It may sound like a simple idea: just hook up a company to its suppliers and customers and reap the collaborative benefits.
But extranets are often more than just simple links. There are the obvious technical considerations: network compatibility; software to manage the documents, workflow and such; and whether to connect by dedicated lines or over the Internet either by simple login or using a virtual private network (VPN).
Then there are the social aspects: determining which company has rights to what information and when; balancing issues of responsibility; keeping competing partners separated fairly; and training the end users on what may be a completely new interface.
Sound like more trouble than it’s worth? Not so, according to David Smith, vice-president of Internet strategies and technologies with the Gartner Group in Stamford, Conn. The key is to just make sure the expectations and policies are established and solid before leaping in.
“You can do very simple extranets. It’s a degree of scale. How much do you want to do? I think every company can benefit to some extent from utilizing the Internet as a way to reach out to their suppliers and customers one way or another, even if it’s a very simple application,” Smith said.
“I’d say one of the biggest challenges is inflated expectations. People are going to think that it’s going to solve all of their problems, but it’s just technology and it’s just another way of doing things that has promise to leverage the Internet and has potential to save money; but like anything, those things aren’t a given.”
Smith said there are cases where extranets do save a company some money, but because it’s a new area of technology, there aren’t many off-the-shelf products and tools available. Furthermore, he said many companies don’t take into account all of the costs, such as development, training, hardware, software and maintenance.
“[Companies] should always go back and examine the real business issues. Why are they trying to do it? Try to understand what some of the other companies in their space have done and learn from their mistakes, as opposed to just going in there blind,” Smith said.
“Consult with experts, people who’ve done it before. Don’t just do it because it’s cool; always tie it back to business benefits. Don’t feel like you have to reinvent the wheel every time. Do some comprehensive searching to see what else is out there,” Smith advised.
A common bit of advice heard from those who have been in the trenches building an extranet is to break up the implementation into stages.
“I think what a lot of companies do at this time is they try to do a little too much up front. They try to solve big problems when they should try to take small steps first. Take a phased approach, take small steps, don’t try to over-architect and re-engineer your entire company’s process, at least not right away. Get your feet wet first. Understand some of the limitations of the technology, some of the capabilities, and don’t be afraid to experiment and innovate,” Smith said.