Business Advantages of Intranets and Extranets Term Paper

Excerpt from Term Paper :

instant, accurate communication -- the days of missed phone calls and letters which had to be sent via certified mail or otherwise tracked are long gone. Today, electronic media can be secure, instant, and quickly accessible and verifiable, making them the most viable means of communication within and without an organization. In the corporate community, the speed of information is almost as important, if not equally so, to its accuracy -- minutes, even seconds, can mean losing an edge to a competitor or missing out on a blockbuster deal.

Two different, and yet very compatible, means of communication in this new electronic era are intranets and extranets. An intranet is defined as "a local network that covers the premises of one Firm/Organisation with the objective of speeding up working procedures and production process." (Trieste 2004). An extranet, on the other hand, is the connection, over public network, of two or more Intranet systems that facilitates the communication among areas far located (same Company or different Firms & Organisations)" (ibid 2004).

Essentially, both are electronic means of communication for instant, secure transmission of information. Their major difference lies in the audience to whom they are accessible -- intranets are the type of network that is available only to registered users, for example, employees of a certain corporation. Extranets may link several of these networks with each other, for example, allowing Federal Express employees to access the information available on an internal server for international airlines that carry cargo overseas, in order to better estimate things like departure times of overseas cargo flights, prices, and frequency.

This is, of course, a very simplistic example, and the functions of intranets and extranets range far beyond allowing different corporations to access information about products or services that they might utilize. To begin, this essay will examine the benefits and disadvantages of intranets and then extranets separately, then I will move into a discussion of how the two may be utilized together, and finally, I will summarize the advances in communication that these media represent.

One of the principal reasons for the development of intranets was the changing structure of business, from single-site locations to multiple-site locations. The increasingly competitive business world also spurred the change. These intranets serve as corporate bulletin boards and provide access to companies' intellectual capital (engineering drawings, best-practices databases, procedure and personnel manuals, and other legacy databases). An intranet can also facilitate in-house videoconferencing and promote chat rooms to serve as virtual meeting rooms. With this ability to instantly communicate and to access needed documents, it's possible to operate more in a just-in-time mode, increasing the flexibility of business decision making. However, security remains a prime concern to organizations with intranets, since unauthorized access could give their competitors a marketing edge.

These security monitors have resulted in many intranets being difficult to access, even for authorized users! Various user identifications and passcodes can be difficult to remember, and some intranets -- notable the federal agency intranets utilized by each separate government agency -- require that a user change their passcode frequently, which results in users' forgetting passcodes, becoming "locked out" of their own systems and wasting valuable time trying to unlock their access, and in users' resorting to a written record of their identification information and passcodes, which essentially defeats the purpose of having electronic passcodes in the first place. Creating an intranet that is too secure is definitely a problem, in terms of user-friendliness, and can actually detract from the productivity inspired by the faster communication if users are constantly spending time trying to remember or record their identification information.

Extranets, by contrast, allow more users to access the networks, while limiting the accessibility to a certain degree. Extranets are on the rise among companies who wish to allow consumers to access their ordering and information process via the internet in general, as well as among businesses who are trying to trim the number of man-hours spent monitoring inventories, supplies, and services from outside providers who may, via an extranet, monitor these numbers themselves and respond promptly with either restocking, automated scheduling of services, or service calls.

Some of the reasons that extranets are becoming more popular are that technical professionals have developed more reliable network architectures, business users and corporate planners have increased their confidence in firewalls, and the business community as a whole has learned to utilize these networks as dependable ways to conduct business. Increased confidence in the security capabilities of networks, even those with access outside of registered users and employees, has greatly contributed to the uses of extranets in everyday business and industry.

Extranets are designed with two firewalls. The first allows people with passwords to go part way into the network to specifically designated files. The second stops outsiders from going further, so the company's intellectual capital can only be accessed by its employees. Extranets are being seen as another way for an organization to develop a competitive edge in this era of just-in-time information and increased productivity.

Initially, extranets were seen as a way to streamline purchases and to cut down the amount of time that both an organization and a supplier were spending on sales calls. Giving suppliers limited access to company information via an extranet allowed the suppliers themselves to monitor the inventory of whatever they were supplying, and to keep the inventory at a comfortable level without constantly calling people inside the company. This helped organizations to always have the supplies they needed, and helped to overcome some of the problems created by downsizing (See also Phelan 2003).

As the internet became more and more utilized by everyday consumers, marketing departments looked for ways to utilize the extranet to promote the organization's products. It quickly became obvious that the extranet also provided a way to handle customer complaints, quickly creating an ombudsman program in order to build customer loyalty. Customers and suppliers quickly spread the word, and other organizations started to expand the offerings of their websites, both external features like sales and marketing as well as internal resources like managing inventories, supplies, and services.

A specific examples of extranet uses is the apparatus of IntelSat, which is a global satellite provider, whose extranet "gives customers real-time access to available satellite inventory and enables easy online ordering of service." (Darwin 2004) The company goes further than just sales in its extranet, though, offering customers online content to foster a sense of participatory community. For instance, it recently presented live streamed video coverage of a satellite launch, prefaced with lots of behind-the-scenes information on what goes into preparing for the launch. Such "special events" help create a more loyal customer relationship in what might otherwise be thought to be a commodity industry. (Darwin 2004).

Encouraging customer interaction with the company is the strongest suit of extranets; the electronic world, while speedy and cost-efficient, is not personal. As such, customers may not develop the connection with a company that they do in a person-to-person interaction, and as a result, have less loyalty to one company in the electronic age.

Drawbacks to extranets are, in a word, security. The increased number of users increases the chances of a security breach, and the access provided to some areas of the website -- to mid-level management, for example -- cannot extend to all levels of the network. A district manager in an automobile supply chain, for example, does not need access to the company's financial reports that are accessed by the Chief Operating Officer. Extranets, instead of allowing all users the same level of access, must regulate which users have access to what, and do so in a way that will not exclude ordinary customers from the site while still protecting sensitive information in a manner similar to that of the high-security…

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