9 Benefits Of Extranets & Why You Need One For Your Business

Succeeding in the global landscape of small, medium and large enterprises requires that firms utilize an unprecedented number of tools and components to complete projects and workflows, and to stay ahead of the curve. Increasing productivity, efficiency, and overall efficacy of all operations is critical. While many tools can aid a business with its operations, one such array of components and tools includes an enterprise's I.T. infrastructure, which is often divided into six or seven major categories: 

  1. Hardware systems
  2. Software systems
  3. Networking systems
  4. Enterprise systems
  5. Data systems
  6. Web systems
  7. Computer Security systems

Regarding the networking systems above, these can include a vast number of different sub-systems that aid a company with data sharing, collaboration, communication, and often works in conjunction with web systems (like web servers, web hosting systems, web application firewalls, DMZ, and others). 

Three significant components are critical to a company's network/web systems for it to succeed:

  • Internet: The public Internet acts as an IP-based global WAN that allows companies to email external vendors, suppliers, manufacturers, partners, and customers, and to access the World Wide Web and all of its de-centralized server-based resources.
  • Intranet: A company's intranet acts as an internal network that can be used for personnel to share, collaborate on, and access critical data, electronic resources, spreadsheets, plans, graphs, and statistics, that can be key for the completion of different tasks. This network is shielded from the outside and is often connected to a DMZ via a firewall so that external parties can access certain parts of the company's resources without being able to access the company intranet. While intranets are great for internal company collaborations, data sharing, and communications, they are not suitable for communicating and collaborating with external company parties.
  • Extranet: Extranets initially indicated two or more companies sharing their intranets via a secure VPN. Indeed, even today, extranets typically imply some form of sharing a company's intranet - or its implied data/resources - with external parties, to aid in collaboration and sharing of critical intranet-only data with appropriate parties. The sharing of such data allows essential and vital business services to be available to third parties while being separate from the company's intranet for security purposes. 

Both intranets and extranets are used mainly for three purposes:

  1. Sharing data
  2. Collaborating on projects
  3. Communication with pertinent parties

Collaborative platforms have replaced email as email is critical for disseminating information, but not for tasks/communications that require interaction. But extranets operate as an even more robust collaborative network-based system that allows external parties to access vital information that is usually within the company's intranet. 

Allowing an external system to exist helps to increase company efficiency, streamlines operations, quickens project completion times (by optimizing communications and access to crucial data), increases company productivity, and ultimately, the bottom line. Such network systems allow for greater security of company networks, greater flexibility with data sharing and collaboration, and optimized management of projects and operations.

Defining Extranet

An extranet is a network-based system that exists outside of a company's intranet that is accessible to relevant third parties via an Internet connection and often tunneled via a VPN or a secure network connection/system. Often compared to a DMZ, an extranet is typically linked to a company's intranet while offering certain services, data, catalogs, EDI (Electronic Data Interchange), and login portals to third parties, all while being external to the company's intranet. Extranets in today's world are often associated with Software as a Service (SaaS) cloud systems that allow for extensive data sharing and collaborations between companies. Usually, such extranets exist as two companies sharing their intranet's data, or at least a portion of it. An extranet allows a company to securely collaborate and share critical data with third parties, while not granting direct access to its intranet.

Functions Of An Extranet

An extranet has several vital functions and mechanisms of action that make it a critical investment, as they can turn a positive ROI quickly by increasing efficiency and productivity. Such a positive ROI is possible since extranets are mainly used for data sharing and collaboration on large projects between companies and vendors in a way that email cannot facilitate.  

For instance, if two companies are attempting to create a co-designed strategic plan for a project, emails would require several back-and-forth communications using the "reply all" mechanism, which could confuse personnel (with attachments being forgotten, lost, or blocked by company firewalls), create a lack of focused communication, and result in a difficult time sharing critical pieces of data, such as statistics and graphs, or even large files. Email is still useful for informing smaller parties about specific pieces of information but is not suitable for large-scale collaboration. While one-size-fits-all collaboration apps such as Google Cloud, Slack, Asana, and others exist for collaboration, they do not support many custom features associated with a robustly designed company extranet, which would allow for more efficient and effective data sharing and collaboration.

Delving further into this, companies within all industries can make use of extranets, for example, construction companies, manufacturing companies, and I.T. hardware companies, all of which would typically arrange their network in three layers:

  1. Intranet (LAN): Within this sphere, the company intranet (for a construction company, for instance), would host all data pertinent to the company's operations and projects, including blueprints, spreadsheets, and communications between all personnel. 
  2. DMZ/Extranet: Within this layer of the network that is separated from the company intranet via a firewall, there could exist portals for suppliers, vendors and even customers to access their pertinent data, such as worksheets, invoices, plans, and blueprints, along with communications between relevant parties, and web services requiring a login.
  3. Internet Access (WAN): The publicly-facing side of a company DMZ allows access to the World Wide Web (public Internet) and all of its resources.

Company extranets in today's global ecosystem are fundamentally crucial systems that are needed for companies to integrate with cloud systems to share, analyze, and collaborate on large datasets that are critical for inter-company projects and operations.

Large-Scale Data Exchange

One of the most critical advantages of using an enterprise extranet is the sharing of large volumes of data via EDI, or Electronic Data Interchange. Companies, vendors, manufacturers, shareholders, suppliers, and even customers could access such files quickly and seamlessly via a company's extranet portal (requiring a login). EDI simply indicates the communication and transfer of electronic sheets and business information that was traditionally transmitted on paper, including invoices, contracts, spreadsheets, strategic plans, graphs, statistics, purchase orders, manufacturing orders, supplier/vendor orders, and more. The ability to easily store, share and collaborate on such large volumes of data via an extranet- data that would usually be housed within a company's intranet - to allow third parties to take part in collaborating, streamlines communications and operations and significantly decreases project timelines, saving money and resources.

Exclusive Data Sharing

As opposed to using rustic email systems that are difficult to collaborate on for large datasets, collaborative extranets not only allow companies to share critical pieces of data to all relevant parties but also enable data sharing with exclusive partners. This can include exclusive data sharing of product catalogs to specific wholesalers or groups and sharing of news or common interest datasets with specific business partners or vendors.

Business Collaborations

Joint development efforts and projects are crucial to success in today's world. Large projects and operations, for instance, in the manufacturing industry, require a collaborative platform that is more robust than email for the sharing of critical data that would allow large operations to succeed. Interactions between communications of significant datasets provide everyone the ability to glean essential information that can move a project forward, as opposed to stalling it. When critical decisions need to be made that require extensive data sharing and collaborations with other businesses for joint development efforts, extranets allow a company to share their critical intranet-based datasets without granting third parties access to said intranet.

Enables Access Services

Access services and cloud-based portals (requiring a login from suppliers or customers) can be effectively streamlined and managed via extranets that allow crucial services to be externally hosted and publicly available to appropriate parties, while safely and securely separating such services from the company intranet and its critical data. For example,  if one company manages the online banking application of another company - on behalf of affiliate banks - all necessary and relevant parties can access the services via an extranet, without the intranets of any company being accessed, making it a secure network system for collaboration, service hosting, and data sharing.

Benefits Of An Extranet

Extranets offer not only intangible benefits for tactical, day-to-day data sharing and collaboration but also provide businesses long-term benefits that can strategically alter how a company does business. Below are nine benefits of an extranet that a business of any size can take advantage of, each point of which falls into one of three categories:

  1. Operations: Benefits associated with short-term, tactical processes that are affected in the day-to-day.
  2. Third-parties: Benefits to customers, suppliers, vendors, manufacturers, shareholders, and business partners/associates.
  3. Strategy: Strategic benefits that increase the bottom line in the long-term by positively affecting company productivity and efficiency.

1. Increases Productivity

Due to the fact that extranet applications can encompass a myriad of systems and functionalities - from team and collaborative workspaces, to distributor channels - all while giving relevant parties easy and secure access to typically-intranet data, such systems greatly aid in streamlining operations and increasing productivity.  Additionally, extranets can be set up to include custom applications that can integrate with advanced software applications, including A.I. analytics engines and automation engines that help to increase process efficiency while eliminating bottlenecks.  Extranets can also be custom-built to monitor business activities and to trigger specific actions. 

2. Reduces The Margin Of Error

Extranets can automate several key but redundant processes that typically require human actions, making them prone to human error. One such example is giving customers their order history and processing orders of distributors and suppliers. These processes can be automated via extranet applications to become seamless and accurate.

3. Offers Flexibility

Extranets offer superb management of processes and information, all while ensuring that data can be seamlessly exchanged between customers, clients, and partners. Extranets also provide a flexible solution in making in-person meetings, phone conferences and endless emails unnecessary, while making transactions outside of business hours possible, since all necessary data is accessible via the extranet platform and applications.

4. Provides Timely And Accurate Information

Extranets are also critical in that they allow instant updates to sensitive information, ensuring price lists or inventory information are never out of date, among other things. This also means that constant email updates with updated attachments are unnecessary, as all updated information is synced across all extranet applications for all relevant parties to access.

5. Shortens Time To Market

Due to the nature of seamless, easily-accessible critical company data being readily available to all third parties via a company extranet, such a system dramatically shortens the time to market. In essence, products can get marketed more by enabling proposals and specifications that are instantly available to suppliers and distributors, as well as shareholders.

6. Improves Supply Chain Management

Virtually all forms of project management are easier with the use of an extranet. Both internal workers and remote workers can collaborate on projects, and even executives can communicate and agree on strategic plans with shareholders. Another such form of management that is greatly enhanced via extranets is supply chain management. B2B extranets can link the inventory system directly to a supplier so that a business can then, for instance, order bulks of inventory once it knows it is in demand, thus reducing the volume of stocks on hand and making the purchasing process more efficient. 

7. Saves Time and Money

Extranets can be privately hosted or hosted by outside providers, both of which allow companies to save on money due to the positive ROI that extranets provide an immediate increase in productivity and efficiency. Mainly, extranets provide near-instant results and help to free up resources, thus increasing the bottom line.

8. Provides Security

One of the most significant optimizations that extranets provide is enhanced security. Managers can store, analyze, share, parse, edit, and upload files to a secure system while assigning and managing tasks, organizing plans and calendar dates, creating discussion threads, making announcements and even starting conferencing calls - all with advanced security controls, including:

  • Encryption (TLS)
  • Access Control
  • Auditing
  • Authorization and Authentication protocols
  • Hashing
  • Digital Signatures
  • Secure channels for Data exchanges 
  • And more.

9. Fosters Customer Loyalty

The more useful a company’s website is in providing timely, accurate, accessible information to customers, the more likely they'll want to keep doing business with that company. Extranets allow a company to transparently enable its customer base to access their private data associated with the company, including purchase orders, invoices, order history, and more.

Forever 21

Several companies utilize the robust services of client-side extranets in a novel way to share data with vendors and to allow customers to access private services for a customized experience. One such enterprise is Forever 21, the fashion company that utilizes a web-based extranet that gives customers and vendors access to related services:

  • Vendor: Allows vendors to access critical data shared by Forever 21 to streamline operations.
  • Customers: Their web-based extranet allows registrations, viewing of their fashion items, online purchases, and the collection of customer data, which is then used to send out newsletters about promotions, among other things.


Several companies utilize extranets to enhance vendor and customer experiences. FedEx is one such company that uses extranets to allow registrations and logins (access control for secure access by customers), and the tracking of packages, among other things. FedEx also has an extranet designed for FedEx Custom critical owner-operators that optimizes business operations for FedEx partners and associates/contractors, helping them to manage their business operations (organizing and managing delivery information) seamlessly via the extranet.

The George Washington University

George Washington University also uses an extranet. The university web-based extranet allows access to students so that they can complete their application for programs that the university offers, as well as allowing students to upload their resumes, transcript, and recommendation letters through their website.

Build An Extranet For Your Business

Extranets are an essential part of today's business I.T. infrastructure, as they can radically transform how a company collaborates and communicates with its customers, suppliers, and joint company partners for projects, operations, workflows, and general data sharing processes. Extranets allow a business to separate the data and digital services it offers from its critical intranet, while still allowing pertinent, significant portions of its intranet to be shared with relevant parties. All of these benefits significantly increase company productivity and efficiency. 

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