An extranet works like the Internet in that it is a method of communication for remote business associates using their computers and other electronic devices. While the Internet is public, an extranet is private, and the extranet owner decides who receives an invitation to access it. An extranet involves extensive identification routines and is accessible by clearly defined affiliate groups in the organization.

Improved Flexibility

Because of trends in innovation and technology advancements, businesses are embracing electronic forms of transactions and communication. Extranets can help boost the level of convenience by which you conduct these exchanges because they offer an efficient way for organizations to connect with affiliates. Since extranets are usually accessible 24 hours per day and there is relatively no downtime, associates, clients, vendors and other business partners can communicate with your business at a time that is convenient for them.

Increased Efficiency

Because you grant direct access to information on your network to associates of your choosing, the use of extranets can improve efficiency and increase productivity. For example, a customer can get answers to questions regarding your policy information without having to wait for a response from your customer service staff. When used to provide access to internal applications, direct access to your business information via your extranet enables users to change and update their personal information, which not only increases productivity but helps to reduce errors.


On the one hand, security is an added advantage if you implement an extranet because you control who accesses your site and thus who gets access to your data. Conversely, extranets can open your systems up to breaches in system security because you grant outsiders access to your system and internal databases. To grant access to external associates, you must create openings in your firewalls. Multiple openings in your firewalls create higher risks for unauthorized entries. Also, keep in mind that extranets grant access to proprietary data, and this access to your information can provide another opportunity for unauthorized users to access sensitive and confidential information.


It can be costly to implement an extranet as you may have to foot the cost of hardware, software, manpower and any other associated costs, including training of external affiliates. Repairs and maintenance can also increase the expense of managing an extranet. While start-up costs may be significant, you may experience reductions in other expense areas if you implement an extranet. For example, because your affiliates have direct access to documents on your network, costs associated with mailing or faxing information are significantly reduced or eliminated.