Intranets & Extranets "Spheres of Influence"

Feb 1999

This article continues a series dealing with the practical applications of the Internet in business. There can be no doubt about the impact of Internet technology on the way businesses communicate; this article examines how these ideas are applied to more select groups through Intranets and Extranets.

The familiar aspects of the Internet are a number of standard applications which work effectively over a world wide network. These technologies, such as e-mail and the web, have evolved rapidly in the Internet world to become very effective communications tools. Intranets and Extranets are simply the application of Internet technology to the needs of a particular organisation or user group. An intranet can be defined as the application of Internet technologies within an organisation, whilst an Extranet extends to trusted third parties, usually suppliers and /or known customers and usually via the public communications networks, i.e., the Internet.

An effective intranet usually consists of an e-mail system within an organisation combined with a number of information publishing applications based on web browsers. Web based applications can vary considerably in scope and complexity. At the simplest level they may consist of a single centralised library for internal documents such as quality standards, conditions of employment, product information etc. More sophisticated applications make use of databases to extend the scope to include data capture and information processing functions.

An Extranet is an obvious extension of the communications power of an intranet to trusted third parties via the Internet. The most important concept for an Extranet is membership, the point being that an Extranet provides information and services to a known group such as customers or suppliers. Access to these services is via the Internet with additional control through some form of user authentication. Because you know who you are dealing with, services can include personal information and a high level of interactivity.

According to a recent survey by Forrester Research in the US, 96% of the companies they polled were either building or already using internal web sites; other surveys indicate that up to 90% of America's largest corporations have some form of intranet. In effect, the net is emerging with breathtaking speed as the information infrastructure of choice for big business. The reasons for this are compelling. Nets replace a whole swathe of expensive proprietary business systems with cheap, interoperable and user friendly Internet technology.

At a generic level, nets are replacing 'groupware' applications for communication and scheduling and 'middleware' applications for the distribution and management of corporate data. The net also provides the ideal platform for a wide variety of more specific productivity and information management functions such as document management, workflow or sales force automation.

It is interesting to note the greatest success stories come from the most complex and competitive business sectors, a good example of this is Dell computers. As well as achieving over £10 million in net sales every day, Dell exploit the net for a wide variety of technical support and customer services functions both internally and externally. This has allowed them to grow very rapidly without needing to take on and train equivalent numbers of new staff.

In truth there has probably never been a lower risk platform for the development of new business systems. The greatest risk to most businesses may well lie in their failure to reap the maximum competitive advantage quickly enough.

The key issue for most businesses facing up to the challenges of the net is not one of technology; it is all about strategy. To fully exploit the potential of Internet technology it is necessary to think of an organisation in terms of information producers, information consumers and information flows. Initially, a clear set of business goals should be formulated along with a vision of how the net will help to achieve these goals. The next step is to define some specific objectives as milestones along the way. Finally, a technical development strategy should be developed to ensure the infrastructure can keep pace with developments.

There are in essence two types of net project. A software development project and a strategic review. In other words, you may decide to use net technology as the basis for a specific software development, or you may decide to review the threats and opportunities of this new communications channel for your business and devise a long term strategy for its exploitation.

Taking on the net at a strategic level will have wide reaching consequences for the business processes within an organisation. It is often claimed the Internet will bring about the demise of any type of business with the word 'agent' in the name. Whilst this is probably a little extreme one can see the point. A similar logic can be applied within an organisation, the net does not need middlemen!

Effective use of net technology requires a complete understanding of the information flows within the organisation and with key partners. Databases, which have hitherto been isolated as part of a specific business application, become part of the overall information resource of the organisation. Similarly, information which is widely distributed may need to be centralised. Most people are both information producers and consumers and will need to adopt new ways of working in both roles.

The net is both an opportunity and a threat for most businesses. It offers tremendous potential to improve service and reduce costs. More importantly it will allow new types of products and services to be developed and marketed world wide. The challenge is to see beyond the technology and think creatively to gain the maximum competitive advantage from your information resources.

The next articles in this series will focus on electronic commerce.

Published in Money Media, February 1999