Building Extranets for Business Advantage

You knew it was coming sooner rather than later. Your executive committee has come down with a bad case of the e-B-G-Bs: E-business is Good Business. The symptoms are pronounced: no word is uttered without an "e" prefix, and talk of extranets, self-service, portals, and profits fills the corporate meeting rooms.

To be prepared for the transition to e-commerce, you need to know how upper-level management thinks. What do they want out of this Internet excursion? How do they plan to present the business to online customers? What should the system provide in the way of services and information to the employees running the back-end processes? How will it all involve you?

Building a solid extranet that compels customers to return is no trivial matter. A number of factors need to come together for an effective extranet, including the interface, the infrastructure, and all the corporate data made readily available. Most important, perhaps, is making the data mean something to line-of-business managers and customers.

The Customer Is King

Due to the nature of their purpose, extranets and the systems they encompass must be designed with the customer in mind. A critical component of the customer-centric extranet is the user interface. It must be simple, clear, and easy-to-use, but still provide access to extensive information behind it. Ideally, everything and anything a customer needs to do can be accomplished via this interface.

"The traditional business-intelligence tools have been slow at adapting their technologies to the Web and making them modular enough to allow themselves to sit seamlessly within a Web solution," says Sanjay Poonen, director of product marketing and a founder at Alphablox Corp. (, which builds a platform for e-business analytical applications. "People want to read a Web page as if they were reading, unaware that some of the information is, in fact, business logic that is analytical in nature from a structured database, while other items might be unstructured information in the form of news feeds."

Greg Johnsen, director of product marketing at Tradiant Inc. (, a provider of e-commerce solutions to the transportation industry, agrees that presentation is a key factor in an e-business’s success. "We run an online marketplace, and giving our customers the help and information they need to make good commercial decisions is critical," he says.

Johnsen’s team manages the multiple communication channels the company uses to interact with its customers. These include e-mail, phone, fax, and the Web. The company collects information gleaned from its interactions, in the end pushing very specific and useful knowledge to customers.

Building an effective user interface means developers of e-commerce applications must integrate data from structured sources -- such as relational databases and data warehouses -- as well as from unstructured sources, such as news feeds.

The Infrastructure

Larry Freed, vice president of divisional practices at Compuware Corp. (, sees challenges on the back-end side of an extranet's user interface. Freed spent several years working with the American National Standards Institute X.12 committee for electronic data interchange (EDI).

"The system-to-system communication components of e-business demand the adherence to standards. Although a standard like XML is critical for effective computer-to-computer transactions, the path to seamless communications still has some potholes," he says.

Freed continues that although several e-business partners can write to the XML standard, each one can write to their own interpretation.

"I worked with automakers for several years on the X.12 standard. While we got real close to agreeing on standardized forms for data interchange, invariably, there was always something a bit different," he says.

For seamless system-to-system communications, which effective extranets require, business partners have to agree on such matters as what fields are defined in their data exchanges, what type of data populates each field, where the fields are located in the data stream, and so on. Naturally, the complexity increases as the number of business partners increases.

Jim Lambert, director of corporate marketing at Octane Software Inc. (, a company that makes Internet relationships management software, sees the integration of disparate systems as a key hurdle to overcome -- similar to the days when it was typical to find a PC and a minicomputer terminal on someone’s desk because the two systems didn’t "talk."

"Some early systems were narrow in focus, perhaps concentrating on the call center where the telephone was the key tool to use. Then along came the fax, e-mail, and the Web. Often, point solutions were implemented for each of these communication channels," he says. "You’d have the 'phone group' in one corner, the 'Web group' in another, and so on. Technology today must be flexible to allow the development of systems that integrate multiple input channels and present them to the knowledge worker in a single, unified manner."

Tradiant’s Johnsen says developing a robust extranet infrastructure behind the Web interface is another important extranet challenge. "Having an infrastructure that can sort, store, and manage this continuous and critical activity is central to any proposition," he says.

The beauty of a Web-based approach is that many of the previous hurdles are eliminated: Users -- customers and the vendors -- rely on standard Web browsers, which can be used across a variety of hardware and software platforms without concern for the underlying details. Interacting with data, viewing data, searching for data, and reporting on data -- are all simplified by virtue of Web-based technology.

Making the Data Mean Something

Making sense out of the data is another complicated matter. The knowledge has to be classified to make it accessible. Different data needs to be driven toward users for whom a particular bit of information is useful. Access rights and policies need to be established, and the circumstances under which information is provided need to be determined.

Imagine an executive of an automobile company being able to get a personalized application delivered across the Web that had the fundamental driving factors of the lease and retail side of car sales -- analyzed behind the scenes by powerful databases and servers -- presented in easy-to-read, protected Web pages.

The executive's experience with this easy-to-use application is in stark contrast to today's analysis experience, where he is forced to open a proprietary query tool that is hard to use, that dominates desktop real estate, and that has little or no hard business context for the automobile company.

Extend the Web-based analogy to the supply chain, where franchise dealers make informed decisions on the inventory of cars based on alerts and analysis provided by the automobile company on its portal. It’s easy to see where this drives tremendous e-business efficiency in the supply chain.

"The heart of the challenge involves making analytics mean something to the context of line-of-business managers at Fortune 500 companies," Alphablox’s Poonen comments.

For example, suppliers looking to understand and analyze the variance of demand forecasts don’t want to have to learn how to "slice and dice" the data, or understand magical words like OLAP. They just want to click a few buttons on a Web page that were customized and optimized for their particular e-business supply chain.

The depth to which users can drill to find the data they need presents further challenges to corporate extranets and e-businesses.

"You can present data in a strictly Yellow-Pages fashion. That is to say that you can present data as a series of categories with just the basic contact information, which forces the user to make a phone call or use some other means of communication to complete a transaction," says Hemang Dave, founder of TrainingNet Inc. (, a provider of access to technical and professional courses. "On the other hand, you can use all data modalities to drill down to get answers and buy products and services right then and there. By allowing the user to transact business from start to finish, you provide value that will bring that customer back and will satisfy participating vendors."

Octane’s Lambert says that one factor in achieving this is personalization -- the integration of business information and knowledge of customers that will make self-service possible.

"The insights e-businesses gain about their customers must be translated to action. Systems must be developed that allow businesses to get to know their customers," he says.

Additionally, extranets must be process-oriented. The technology must allow the fluid execution of business from start to finish, rather than providing the ability to simply execute a single transaction, Lambert explains.

Despite the advances in technology that are geared at making e-commerce ventures successful, the value of old-fashioned elbow grease can’t be ignored.

TrainingNet’s Dave cautions customers not to underestimate the amount of manual labor required to populate a database -- not to mention massaging and grooming the data. TrainingNet knows the effort; it is doing everything itself -- data entry, cleanup, posting, and updating.

"We started with 100 percent manual effort. Now we estimate that we’ve got that down to 60 percent, and we’re trying to bring it down to 30 percent. Still, technology can’t solve everything. B2B [business-to-business] ventures need to consider the resource costs of this manual effort up front," he stresses.

The Corporate Melting Pot

Another challenge facing extranet e-commerce-based businesses is the IT culture shift that inevitably occurs. More than ever, business units and IT must work together to make a project successful. IT groups must see the continuous chain of requirements from the customer down to the server. This sort of integration and awareness cuts deployment time from years to months, or weeks to days. While integration technologies such as Computer Telephone Integration (CTI) and XML are important, the cooperation between IT and the business units is the linchpin in the success of business extranets.

Patrick Meehan, vice president of solutions architecture at InfoRay Inc. (, a developer of real-time business monitors, can foresee the day when a hybrid business-IT organization will emerge as the profit engine of the enterprise, rather than a cost center.

To that end, systems will be developed that constantly monitor business performance and automatically link to suppliers and partners with much of the e-business activity taking place behind the scenes.

Vendors agree that companies need to consider business objectives in relation to an extranet. Tradiant’s Johnsen says this is a step that many companies race over in the rush to get something in place.

From the beginning, though, customers should be thinking about what they want to accomplish from a business perspective, how they want to service customers, how to measure their own success, and what results they’ll produce by meeting those business objectives.

"Look at the big picture. Too many organizations address one thing -- infrastructure, portal design, etc. -- and lose site of the overall goal. Don’t look at the pieces rather than the whole. Focus on how customers are treated by your e-venture," Octane’s Lambert says.



Outsourcing an Extranet

Add another three letter acronym to the list of offerings in the service provider space: the extranet service provider (ESP).

With the seeming complexity of extranet e-business environments, should one seek to outsource all or part of an e-venture? According to Giga Information Group Inc. (, large corporations can expect to support at least 10, if not dozens, intercompany connections within the first 18 months of an extranet initiative.

Even in cases where a company's requirements are ultra-unique, a state-of-the-art infrastructure system will prove to be flexible enough, and open enough, to bring more value more quickly than could be accomplished in house.

Although the market is still a small one, at least one company, Aventail Corp. (, proclaims itself an ESP, with the goal of providing everything customers need to activate and manage business partner networks. Aventail’s approach merges a customer’s existing investments in technology and core business functions. An Aventail spokesperson says that the company can set up an extranet for customers in as little as 10 weeks.

If Giga’s predictions are accurate, we can expect to see more ESPs emerge in the future.