Walk Brisk, But Watch Your Step

Extraordinary Extranets

Extranets offer extraordinary benefits, but their risks and their pitfalls are legion. Business issues can become delicate wherever electronic commerce is concerned.

When General Electric Company first put up their extranet, suppliers got so upset that they demanded that GE redesign it. The problem was their open, online bidding process caused their suppliers to chronically undercut each other's bids. What GE learned forced them to re-evaluate their efforts and involve their partners in the new design. The new system features a blind bidding process with deadlines for bids posted well in advance. The new system has reduced their 14-day purchasing cycle down to seven days and their suppliers are happy to use it.

Some other the common pitfalls for extranets include:

• Suppliers who aren't involved in the system's design and use may accuse your company of playing favorites with their competitors.
• Selecting certain technologies might exclude those businesses who can't or won't allow their use within their organization. For example, sites that force users to run Java applets to obtain information might upset those suppliers who have banned Java from their intranets.
• Extranet operators may be held liable for losses of business when the system is unavailable or unexpectedly crashes.
• The training of users at external or partner sites is a never ending process.

Extranets are not to be taken lightly. "You are impacting someone's ability to do business, and both parties need to be real careful about becoming dependent on each other in that way", says Barbara Reilly, an analyst at the Gartner Group.

Experts recommend that when you're considering an extranet, choose a partner or supplier that represents the "Average Joe" since those extranets which are constructed with sophisticated users in mind are often to the exclusion of everyone else. The key to maximizing participation is to make the extranet as accessible to as many partners as possible, regardless of their technical adeptness. The more participants you have, the greater the rates of return from the system.

Extranets and their cousins, Virtual Private Networks (VPNs) like ANX can be built for one user or just as easily for a million users. The possibilities, along with the benefits are without limits. Says David Goodtree, an analyst with Forrester Research Inc. "It's the Internet, but it's better."

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Mr. Merkow is a Lead Business Systems Analyst in the American Express Interactive Services Center of Excellence. He has over 22 years of experience in Information Systems. He has held the Certified Computing Professional in Management (CCP) certificate since 1982. He is the author of Breaking Through Technical Jargon, published in 1990 from Van Nostrand Reinhold and has been writing trade journal articles on applied advanced technology since 1989. Mr. Merkow currently holds a Master of Science in Decision and Information Systems from Arizona State University, and is currently pursuing a Masters of Educaton degree. His home page can be found at http://www.public.asu.edu/~mmerkow, and he can reached via e-mail at Mark.Merkow@aexp.com.