Intranets and Extranets

views updated



Intranets combine all the features of the Internet, including e-mail, Web sites, interactivity, and cross-network uploading and downloading, but are specifically for use inside a particular organization, such as a business, research facility, or school. In other words, an intranet is a sort of bordered, limited-access Internet that allows for more comprehensive and efficient passageways to company information. They find their most prolific use in the business world, where they help to streamline company operations by providing access to corporate dataeverything from meeting schedules to sales projections to product-development reportsto those inside the firm. Many companies even build portals on their intranets to provide a central point of access and navigation scheme for company information and news.

Typically, intranets grow out of the need to address specific problems within a firm or department that requires data to be readily available to a number of separate users. From these initial steps, the network grows to incorporate more company information and provide access to more and more members of the firm. Corporate applications and software also are geared toward integration with the internal network. The intranet really begins to pay off, however, when it graduates from a massive information storage device to a tool for knowledge creation.

By the 2000s, companies were looking to their intranets not just as a forum for data storage and transfer, but also as a mechanism for exponentially enhancing the creation of corporate intellectual capital. By providing the tools for mining through the mass of data stored in company files and extracting relevant information in a meaningful and useful fashion, intra-nets are a mechanism for the creation of company knowledge and a cutting-edge vehicle for competitive strategy.


Extranets operate on the same general principle as intranets, but link an enterprise's internal networks to those of strategic business partners. That is, extra-nets link two or more businesses in an exclusive network open only to those parties. Extranets include everything from simple intra-firm electronic ordering systems to more complex and comprehensive information-sharing networks. Extranets were increasingly common as the move to digitally integrate data pertinent to sales and joint development blossomed. Business-to-business e-commerce pushed extranets to the forefront of business planning in the early 2000s.

Often referred to as business-to-business Webs, extranets typically evolve from intranets when the latter are opened up to suppliers and trading partners to eliminate inefficiencies in their business channels. By opening up the company's internal network to suppliers, for instance, corporate databases are rendered transparent so as to ensure adequate inventory control and optimal delivery schedules.

However, this arrangement is not without its complications. While businesses enjoy clear advantages by integrating portions of their networks with those of partnering firms, that integration can cause sticky problems between businesses that partner in some lines of business but compete in others. There is always the worry that the other firm may try to gain a bit more information and advantage from the arrangement. As a result, companies increasingly institute internal safeguards, in the form of security checks and network firewalls, to keep partnering firms confined to only those areas of the network that are pertinent to the partnership. To avoid the appearance of acting in bad faith, the establishment of security measures, proper use guidelines, and clear access limits is increasingly a part of the initial negotiating process when establishing an extranet partnership. The owners of data typically maintain control over, and set policies regarding, the level of protection their information requires.

By integrating suppliers, partners, and even customers into a cohesive network, extranets allow for quicker and more efficient responses to subtle or rapid shifts in market opportunities and phenomena. Extra-nets ideally put all parties into seamless contact with each other, regardless of their respective locations. More contentiously, extranets connect partners to such an extent that middlemen, such as wholesalers, are often cut out of the transaction process altogether, resulting in significant cost savings. Alternatively, extranets force such intermediaries to broaden their focus and offer value-added services in order to keep their businesses worthwhile to clients.

In addition to the growth of business-to-business e-commerce, the wave of business outsourcing in the 1990s was another impetus toward the development of extranets. Businesses increasingly located their primary areas of competence and then outsourced the rest of their operations in order to maximize efficiency and minimize costs to remain competitive. The continuing contacts between the original firm and its outsourcing partners called for an adaptation of Internet technologies specifically for business-to-business purposes, broadening the intranet concept to include partners whose borders were increasingly blurry. As Karl Wierzbicki explained in Computing Canada, "[t]he real benefit of an extranet will be its ability to bring together all of the extended enterprise, serving no longer as just an authorized conglomeration of corporate fact, but as the neural centre of corporate intelligence."

According to Telephony, extranets combine salespersons, catalogs, call centers, and technicians into a single, round-the-clock system through which full business services and deals can be conducted without regard to time or physical location. As a result of the advantages involved in developing extranets, companies were scrambling to build their own extra-nets as a value-added service, fearing that failure to take advantage of the possibilities of such electronic communications would leave them at a strategic disadvantage.


In an economy increasingly based on digital information, intranets and extranets are becoming central tools in the effort by businesses and other organizations to streamline their operations and maximize their available resources, both physical and intellectual. Increasingly, intranets were a given for large companies. According to The Journal of Business Strategy, between 1997 and 2001, 90 percent of major corporations implemented an intranet strategy. In the early 2000s, extranets also were rapidly becoming an expectation rather than a bonus.

InformationWeek reported that IT managers generally had high expectations for their intranets and extranets, noting that 80 to 90 percent of all IT managers expected a positive return on their investments in such network systems. The lowered costs of doing business with other firms was the most obvious and immediate advantage posed by the implementation of intranets and extranets, though the efficiencies of data flow throughout and between firms was an important subsidiary advantage.

Security, of course, was a primary concern with intranets and extranets, since their purpose was to invite some but exclude others. Access can be secured by a variety of techniques, including traditional identification and passwords, or by other methods such as digital certificates or IP address recognition. A favored method of managing the access of internal data systems by outside parties is to employ enterprise directories. Enterprise directories are a relatively easy way to manage outside access because their hierarchical structures can serve to provide layers of authentication, determining what kinds of information can be made available to what kinds of partners. Because the layers of access restrictions for extranets can be complexfor instance, a company may choose to provide open access to all partners for product testing information, but to only certain partners for confidential sales informationextranet security is labor intensive and requires skilled IT managers and security experts.

In addition to basic information sharing capabilities, intranets and extranets play a prominent role in corporate communications, both inside and outside the firm. With advanced audio and video technologies wired for Internet capabilities, intranets and extranets can facilitate secure real-time conferencing, seminars, and other discussions. This enables executives and workers to communicate directly and immediately, and allows them to transfer information on a moment's notice, thereby making such meetings much more efficient.

Intranets and extranets also favor the model of corporate organizing that was on the rise in the Internet age of the 1990s and early 2000s. Instead of relying heavily or exclusively on top-down communications structureswhereby instructions and ideas are announced by executives to lower-level workerscompanies can utilize intranets and extra-nets to encourage creativity and decision-making among their lower-level employees. This facilitates cross-departmental collaboration and results in a constant dialogue among all members of an organization, thereby maximizing the knowledge at the firm's disposal.


Baker, Sunny. "Getting the Most from Your Intranet and Extra-net Strategies." The Journal of Business Strategy. July/August 2000.

Krill, Paul. "Portals Play Key Role as Intranets and Extranets Evolve." InfoWorld. May 7, 2001.

Moch, Chrissy. "Everything You Always Wanted to Know About Extranets, but Were Afraid to Ask." Telephony. September 13, 1999.

Schwarzwalder, Robert. "The Extraordinary Extranet." Econ-tent. December 1999.

Wierzbicki, Karl. "Extended Intranets Add to Your Business' Reach." Computing Canada. October 29, 1999.

Yasin, Rutrell. "Tools, Policies Make Good Security MixCompanies Aim to Build Safer Internet." InternetWeek. October 30, 2000.

SEE ALSO: Business-to-Business (B2B) E-commerce; Channel Conflict/Harmony; Channel Transparency; Data Mining; Digital Certificates; Intellectual Capital; Knowledge Management