Establishing an Extranet


For years, customers and vendors had to dial directly into corporate computers to conduct electronic business. Now, with the advent of extranets, companies can post their private information on the Web, where it can be shared with any insiders who have Internet access and the right password. "Extranet" is actually one of the more catchy marketing terms out there these days, and is certainly becoming one of the most alluring concepts: Make your business cutting-edge by extending your internal Web applications to your trading partners and consumers.

Extranets refer to connections of networks that link trading partners, suppliers, customers or communities of interest over IP networks. Basically, you can think of an extranet as a private conference room tucked inside the expansive Web. Formerly self-contained corporate networks, intranets are being transformed into wider, broader, more public sets of communications technologies. Yesterday's leased lines and dedicated connections are being replaced by today's extranets and virtual private networks (VPNs) as companies embrace the need to communicate not only within their own enterprises, but also with those outside enterprise walls: Trading partners, suppliers and the general public.

According to Gartner Group Inc., up to 15 percent of the country's largest companies — those with $1 billion or more in annual revenues — have set up an extranet or are in the process of doing so. And, according to a Booz-Allen & Hamilton Economist Intelligence Unit research project, many of the nation's business leaders are looking to extranets as the most promising way to use Internet technology in the foreseeable future. Although only 29 percent of the survey's participants have extranets today, 61 percent plan to have extranets up and running by 2001.

Isn't it time you got yours up and running?


  1. What Is an Extranet?
  2. The Significance of a Company Extranet
  3. The Benefits of Extranet Implementation
  4. How Companies Are Using Extranets
  5. The Different Types of Extranets
  6. Setting Up Your Extranet
  7. Questions to Ask Yourself Before Setting Up an Extranet
  8. Maintaining Your Extranet
  9. The Issue of Security
  10. Tips for Success in Extranet Creation and Utilization
  11. The Future of the Extranet
  12. Software and Other Resources

I. What Is An Extranet?

Like intranets (internal networks that exist behind company firewalls), extranets are restricted networks. In the case of the extranet, however, the focus is outward rather than inward. Instead of data being shared among employees, extranets use the Internet to link a company with its customers, suppliers and other business partners. They are often built by opening up part of an intranet to such partners who visit the site to check on a product's vital statistics, availability or place orders.

At their simplest, extranets are trading networks of known business partners who are using the Internet. They are essentially business-to-business networks operating over the Internet. If two companies open parts of their intranets to each other, they have, in effect, created an extranet. The extranet can provide secure communications between a company and its customers and suppliers, and be used for marketing, customer service, and transaction processing.

Extranet applications can include any of the following:

"Extranets improve the overall efficiency of an organization," said Sanjay V. Patel, president of Bethesda, Maryland-based WebFirst, Inc., a company that creates custom Web applications. "The cornerstone of any company is communication. By allowing remote access via a standardized protocol (such as the internet's TCP/IP) to a centralized database of information, users may share information and communicate with clients or other co-workers more quickly."

According to Patel, ease of access is the key to extranet success. If you can log onto the Internet, then you can access an extranet (assuming you have the proper security credentials). "Improved communication leads to greater employee productivity, thus enhancing an enterprise's growth," said Patel. "On the flip side, if the competition is using an extranet to facilitate communication and productivity enhancements, then those companies that fail to do this risk losing market share and profitability."

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II. The Significance of a Company Extranet

An extranet is a hybrid: part Internet, part intranet. It allows companies to give suppliers, partners and customers access to select areas of their intranet — and even to some operational data through links to client-server systems — over the Internet. With extranets, companies can use the Internet's existing infrastructure to build an information access road between themselves and their business partners. Because the Internet is platform independent, companies can use their existing computers and software to access the extranet.

"Extranets are fundamentally about increasing competitive advantage," said Jude O'Reilley, product marketing manager for Seattle-based Aventail Corp., a developer of extranet management and security. "If you're a large brokerage house, for example, your ability to attract and retain independent brokers trading on your network and provide them with the most efficient, most effective quality of experience means those relationships will be more profitable and more sustainable. All industries have some variation on this important theme: Health care companies working with outside doctors; insurance companies working with agencies; manufacturers working with suppliers and many more."

Steve Dille, vice president of marketing for Viador Inc., an e-business information portal in San Mateo, Calif., said companies need extranets for improved productivity. In addition to being cost-efficient, an extranet can help customers help themselves. They can order electronically, check on product availability, or troubleshoot problems by reading an online guide. That saves the manufacturer money, but it's also more convenient for the customer, who is then free to visit the extranet whenever the need arises. "Customers can fulfill their own information requirements, rather than having to call someone every time they need something," said Dille. "This seems to be a major driver behind the move to create extranets."

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III. The Benefits of Extranet Implementation

Commercial and retail banking transactions are becoming more commonplace on the Web, but few companies have even contemplated anything on the scale of what Internet Banking Communications, LLC, has proposed. The firm is linking their business partners, The Bankers Bank in Atlanta, Georgia, and The Independent Bankers Bank in Dallas, Texas, and their combined 1300+ customer financial institutions, with other commercial and retail financial institutions around the country.

Internet Banking Communications CIO Guy Wood has spent the last year building the networks that will carry this staggering traffic in a fail-safe way. Along with a team of Web developers, programmers, and consultants, he is preparing to implement a Java-based application to manage transfers carrying billions of dollars every day. The challenge: How to provide consistent, secure network access for all financial institution customers of The Bankers Bank and The Independent Bankers Bank. Through this secure frame-relay network, Internet Banking Communications will support $4 billion in transfers every business day. Wood chose's FrontLine Manager to get the job done. "I like the real-time monitoring that FrontLine Manager provides, and it keeps the application open on my desktop 24/7," said Wood. "It constantly discovers, monitors, diagnoses, and controls everything that's connected to our network. When a problem occurs, I can 'drill down' through several layers of node status simply by double clicking to diagnose and repair a problem."

Such use of an Internet protocol mechanism to collaborate with partners, suppliers and customers, as well as employees and co-workers, has several attractions. First, Internet Protocol (IP) is becoming ubiquitous. This means that many more participants can be involved in electronic business and trading because most already have Web technology of some sort. Secondly, IP is standardized and therefore available at lower cost than earlier proprietary electronic data interchange (EDI) solutions. Whereas in the past it was not viable to bring people into electronic trading environments because the expense was too great, Web technology has increased the reach of EDI-type services to larger numbers of partners. And it can be quick. Once the extranet is customized to user needs, all that remains is to disseminate user numbers and passwords.

According to Patel, the benefits of using an extranet include the ability to access remote company data using standard tools (a computer, access to the Internet), expedited communication, 24/7 availability, enhanced employee productivity, and centralized access to a bevy of company data. "The beauty of the extranet is that it allows traveling employees to access all of the necessary information they might need for the remote job with which they are tasked," said Patel. "All of this leads to greater customer/vendor satisfaction."

Of course, extranets are hardly the first solution to allow organizations to share electronic information. EDI has been around for more than 20 years. However, companies incorporating EDI are faced with the high costs associated with setting up the infrastructure and the implementing and integrating proprietary software with customers and suppliers. Implementing an extranet is comparatively simple. Extranets are also easy to update. You simply amend a file rather than making updated hard copies of information, such as an operation manual, and then mailing them to the appropriate parties. And, according to Viador's Dille, extranets are fast. He explains: "The speed of information can really help make a company more competitive. Say, for example, you're communicating to your distribution channel. You can get out information on a new product faster than ever."

Extranets also pay off in less tangible ways. They can deepen ties between business partners and foster collaboration. Vendors can tap into their customers' knowledge banks and get them involved in the product development process. A manufacturer can get its retailers involved in competitive intelligence. Another attractive feature of extranets is their ability to personalize data for specific target markets and customers.

According to Bob Quillin, vice president of marketing for, a Santa Clara, Calif. developer of portal-enabled management software for eBusinesses, extranets allow for:

"An extranet creates an extended enterprise that treats partners, suppliers, and customers as an integrated whole, with unified business objectives to create shared value, drive revenue, accelerate time to market, and compete more effectively," said Quillin, adding that companies are using extranets to bring customers more directly into the product development process, build trading communities that buy and sell through a secure networked environment, replace legacy EDI commerce models, share information with channel partners and increase supply chain efficiencies.

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IV. How Companies Are Using Extranets

When Gelco Information Network, Inc., North America's leading travel expense management outsourcing company, wanted to power its new ExpenseLink┬Č┬« Analysis Service, it turned to Viador's E-Portal Suite for help. Gelco's service gives more than 2,000 clients the ability to securely analyze and report their own corporate travel expense data from the firm's portal (extranet), thus providing them with timely access to information for better decision making. By doing this, Gelco has created the first portal of its kind that gives clients an easy way to access and analyze travel expenses and patterns.

Gelco's new offering is designed to enable the company's clients to directly access important travel expense information hosted via a secured extranet, analyze it through a variety of powerful techniques, including the ability to slice and dice data sets, drill down from summaries to details, and distribute the information immediately through customizable, paperless reporting capabilities. Prior to the introduction of the Analysis Service portal, it would typically take several days for Gelco to respond to requests for specific travel expense data — information would have to be tabulated, put on paper and mailed to the client.

"The ExpenseLink Analysis Service was created to provide our clients with the ability to easily and securely take advantage of their travel expense information with no hassle, complications, or slow turnaround times for reporting," said Charles Buckner, senior vice president of Gelco's Expense Network. "It enables us to provide clients with immediate benefits — they can get the exact information they need, in any form, at any time, through a Gelco-customized 'portal-like' interface for expense management."

According to Patel, there are as many ways to employ an extranet as there are people who can think of ways to use them. For example, he says, one company he's worked with uses an extranet to track all facets of invoice management. In this situation, both the company and the vendor can track the status of an invoice at any time. "Another company places documents on line for users to download, edit, and upload changes," he added. "These documents are tracked so that users cannot 'check out' and make changes to a document if another user has already checked it out."

Because extranets are highly customizable, even very unique requirements can usually find a home on an extranet. According to Patel, extranets primarily serve one or more segments of an enterprise's business operations: Company/vendor, company/employee, company/membership, and company/client, to name just a few of the more common extranet models on the Internet today. "As more diverse companies with unusually specific needs turn to extranets to share information, different extranet models will arise to fill these needs," said Patel. "Companies can also create Virtual Private Networks or VPNs, providing even greater security for their extranets." (VPNs provide an encrypted connection between a user's distributed sites over a public network.)

Perhaps one of the most recognized extranets is that of Federal Express. The overnight shipper created an extranet that allows customers to track the location of their package from anywhere in the world. Incorporating browser technology, customers can sign on to the extranet, key in their parcel identification number and determine detailed information on the location of a specific package. Extranets can also be used for:

Expediting the purchasing process

A U.S. manufacturer that buys components in Asia can post a request for proposal (RFP) on an extranet instead of calling up or faxing its requirements to its trading partners. Such electronic posting of information is faster and more efficient than other methods.

Tracking invoices

The Agricultural Research Container Council in Washington, D.C. Research Council developed an extranet-based invoice tracking system. According to Patel, whose firm developed the system, the council has managers spread out across the country, each with sign-off authority on invoices. "The invoice tracking system allows them to track where each invoice is, mark an invoice as paid, send notification emails, and create a running history of invoices," he said.

Job hunting and recruiting

The Catholic University Law School also called on WebFirst, but its goal was to design and develop a jobs/resume database for use by students and alumni. Through the extranet, jobs can be posted regularly, and staff and students can search by geographic location, job type and a number of other factors. "This application saves the career services staff time," said Patel. "As a result of this implementation, paper searches have been completely replaced by real-time searches."

Speeding up supply times

A retailer can log on to the extranet of a wholesaler, distributor or manufacturer and order supplies when the need arises. They can also check availability and delivery in real-time, thus making the acquisition process smoother and giving the retailer the chance to provide better service to their own customers.

Getting the word out

Extranets can also be used for communication and marketing. Large insurance companies, for example, are setting up extranets with their independent insurance agents, giving the agents access to product updates and information on competitors' prices.

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V. The Different Types of Extranets

Forrester Research breaks down extranets into three broad and somewhat overlapping categories:

At Charles Schwab, a private (or supplier) extranet has proved extremely handy for information dissemination. The firm sells more than 300 mutual funds, and previously had to print out hard copy reports and send them to their mutual fund managers and investors on a monthly basis. Today, through its extranet, the company has connected its private network with its business partners.

"They've built an extranet to communicate information back to all of those mutual fund partners regarding what trades took place from their account," said Viador's Dille, whose firm developed the extranet. "For example, The Dreyfus Fund used to have to wait for a monthly report to be sent, informing investors about the various trades that took place." Now, through the use of Schwab's extranet, the fund managers can come in and look at the information every day if they want to. They have more up-to-date information, plus they now have the numbers in a digital format, making analyses and other number-driven functions much easier to perform. "The extranet has completely eliminated the need for paper-based reporting," Dille added.

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VI. Setting Up Your Extranet

In terms of technology, an extranet can be little more than a regular Web site with password protection (that is, a person must have a password to enter). Another option is to build the extranet as a VPN. Companies can build their own extranets, but they usually tap an outside expert to do the work because it requires specialized technology.

Cost can be a deterrent to extranet construction. Global companies often spend up to $300,000 to create an extranet, and millions more to provide specialized functions such as advanced inventory data or sharing financial information with joint-venture partners. However, smaller firms can set up a basic extranet for a few thousand dollars if they already have a Web site and an intranet.

"The most important thing for any type of IT application is to first establish a business purpose that will get the whole company behind it," said Viador's Dille. "It always takes work to get such projects off the ground, so define what the information is that you need to communicate, and why. Get some feedback from the system users to make sure it will benefit them and how it will offload work from your company." In addition, he said, it's important to understand the business purpose, then consolidate the information that you're going to need. "Define the processes for putting that information together, then use a product from a company like ours to actually deliver the information, which involves taking it out of the data sources and actually creating the interface."

No matter how you choose to set up your extranet, planning is the key to success. A well planned system will garner the budget to do the job right. According to Aventail's O'Reilley, the integral steps to developing an extranet are:

According to WebFirst's Patel, most companies looking to establish an extranet will follow one of two paths. They will either hire expertise in-house and construct an extranet using internal hardware and software, or contract out to a professional Web development firm. "Larger companies usually have the resources to follow the in-house model," he says, adding that these resources include the requisite connectivity (usually a fractional or full T-1 access), multiple servers with high powered processors, and the software to run the various application engines.

Conversely, smaller companies tend to hire an outside consultant, using an a la carte approach to constructing an extranet. "They can add functionality as they go and as financial resources permit," said Patel. "Because of their inherent 'open architecture' design, extranets are readily scaleable. Depending upon the specifications and complexity of the desired result, extranets can run from a few thousand dollars to hundreds of thousands."

Dille said he sees the outsourcing of extranet development and maintenance as a new trend, especially among smaller firms that may not have the in-house expertise necessary for effectively developing an extranet. Viador helps companies outsource on a subscription basis. "We lease them the software, get their data sources, work with them to set up a security model, and have our technical staff create and publish the information," he says. "I would seriously consider outsourcing, especially for small to midsized companies that can gain access to the technology resources to build the extranets for them in a fairly cost-effective manner."

Whether you build the extranet yourself or hire someone to develop it, you need to think through the purpose of an extranet well in advance. Ask your business partners if they would do business via an extranet and how they would use it. Because the biggest savings occur through automation, an extranet improves a transaction that begins electronically and never requires paper or human interaction. That means an order-entry system would have to integrate with an existing database, enterprise resource planning system, or customer service application in order to be effective.

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VII. Questions to Ask Yourself Before Setting Up an Extranet

  1. What type of information technology inventory does my company already own?  
  2. Which applications can be extended to the extranet?  
  3. Can any Web servers double as extranet application Web servers?  
  4. What skill sets do my in-house developers have?  
  5. If these skills are lacking, what is the cost and feasibility of outsourcing the extranet development and maintenance?  
  6. Have we defined the complete scope of the extranet project (including, but not limited to complexity, time to implement, and estimated maintenance requirements)?
  7. Have we studied and evaluated how other companies have implemented extranets to achieve goals similar to ours?  
  8. Have we consulted with professionals who are experienced with extranet design and implementation?  
  9. Have we defined our budget and priced the various components needed (dedicated server[s], software licenses, outside design estimates, connectivity requirements)?  
  10. How will we guarantee security over the extranet?  
  11. Do we want to allow different access to different divisions or individuals? (For example, technical support staff should not have access to financial data.)

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VIII. Maintaining Your Extranet

Once your extranet is up and running, it should become fairly self sufficient. However, much like a Web site, one of the big issues relating to extranet maintenance involves keeping the data current. "The good thing is that everyone you're working with is using a Web browser to access your extranet," said Viador's Dille. "You needn't worry about new versions of software being needed, and installing it on every one of your partner's companies."

According to Dille, the beauty of the Web is that the maintenance is practically non-existent, and takes place at one central server to which the information is distributed. For example, you would apply new Edgar software updates to the server, providing everyone with automatic access through a Web browser. "The Internet browser is what has made this whole paradigm of businesses working together possible," said Dille. "It used to be client-server, where you had to go out and install software on everyone's computer to have it work with the database."

Aventail's O'Reilley adds: "An extranet needs to be built to be production-ready: Highly available, redundant, and built for performance monitoring. Remember that the extranet is major conduit for a services to key revenue-generating partners and customers. Therefore the extranet must be designed to monitor and meet service provider scale metrics over time and in challenging environments."

Fortunately, with today's remote access tools such as Symantec's pcAnywhere, the host server does not have to reside in-house in order for company personnel to maintain it. A co-location hosting solution allows for high access data throughput, which otherwise might not be available to the company. (In this scenario, the company provides or rents a server which resides at an ISP. This server is dedicated only to the company renting or providing it; no other customer sites are contained on the server.) Those managing the extranet could then do so using the remote software administration tools rather than having to travel to the ISP for on site maintenance.

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IX. The Issue of Security

To give extranet Web servers access to internal databases, companies must open a hole in their firewall. Unfortunately, the more holes a company pokes through a firewall, the more possibility for the wrong people to get in. In addition to setting up internal security policies, companies' IT professionals are finding that they must work closely with their extranet partners to iron out technical issues on both sides of their firewalls before implementing advanced functions such as collaborative applications. Although sharing basic Web pages is not a big problem, collaborative applications such as email or Lotus Notes must cut through both partners' firewalls.

Because they involve permitting third-party users into corporate networks, extranets need to be extremely secure, and access needs to be highly controllable. Access control, authentication, encryption, and filtering — all core elements of a secure extranet — are most effective when tightly integrated into a single, comprehensive security and management platform.

Today's extranet builders face various delicate business issues when they create a Web application for business-to-business electronic commerce. Some question whether information systems departments should be in charge of running extranet projects that, if handled poorly, could hurt relations with critical trading partners. Concerns regarding extranet security include the physical separation of intranet and extranet sites, firewalls and hypertext transfer protocol (HTTP) tunneling.

However, bigger concerns for e-commerce are the verification of the true identities of parties in an on-line transaction and the legal verification that the transaction has taken place. Solutions such as public key encryption systems, digital signatures and digital certificates are available to establish the true identities of each party.

A company operating on the Internet typically has a firewall protecting its corporate computers — a barrier or barriers designed to keep intruders from seeing anything other than what is made publicly available on a Web site. In contrast to universally accessible Internet sites, privileged access to corporate computers beyond this firewall constitutes an extranet. Extranet access is usually through a Web site using a standard browser, but it can also be a direct connection using proprietary software.

"The security model is a very big step in the creation of an extranet," said Viador's Dille. "For example, the Charles Schwab extranet had to be set up so that only the Dreyfus Fund could see the Dreyfus Fund. This is an example of how companies must establish a security model for the individual pieces of information first, then for the extranet as a whole."

Here are a few other potential pitfalls to consider regarding extranet security:

Put simply, as long as extranets are secure and enable organizations to manage very specific rules about access permission, they have the ability to give companies the control they need to share information and gain a competitive edge.

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X. Tips for Success in Extranet Creation and Utilization

Plan ahead.

A poorly designed extranet can cost hundreds of thousands of dollars, and drag down the company with an expensive maintenance headache. To avoid this, plan ahead, take your time and get input from the necessary parties before making important decisions.

Start with what you already have.

View your extranet as an extension of an existing application, rather than a separate project. When using existing applications, it may be possible to utilize existing hardware.

Build a project team.

Choose a leader who understands the specific business processes as well as the information technology components. Build a project team from all disciplines required for the extranet project: Webmasters, IT staff who understand the back-end systems, business managers, and, if possible, the end users who will ultimately rely on the system.

Team up with outsiders.

View outside consultants as potential team members. Start your search for vendors and consultants with a request for information (RFI), rather than a request for proposal.

Select collaborators with care.

When choosing a supplier or customer to collaborate on extranet design, look for an "average Joe." An extranet built with your most savvy tech partner in mind will likely be difficult or impossible for others to use.

Put it out there.

The key is to make the extranet accessible to as many partners as possible, even those with limited technological know-how. The more firms participating on the extranet, the higher the return on investment.

Get it in writing.

If you're concerned about liability, tight contracts are one answer. Extranet providers should specify which responsibilities they will shoulder for their users. Note: One contract won't fit all extranet partners. Be ready to negotiate details and responsibilities.

Try outsourcing.

You may run into unforeseen logistical difficulties. For example, a supplier may need to connect with several customers' extranets, each with particular and different access conditions and restrictions. Outsourcing the extranet function may lessen such logistical difficulties and provide the experience required to handle such difficulties.

Look beyond the Web.

Web applications are an important part of the extranet, but don't let your thinking stop there. Many legacy applications can be safely deployed to partners if the right authorization and management is in place.

Think like a service provider.

The more successful your extranet becomes, the more your partners will rely on you to deliver. Build an extranet with "service level agreements" in mind, designed to be continually available.

Remember that this is a customer service application.

By definition, your extranet is a network of companies that directly affect your bottom line. The number one determiner of extranet success is the quality of end-user experience.

Consider a Web architecture.

Though various client-server tools may be available, a Web-based architecture will make it much easier for all business partners to access your extranet.

Carefully choose your extranet security product.

The typical security package included with a Web portal product is fairly light, and designed for intranets, where companies don't have to worry about improper access through firewalls. When purchasing or leasing your system, be sure it includes special, optimized security protection.

Rigorously test implementation.

It's imperative that you find and eliminate all of the bugs and errors that you possibly can prior to launching with your extranet.

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XI. The Future of the Extranet

Some industry players predict that extranets will eventually replace the specialized networks currently used to address specific business applications such as remote access, branch office connectivity, mainframe access, Web browsing and EDI. The predictions may prove true, especially because moving these business applications to extranets — networks that leverage the global reach and cost-efficiencies of the Internet — reduces hardware and communications costs, simplifies management and allows corporations to integrate customers into the network.

"Some of the first generation extranet activity has been Web-only, where an organization allows for the sharing of a select set of Web information protected by a password," said Aventail's O'Reilley. "More experienced organizations and larger enterprises generally decide that a Web-only approach only gets them half of the extranet benefit. Their extranets span a whole range of application types, sharing information resources across a full range of applications, from SAP R/3 to HTTP."

From sharing catalogs to providing real-time quotes to revealing accurate shipping times, extranets have found a welcome home in today's business world. And while they were virtually unheard of just two years ago, extranets are proving to be real cost and time savers for companies of all sizes and across all industries. Competitive pressures are moving many companies to extranets — a trend that's expected to increase as companies learn that they can't effectively compete without them.

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XII. Software and Other Resources

Many companies provide help with extranet implementation, and an equal number of software developers sell their own extranet systems. Among the companies that handle extranet creation and implementation are IBM Global Services, which builds turnkey extranets on top of its Lotus Notes. Other big network operators, such as AT&T's WorldNet, also develop or administer extranets. Many local Internet service providers (ISPs) and consultants — from large companies such as Arthur Andersen to smaller concerns — also provide extranet development expertise. According to's Bob Quillin, the three categories of providers are:

"Our own product line has been structured around the three phases an e-business will move through as it first races to roll out a service (FrontLine FastStart); then scales its infrastructure to grow its business, partners, suppliers, and customers (FrontLine e.M); and finally shifts to operational efficiency to optimize its business processes (e.M modules)," said Quillin. "FrontLine FastStart, introduced in April 1998, provides an at-a-glance, browser-based management view of a company's e-business infrastructure resources, including network devices, desktop systems, servers and services with simple all-in-one navigation capabilities."

At webMethods Inc.. in Fairfax, Va., software developers have designed a server specifically for companies that want to implement automated business-to-business links and leverage their existing Web sites so they can exchange information via the Web. The server costs $19,995 for the starter package bundle.

Viador provides the Viador Eportal Suite, a Yahoo!-like portal that enables companies to extract information out of any type of data source. It also includes security access and delivery of the information in a secure fashion to trading partners, resellers and suppliers. Typical cost of a pilot installation is $50,000, according to Dille.

Recently, Sunnyvale, Calif.-based FreeGate Corp. introduced Virtual Private Network (VPN), a software program that establishes transparent links across public and private networks to branch offices or organizations outside the corporate umbrella, such as vendors, customers and partners. VPN Extranet, for example, opens small companies' corporate networks to select outside parties, with some users having access to a limited amount of corporate data. The branch version of VPN costs $995; the remote version is $495; and the combined package costs $1,295.

No matter which software product you choose, Aventail's O'Reilley insists it's important to go with a company that is focused on the unique needs of business-to-business commerce. "There are no effective all-in-one extranet, remote access, intranet solutions," she said. "At Aventail, [for example], the extranet is all we do."

According to WebFirst's Sanjay Patel, having a Web site that is hosted on a dedicated Internet connection is the prime requirement for an effective extranet. Most Web server software used by ISPs has the ability to set specific access permissions for various users and groups. However, he adds, in order to run more powerful Web programs, such as Web-to-database applications, a scaleable database engine such as Allaire's Cold Fusion Server or Microsoft's Active Server Pages must be installed. "Cost of these components vary, depending upon the complexity of the desired result," said Patel. "Most Web providers who offer database development services will furnish the infrastructure resources that a company needs to build an extranet."

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