An extranet is simply a TCP or IP based intranet made available to outsiders who can use the IP to lower transaction costs and enhance flexibility. An intranet technology enables companies to create a knowledge system throughout their enterprise. Extranets make this knowledge available to others for strategic purposes, specifically, getting outsiders to join in a value determination. They can be used for a variety of applications, especially streamlining and integrating the supply chain. Many reports have indicated significant benefits in information accessibility, improved customer service, reduced inventory, faster time to market and reduced staff time. Extranets have many advantages offering open standards and lowering cost. A customer, supplier, or strategic ally can gain access to an extranet, using any type of computer. External users can gain access to internal resources by simply purchasing a subscription to an Internet service provider.
Using extranets strategically means enabling customers to browse through businesses to find and order products, and check pricing and availability. Nowadays, many customers are looking online to find products and to have all the information in a few clicks has become much easier then searching stores directly. It is also helpful to use extranets in providing confidential information to strategic business partners. These business partners can interpret the information instantly and provide helpful opportunities for change and growth. Many companies are implementing supply chain management by enabling suppliers to browse internal inventory databases. Supply chain management has become vital to many businesses by browsing internal inventory; suppliers can detect trends and use that to help with future orders. Such a direct link to suppliers for distributed purchasing of supplies can eliminate the need for a stockroom and expensive purchase-order processing. Another way of using extranets is to join offices even globally, into a better enterprise with a greater sense of the organization’s mission and culture. Other opportunities lie in just in time manufacturing which can enable customers to transmit their needs directly to manufacturing and eliminate sales overproduction. The key in business operations is to create a long lasting relationship with business parterns; they must allow them to access sales and marketing trends. Extranets help to create an intellectual network, which allows managers and executives to discuss and better ideas. The more creative a business becomes with extranets, the more they will see their business strive. All of the applications that I have just mentioned can be used effectively between enterprise sales, marketing, finance, and managers.
Extranet technology can help companies create information communities involving suppliers, customers and other allies. There are many compelling issues such as security that are connected with the extranet design. Before a firm makes key design decisions related to extranets, it needs to fully understand these issues. Extranets require encryption, reserved bandwidth, database connectivity, transaction capability, “push” systems, and other advanced functions. To support such functions, companies are designing new, competing standards. It is important to understand where the major players think the technology is headed, and how they’re manipulating standards in hopes of their future vision, rather than their competitors.