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Advantages of Extranets for Businesses

written by: Karishma Sundaram•edited by: Lamar Stonecypher•updated: 5/17/2010

Extranets are useful networking setups that extend the concept of intranets to outside a single enterprise. This article looks at the various advantages of implementing an extranet.

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    Introduction to Extranets

    Network An extranet is a type of virtual private network (VPN), used by businesses to disseminate information to certain sections of people.

    Usually a VPN is restricted for use within one enterprise, therefore making it an intranet. Each individual who is allowed access to the intranet belongs to the enterprise who owns the entire VPN. Extranets, on the other hand, are VPNs when multiple enterprises own the various components of the network. The similarity between an intranet and extranet is that they both exist on publicly available network infrastructure - most commonly the Internet – but are inaccessible to everyone indiscriminately.

    The chief characteristic of an extranet is that it is used between businesses and not with individuals.

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    Advantages of Extranets

    There are a number of advantages of implementing extranets in an enterprise environment. Some of the main advantages are discussed below in greater detail.

    As extranets are intended to be shared networks between enterprises, the potential for sharing information easily over a secure network is great. In the event that companies are customers for other companies, the shared data can represent anything – including outgoing project information, financial reports, and many other things besides. An extranet facilitates communication between enterprise partners even when their physical locations are geographically distant.

    Extranets enable quick communication amongst various partners. Therefore if a document is stored on the extranet by an employee of one company, an employee of another one could update it in real-time, therefore making the updated document instantly available. The turnaround time involved is drastically reduced, as compared to more traditional sharing mechanisms like emails.

    Apart from the economic implications, there are other less tangible advantages to an extranet. For instance, there is a great deal of goodwill generated with the use of extranets. As a case in point, because the network is shared, there is a certain amount of transparency generated. Transparency in business dealings fosters confidence to a large extent.

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    Implementing an Extranet

    There are considerations when setting up an extranet. First and foremost, an extranet is a departure from the traditional scenario of secrecy in business dealings. There are disadvantages, certainly; however these are best weighed against the advantages in the context of individual instances.

    It is quite straightforward to set up an extranet, as it relies on an existing network infrastructure. Many service providers who specialize in setting up enterprise networks will be easily able to modify a VPN to include the abilities of an extranet.

    Optionally, an enterprise can outsource the extranet to hosting service providers. This option may well prove to be less expensive that proprietary hardware installations. The capital expenditure reduces considerably as well.

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    There is a major security aspect when discussing extranets. As the information is accessible over multiple locations, maintaining secure defenses becomes somewhat of a challenge. It is certainly not impossible, but the measures taken would need to be more stringent than under normal circumstances.