work according to which rules and in which format com­mu­ni­ca­tion takes place. The internet protocol (IP) and the trans­mis­sion control protocol (TCP) form the basis for data exchange.

Security pre­cau­tions are very important when handling private data. It’s not only necessary to make sure that unau­tho­rized persons outside the company don’t access con­fi­den­tial in­for­ma­tion, but also to close security gaps within a company. To secure the extranet and protect con­fi­den­tial data from unau­tho­rized access, two main security measures are used:

• Firewalls: A firewall prevents unau­tho­rized persons outside a company from accessing data on the extranet.
• Passwords: Passwords prevent unau­tho­rized persons (also within a company) from having direct access to data stored on the server.

An effective pro­tec­tion of the extranet is guar­an­teed by an external firewall. It’s set up between different computer systems and is therefore also known as a network or hardware firewall. Unlike the personal firewall, it does not run on the protected system itself, so it’s difficult to ma­nip­u­late.

You can also guarantee the most secure access to data via so-called virtual private networks (VPN). A VPN is a private com­mu­ni­ca­tions network where the sub­scribers are connected via a virtual IP tunnel, and can access the company's internal intranet through the tunnel. To ensure a high level of data security when using public lines, all in­for­ma­tion is trans­mit­ted in encrypted form (tunneling). This means that the trans­mit­ted data is not visible to other users on the public network.

There are es­sen­tial­ly two different ap­proach­es to creating an extranet and in­te­grat­ing it into corporate com­mu­ni­ca­tion. Both ap­proach­es are portal solutions:

• En­ter­prise portals: These combine different ap­pli­ca­tions under a single user interface. This is par­tic­u­lar­ly ad­van­ta­geous if many different extranet ap­pli­ca­tions are to be in­te­grat­ed. In this way, users don’t have to deal with different operating concepts. In addition, iden­ti­fi­ca­tion is only carried out once in relation to the portal, not for each in­di­vid­ual ap­pli­ca­tion.
  
  
• Process-oriented portals: These primarily serve to handle certain business processes. Possible examples are orders or travel expense ac­count­ing. The in­di­vid­ual business processes can be in­te­grat­ed into the portal, but don’t have to be. They can also be im­ple­ment­ed via separate ap­pli­ca­tions.

An extranet can also be set up on the foun­da­tion of a content man­age­ment system (CMS). The range of functions covered by the standard software varies depending on the system used. If the required functions are not covered by the standard software, it’s often possible to sup­ple­ment them with ex­ten­sions. However, you should keep in mind that im­ple­ment­ing and main­tain­ing complex systems requires a certain amount of expertise.

If you are unsure which solution is right for you, it’s advisable to consult an expert.

The im­ple­men­ta­tion of an extranet has many ad­van­tages for companies. This includes the rapid exchange of data between internal and external employees as well as external staff. Since large amounts of data can be exchanged quickly via an extranet, many processes can be optimized. Reduced time spent on manually executed ap­pli­ca­tions often results in increased pro­duc­tiv­i­ty and cost savings. Order status in­for­ma­tion, for example, no longer has to be sent to each in­di­vid­ual customer by e-mail. The cor­re­spond­ing customer simply accesses the current order status via the extranet. Since the extranet elim­i­nates the need for separate EDI software, ad­di­tion­al costs can be saved, and finally, because fewer manual processes have to be carried out, there are fewer possible sources of error.

The ad­van­tages of an extranet are also faced with some dis­ad­van­tages. This includes, for example, the ac­qui­si­tion costs of the cor­re­spond­ing software. In addition to the initial costs as­so­ci­at­ed with the pro­duc­tion, there are also con­se­quen­tial costs. For the extranet to fulfil its purpose, it must be regularly main­tained by internal employees or an external service provider, for things such as software updates, backups, and problem solving. In addition, the required training time for employees results in cor­re­spond­ing­ly high op­por­tu­ni­ty costs, es­pe­cial­ly for systems with complex ap­pli­ca­tions. In other words, during the training period, employees don’t have time to perform their actual tasks, which may reduce a company’s turnover, es­pe­cial­ly when many employees need to be trained at the same time.

In addition to the costs, possible security risks must also be taken into account. High security standards must be main­tained to prevent unau­tho­rized access to sensitive data. This applies to access from outside as well as unau­tho­rized access within the company.