The Implications of an Extranet on the Business Model

(graphics not available) Purpose of the Report 
The purpose of this report is to provide the strategic implications of an Extranet on my company's business model over the next three years. It is understood that the present business model utilizes an Intranet system. 
Background of the Topic 
When discussing Web-based technologies, we need to consider three distinct variations: the Internet, the Intranet and the Extranet. 
Internet 
The Internet is a public, global network of networks which is based on Internet Protocol (IP) and related standards (http://www.teleshuttle.com/media/extradef.htm). The Internet was designed to provide a standard means of interconnecting networks so that any system could communicate with any other system, regardless of physical location. It operates as a confederated network of networks (an "internet"), and offers universal accessibility (http://www.teleshuttle.com/media/extradef.htm). 
Intranet 

An intranet is a private application of the same internetworking technology, software, and applications within a private network, for use within an enterprise. It may be entirely disconnected from the public Internet, but is usually linked to it and protected from unauthorized access by security firewall systems (http://www.teleshuttle.com/media/extradef.htm). An intranet provides access to data across all functional areas of an organization. These functional areas including Sales and Marketing, Manufacturing and Production, Finance and Accounting, and Human Resources. Addtionally, Intranet applications have been developed for each of the aforementioned functional areas (see Figure 1 Above). 
Extranet 

While an intranet is private and is protected from public visits by firewalls, an organization can create an Extranet to allow authorized suppliers/distributors and customers/shareholders to have limited access to its internal intranet. An Extranet, or extended Internet, is a private business network of several cooperating organizations located outside the corporate firewall. An Extranet service uses existing Internet interactive infrastructure, including standard servers, email clients and Web browsers. This makes the extranet far more economical than the creation and maintenance of a proprietary networks. It enables trading partners, suppliers and customers with common interests to form a tight business relationship and a strong communication bond (see Figure 2). 
Extranet Security 

A typical Extranet site is partitioned into open and secure segments. Access security is the corner stone of the Extranet concept. Secure connections using Virtual Private Networks (VPN) between computers create a virtual tunnel, using inexpensive and ubiquitous public lines (see Figure 3). (Management Information Systems, pg. 291) Tunnel technology can also be used to individualize the Extranet site, providing access only to the features that a particular user is entitled to. 
Discussion Area 
A typical Extranet site also offers a private Discussion Area (Industry Network) and member feedback means, which permits the members to exchange ideas and to share information. The Discussion Area facilitates collaboration in solving joint problems and in continuous service improvements. Members are also able to provide valuable feedback though email links, questionnaires, surveys and guestbooks, and use patterns. 
Collaboration 
Close collaboration among Extranet members typically results in a better definition of a product or service, higher degree of cooperation and improved efficiency. An extranet extends a company's network beyond its boundaries to predetermined business partners, customers, suppliers and others. Companies have the ability to leverage key information residing on their Extranet. In 2003 Aber determined that "Given the fact that the average small business deals with 35 to 45 vendors three to four times per month, efficiencies gained through online collaboration can cut costs and improve a business's competitive position." (http://www.entrepreneur.com/article/0,4621,305817,00.html) 
Discussion of Current Issues 
Information Exchange 
Today, extranets are becoming a popular means for business partners to exchange information (http://www.informationweek.com/657/srcult.htm). A distributor or salesperson can go to a manufacturer's private extranet by entering a user name and password to access real-time information such as product availability, order status, and pricing. Other useful information also may be included on a manufacturer's extranets. For the most part, manufacturers and distributors are on the same page when it comes to what distributors want and the type of information that can be accessed from manufacturer extranets. 
Current Business Model 
Extranets have forced many corporate executives to reexamine how they manage their business models. With a proper extranet, every person can communicate with every person or functional role in a project. You don't have to know the names of the sub-contractors (http://www.cadinfo.net/editorial/extranet.htm). What's more, invaluable business processes are preserved. All communications are archived, in a form that cannot be edited. Just think: How many lawsuits could be avoided by the mere existence of an indisputable record of all project communications? One large builder was told by their attorney that just being able to retrieve all the project documents would save, at a minimum, tens of thousands of dollars on any project that resulted in litigation—just on the document assembly for the discovery process (http://www.cadinfo.net/editorial/extranet.htm) Additionally, Picture having a single virtual location for all project documents, accessible from almost anywhere. No more questions about whether the concrete people got the latest version of the foundation drawings. 
As associate editor of Information Week, Gregory Dalton, writes, "extranets are reshaping corporate culture as companies decentralize management, alter policies about publishing information, and redefine relationships with their business partners." (http://www.informationweek.com/657/srcult.htm)