Developing an Internet Strategy For Your Company (Part 4)
How an extranet can save you money and make your company more agileAlready in this series we have looked at how the Internet effects business and developing a strategy to use the Internet as a business tool. Last week we reviewed the benefits of intranets. In this final installment we will look at how EXTRANETS can reduce your cost of business and make your company more agile.
While the Internet is wide open to anybody, an intranet is private. Held behind the corporate firewall, the intranet allows select, familiar individuals access to the corporate information store. An extranet is a hybrid of the two in that it restricts access to the information, but it extends beyond the protection of the firewall to allow suppliers and partners to work more closely with us.
What is an extranet?
An extranet is the practice of sharing some corporate information with trusted individuals over a computer network. It's biggest benefit is that it can reduce cost. It's biggest risk is possible security problems. An extranet is a business tool that uses technology to make people more effective.
Risk in an extranet?
Of course there is some risk. Name one business practice that doesn't carry some risk. As with all the others, the key here is to manage the risk and to weigh the benefits against the resultant risk.
The biggest risk in an extranet is the possibility that someone will use it to access company information that you would rather they not. The best protection involves a discussion among your computer manager, your business manager and your lawyer. (Or VP of Operations, IT Director, and Corporate Counsel).
The computer manager can tell you the mechanics of protecting the information: firewalls, proxy servers, passwords, encryption, etc. The lawyer can draw up necessary warnings to deter causal intruders and agreements to protect your company in the event of misuse of the data. The business manager needs to keep it all in perspective. Does what we are trying to do justify the risk we are undertaking? If all we want to share with our suppliers is order information, why can't all that data be put on a single computer and that's all they have access to?
Benefits of extranets are huge
Despite the possible risks, the benefits to a well planned and executed extranet can be huge. By connecting to your suppliers through an extranet you can decrease the time it takes to place an order and the time it takes to get it filled. By placing structured orders through a limited number of suppliers you reduce their costs and increase their revenues. You can, and should, expect that to be reflected in lower unit costs to you.
Your people will spend less time in the repetitive tasks involved in preparing, placing, receiving and processing an order. This also reduces your cost.
If you turn it the other way, you can use an extranet to make it easier and cheaper for your clients to order from you. This reduction in their cost will likely result in more revenue for you, increased market share, and higher profits.
This article provides a good summary of the benefits of an extranet.
Real life examples
Liberty Mutual Insurance group was able to expand its business into Latin America using an extranet that let Brazilian brokers access quotes on policies, track claims and print forms online instead of using paper.
This article describes how extranets were used successfully in the auto industry and in Heineken's brewing operation to reduce costs and get products to market sooner.
Netscape has made a conscious effort to help businesses implement extranets by coordinating an industry group to produce Extranet Standards. They are not industry wide or de facto standards, but they are a good place to start.
In Netscape's Directory Server Deployment Guide, the directory design examples includes this one for Enabling the Extranet.
Sharing YOUR experience
For those of you who have implemented an extranet at your company, why not share the experience with this community by posting it to our "Conference Room Bulletin Board"? What worked, what didn't? What was the greatest risk in your case? What was the biggest benefit? We would all like to hear the first hand experiences.
Annual Performance evaluation. Good idea or waste of time?
John Reh--
If you have any questions or comments about this article, or if there is an issue you would like us to address, please email them to me or post them on our Conference Room Bulletin Board to share with the entire group.
Other Management Feature Articles
