Building extranet for secure transactions in business

Extranet is not just a technological development but a business concept. Read how extranets are changing the way companies have been doing business and how they can be successfully built.

Extranets are networks that secure private transactions within multiple organizations that communicate or exchange documents regularly to achieve common goals. Extranets allow easy entering and accessing of information. Moreover, these are more economical than other proprietary networks as they use the existing internet infrastructure only. The infrastructure includes all web browsers, standard servers and e-mail clients.

For customers, extranet environment gives more personalized services by keeping a track of their preferences, priorities and feedback. Extranets are changing the way companies have been doing business. As per analysts, the real revolution can be expected in next three to five years when global procurement systems will be developed for wholesale services and goods. As per a survey conducted by Forrester Research Consulting group on fifty big companies, 70% of the companies are already using extranets for product & marketing information and 14% are using them for transactions.

Steps to build an extranet

Extranet is not just a technological development but a business concept. The change in corporate culture requires multiple stages, supervision and commitment. Hence, any organization adopting this concept must embrace it completely. If the members fear staff reduction or loss of control, an extranet can't be successfully implemented.

Gather data

An extranet supported business includes suppliers, customers and partners. First, all the relevant data must be collected from them. Information should be managed, processed and shared to avoid misunderstandings between all. This sensitive data must be protected from snoopers and competitors.

Create an extranet

First, check whether a private network is actually necessary or internet can handle all the traffic. In most cases, it is necessary. The time and cost factors should also be considered in advance itself. Many companies have collaborated with partners in order to reduce the cost of the process. Analysts say that creating a sophisticated extranet can cost between $250000 and $3.5 million but the good thing here is that in long run, it saves money.

A multi-divisional management team must be allotted the task of creating an extranet. The team must see if there is already software available in market that meets the needs of the organization. Else, custom software must be developed. One major problem faced by IT managers here is the lack of software standardization. It is essential that for sharing information, the two ends have common vocabulary. Similarly, for transferring any data, the two ends must have a common protocol and management model. For vocabulary issues, IT managers can avail the services of organizations like Ontology, BizTalk and HL7.

While Hypertext Markup Language (HTML), the current standard, describes data in a limited manner by wrapping tags around text, eXtensible Markup Language (XML) & Information and Content Exchange (ICE) are two new standards. XML is a reusable metadata format that defines data by applying a particular vocabulary. ICE is based on XML only. If you buy database management systems from companies like Microsoft, Oracle and IBM, these companies promise XML compliance. As this is a major step, outside consulting firms can be hired for expertise.

Start a pilot program

Thereafter, a pilot program must be started where the staff will be exposed to the new paperless environment. All the procedures will be electronic and communication between members will be via emails. This should continue for four to six months. It is important here to create interfaces, customer facing applications and back end functions.

Full scale development

After six months, if the organization benefits from the new work culture, it can proceed with full scale development of the extranet. In this era of technology, all organizations need to upgrade their work systems fast in order to sustain.

Read The next generation of banking


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