The Extranet advantage

Extranets are fast becoming vital business tools, providing a cross between the openness of the Internet and the security and privacy of an intranet. Say you're in the baking-products business: On your public Web site, you provide all the typical marketing information—what your company does, its unique advantages, physical location, contact numbers, and the like. In a secure area that only your customers can enter, you let them access your price list, place secure orders, even view multimedia content demonstrating proper use of new products—all from a Web browser via the Internet. You can tailor the secure area to specific customers, and even let customers view their complete order history.

The technology to create such an extranet is simple: Place the specialized content in a unique directory, and instruct the Web server that access is permitted only after entry of a valid user ID and password.

Everybody Wins

Enabling this type of access to your information provides both you and your customers with dramatic savings in cost and time over the traditional paper-order process. And customers have far greater control over their ordering process. Because they view inventory in real time, they avoid the frustration of ordering out-of-stock or discontinued products. What's more, an extranet is a great sales tool, providing detailed information about current and future products, including images, links to additional information from the manufacturer, perhaps even multimedia presentations of the products' benefits.

Since an extranet lets you tailor content to individual customers' profiles (by determining who's viewing, based on login names), you can target each customer. Your extranet could display special price lists for high-volume customers, or products for a customer who produces only ethnic breads. (Of course, customers can always view additional inventory, if needed.) You can offer specials based on your customers' buying patterns. They get better service; you get increased sales.

The Three Cs

To create a great extranet, you should consider the three Cs: content, customer, and convenience.

Most extranets do provide attractive and useful content. But make sure that content is tailored to your customers' needs—by maintaining a profile of each customer and delivering content germane to each. No sense in offering lard to a kosher bakery. Knowing the customer characterizes good salespeople—now a well-planned extranet lets you add such capability to the Web.

Finally, your extranet must be convenient. Use cookies (the digital kind) or similar mechanisms to automate logon and user identification—so your extranet remembers customer number, company name, and address from session to session, saving customers the hassle of re-entering that information.

The Trade-offs

Extranets aren't without caveats. For one thing, the security may be rudimentary. Most extranets, for instance, don't encrypt the passwords and user IDs sent across the network. Your own customers may not protect their user IDs and passwords as well as they should. In each case, the result could be unauthorized use.

Cost is another pitfall. You may have to pay to maintain two sets of Web content, one for your public Web site, another for your extranet. Because they're customized, extranets require regular maintenance, not to mention back-end integration with your existing information systems.

They may not be cheap to maintain, but extranets permit you to support customers better. That tends to increase business and reduce customer turnover.

Exemplary Extranets

National Semiconductor

National Semiconductor's extranet is open to the public, but to purchase a product or run its simulation software you need a user ID and password. Users create their own account space, defining who they are and what they need. National Semiconductor also provides a private extranet for major customers and channel partners, which adds a sales-force-automation application and commission- incentive programs. In the private extranet, depth of access is based on purchasing volume.

Heineken U.S.A.

Heineken U.S.A. created its Heineken Operational Planning System (HOPS) extranet in 1997 to tighten links to its distributor network. Resellers log in, register monthly sales forecasts, and place orders—helping Heineken react faster to customer demand. By the end of the first year, 80 percent of Heineken's sales were integrated into HOPS, and before the year was through, the extranet had paid for itself.

Federal Express

Through the Web, you can access the extranet portion of the Federal Express site, enter tracking numbers, and locate any package still in its system. The site estimates delivery time and notes any delays. You can also prepare a shipper form, obtain a tracking number, and schedule a pickup.