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Every economic pundit, from the president of the United States to your favorite financial columnist, credits the Internet as a factor in our current economic boom. While the details might differ, their bottom line is the same: Using the Internet allows companies to lower costs while increasing sales opportunities.

You may think your business is in on the action if you have a web page and email access, but you may well be wrong. Even if you're engaged in e-commerce -- selling wares or services to consumers or other businesses via your website -- you still could be missing the boat. The most dramatic cost-cutting benefits of the Internet are in what the technical folks have dubbed the "intranet" and the "extranet."

The Internet is a public data network, available to anyone who pays to access it. Intranets and extranets, on the other hand, are private. An intranet is a company's own mini-World Wide Web. Content is viewed via a standard web browser, but it is available only to a company's employees, not the general public.

An extranet is essentially an expanded intranet that can be used by a company's business partners. Extranets employ various computer security methods to drill private tunnels through the public Internet. Because they employ the shared wires and computers that make up the Internet, extranets are far less costly to build than a truly private worldwide data network -- an option only affordable to the largest corporations. Once a company can network with its partners, it can build complex e-commerce, customer support, supplier management tools and more.

Extranets for the first time enable mid-sized and small companies to offer networked services to business partners that giant companies have offered for years. The cost benefits are so great that many giant corporations are abandoning their private data networks in favor of intranets and extranets.

Intranets and extranets are used to communicate instantaneously with a wide variety of people in a broad range of tasks, regardless of where in the world those people are located or what kind of computer they use. Boatloads of information can be published and personalized to a target audience, such as human resources information for internal employees and online product catalogs for customers.

Extranets, especially, can improve customer service by providing access to corporate resources seven days a week, 24 hours a day. This in turn eliminates -- or dramatically reduces -- the need for 800-number support.

So finds Factual Data Corp., a provider of credit, criminal and other background information to lenders, employers and property managers. In January, Factual Data turned its website into an extranet for more than 25,000 clients. These clients can now log on to order reports and receive them in minutes, rather than days.

"Prior to our extranet site, phone costs were our third highest expense. We don't even have all of our clients converted to it yet, and we're already seeing savings," said Rob Copp, a spokesman for the Loveland-based company.

But there are downsides. Security, while not exactly a stumbling block, is nevertheless a critical issue if you are to keep unauthorized users from getting at potentially sensitive corporate data. The initial cost to build an extranet also may be high (see sidebar) and, because the system will require ongoing updates and maintenance, there will be recurring re-investment. (See sidebar: "What will an intranet cost you?")

Still, no business can afford to ignore intranets and extranets any longer. Your competitors may already be implementing theirs, according to a new study by Infonetics Research (, a market research firm in San Jose, Calif. Roughly half of the large and mid-sized companies in the United States are deploying the enabling technology for intranets and extranets, both known as virtual private networks. Because extranets make e-business possible, the report also predicts that one third of small businesses will be using extranets by 2002, up from 16% in 2000.

This surge is due to the widespread adoption of Internet technology. By now, most people can aptly use a web browser. If a business can convert costly paper-based processes into web-based ones, the company will save money and people will work faster.

UNIPAC, a national student loan servicing company in Aurora, launched an intranet in the spring of 1996 to reduce reliance on paper for distributing employee-related information. UNIPAC found its intranet not only reduced paper consumption (and associated printing and postage costs), it increased the productivity of its human resources professionals.

Rather than have HR people spend time delivering forms, the intranet allows employees to get their own updated HR data, combined with the appropriate forms, all with a point and a click. The intranet has since grown to encompass internal and external newsletters, employee briefings on corporate projects, branding and trademark information, phone lists, org charts, letterhead and fax templates, internal job postings and more, It even includes a company store, according to staffers in UNIPAC's multimedia department who run the intranet.

Beyond automating paper-based processes, intranets, and particularly extranets, let companies create new products and services that could never exist before. This is the impetus for the onslaught of so-called companies.

Take, for instance, American Floral Exchange, a company in Boulder founded in January 1999 whose entire business will soon hinge on its extranet. APE is a floral distributor. But unlike bricks-and-mortar rivals, the company doesn't own warehouses filled with stock. Instead it owns a website,, from which florists can order.

When it launched its site in November, AFE employees had to contact flower growers via phone and fax each morning to find out what stock they had available, then manually input that data into a corporate database. An extranet for growers will soon replace all that, enabling the growers themselves to update AFE data-bases with their latest inventory and price information. Flower shops will then be able to log on to the website and compare prices from growers worldwide in real time, said Johann Robbins, AFE's CEO.

"From the beginning we knew phase two would be the growers' extranet," Robbins said.

Even bricks-and-mortar companies find that extranets open new business opportunities.

Prior to building an extranet, Factual Data wrote custom software for its three business lines: lenders, employers and property managers. It distributed the software via disk, then had to provide technical support to its customers. Because each type of customer had its own software, the company couldn't cross sell services among its three divisions. Likewise, because of the high cost to Factual Data of obtaining a customer, it couldn't target smaller businesses.

Replacing custom software with the web helped Factual Data solve these business problems. The company's new extranet all but eliminates the need to provide customers with technical support -- each customer is responsible for its own Internet connection and browsers, although Factual Data will support those that don't have their own Internet connection with a direct-dial line into the extranet.

Moreover., Factual Data leveraged its investment in Internet technology to provide an intranet, as well. Since June of 1998, the company made 29 acquisitions and now has offices in 44 locations throughout the nation. Its challenge was to integrate, communicate with and train its newly acquired employees.

The company sent its intranet to the rescue, using it to disseminate information that brings employees up to speed. For example, Factual Data posts a PowerPoint presentation that its sales people can fire up over a web connection at any client's location. Salespeople always have real time information, and they tell customers a single, corporate-sanctioned marketing story, which also "helps to show off our technology through our employees' secured site," Copp said.

For those companies that have no remote employees, building such an intranet is a fairly simple, inexpensive proposition. For less than $500 you can buy a website development package that includes a basic web server that can be used as your intranet server. If you limit the bells and whistles -- such as streaming audio, video and Java applications -- you can likely install the server on a computer you already have in use, such as the e-mail server. Users will access the server over your existing corporate network, leaving the Internet out of the picture.

But should you need an extranet, or to grant access to remote offices, you'll have to deal with more complex security issues. To reap the cost savings, remote access to your intranet or extranet should come through the Internet. In this way, business partners can handle their own technical support and remote offices can call local ISP access numbers.

Different security methods can be used, depending on how important it is to keep data private while it passes over the public Internet. For some, simple password protection will suffice. This is a lightweight method of protecting content, but inexpensive and uncomplicated to deploy. Almost all web servers support a password function. A company may use this, for example, when posting repair manuals to an extranet for its authorized dealers. Sure, it's best to keep this information out of direct public view, but the data isn't so sensitive that it justifies spending thousands of dollars to protect.

Another method is to use Secure Sockets Layer (SSL) technology, perhaps with digital certificates. Digital certificates are like virtual driver's licenses in that they verify the identity of extranet or website users. SSL is a type of encryption-based security widely used by consumer e-commerce shops. It usually requires a software server package dedicated to the extranet application, but this software can run on same hardware server as your public website. An SSL server encrypts all data sent over the web. It is a good choice for an extranet site used for e-commerce, such as one that allows your business partners to place orders via their own customized catalog.

You may not need to invest in the server yourself. Many web hosting companies offer these services, for which you can expect to pay a few hundred to a few thousand dollars per month, depending on how many visitors your site must serve and other performance metrics you negotiate.

The most complex way to tie in remote intranet or extranet users, but the one that is most versatile and secure, is to build a virtual private network (VPN). VPNs may support several types of advanced encryption methods, even allowing the choice of methods to be decided upon at the start of each connection, depending on context. This is a far more secure way to protect data than SSL, which uses a single type of encryption, making VPNs appropriate for even highly sensitive types of information.

Likewise, VPNs enable you to verify the person you are communicating with and that they have the authority to be included in the extranet. In computer security lingo, this is called authentication. You can add authentication to SSL -- namely in the form of certificates -- but the issues of how you issue certificates, who manages them and so on can get sticky.

VPNs often are included in firewall software, which already sits at the edge of the network. Firewalls ensure that unauthorized connections can't come into a company's network through the Internet. VPNs also may be included in the specialized computers called routers, whose only job is to make sure data sent over a network gets where it is supposed to go. Virtual private networks also can be de played at the server and desktop computer level. For instance, Microsoft supports two types of VPNs in its operating systems.

VPNs also are available as standalone appliances, which a company may place at each of its offices. Additionally, national Internet Service Providers (ISPs) are increasingly offering VPN services. The ISP may place VPN devices in the networks involved or may encrypt data only as it passes through the Internet, decrypting it at the end of the ISP's network -- typically the dial-up access point.

Virtual private networks are complex to implement. Unless you have an internal IT department that includes network specialists, you will need to hire a consultant to help you choose and deploy a VPN. For remote employees needing access to services on your network, VPNs are the security mechanism of choice. They also are appropriate for many types of extranets, such as anytime a business partner will upload information to your web server.

Intranets and extranets range from large to small, simple to complex, with costs of a few hundred dollars to well into the millions. They have proven to be extremely effective tools for communicating with employees and business partners. The sooner your company adopts them, the better for you -- and for them.

Julie Bort is a senior editor for the weekly trade newspaper Network World and co-author of the book, Building an Extranet [Wiley, 1997]. She lives in Dillon, Colo.,
Company City Contact
ProjectWorx Inc. Fort Collins
The Internet Design Firm Denver
M H Software Inc. Broomfield
Origin Interactive Denver
RISE Development Group Inc. Denver
Seine Systems Inc. Denver
Twin Peaks Computer Inc. Longmont
System Creators LLP Denver
RMI.Net Denver
Colorado Multimedia Center Inc. Denver
Summit Communication Design Inc. Denver
Interactive Papyrus Co. Colorado Springs
Grand Valley Internet Grand Junction
Antero Web Technologies Colorado Springs
Centera Information Systems Inc. Boulder
Company Services
ProjectWorx Inc. Commercial website development
The Internet Design Firm Website design/hosting
 Intranet development
 E-commerce strategies
M H Software Inc. Intranet/Extranet
 Custom software
Origin Interactive Full Service Intranet/Extranets
 Web design
RISE Development Group Inc. Internet/Intranet/Extranet
 E-commerce or e-store
Seine Systems Inc. Static/dynamic site design
Twin Peaks Computer Inc. Web design
System Creators LLP Web design and graphics
 E-commerce w/storefront
 "Audio, video, animation"
RMI.Net E-commerce
 Assemble online magazine service
Colorado Multimedia Center Inc. Web design
Summit Communication Design Inc. Web design
Interactive Papyrus Co. Intranet/Extranet
 Web design
Grand Valley Internet Multimedia
 Web design
Antero Web Technologies Web design
 Intranet design/implementation
 Web hosting
Centera Information Systems Inc. E-commerce
 Web project management
 Strategy development


Before you can fully grasp the magical economic properties of these two Internet-technology offshoots, the intranet and extranet, it helps to understand why the Internet is such a great money saver.

Prior to the mass adoption of the Internet over the last half decade, computers were decidedly sectarian -- one would only readily talk to another of its own kind. Therefore PCs, could only easily communicate with other PCs, Macs with Macs Sun workstations with Sun Workstations and so on. While you could get varied machines to "talk" to one another, it required specialized hardware, software and expertise. The cost money.

The Internet brought a concept called "platform independence' to fruition. A platform refers to the type of software a computer was designed to read, e.g., windows or Unix. In simplistic terms the Internet takes the software being generated by any computer and wraps in an-other, smaller layer of computer code, called TCP/IP, which contains delivery information. In this way, any computer that has TCP/IP properly installed can send and receive data from any other computer regardless of platform.

With the advent of the World Wide Web in 1989, content -- not just networks -- became platform independent. A browser could read documents that use the language of the web, HTML, and it didn't matter if it was installed on top of Windows or Unix. The programming language Java entered the picture a short time later and allowed complex applications to be written once and executed via any browser.

It is this ability to network large numbers of computers, regardless of their location of their platform, that make intranets and extranets such a great value proposition. Add in the falling costs of computing power, the growing numbers of companies and people who have Internet access and the blurry Internet Picture begins to take focus.


Website development rates range all over the map, depending on the task at hand and the experience of those contracted to do the work. In Colorado, rates for graphic design work range from $35 to $75 per hour, depending on the city in which you live and the resume of the designer.

Complex intranet and extranet requirements such items as connecting to databases, security design integration with existing networking hardware and writing applications, tend to be costly. Expect to pay $125 an hour for a Colorado base company said Wade Nichols. Chief operations offer for Seine Systems Inc. a website design firm in Denver that specializes in intranets and extranets.

That is a relative bargain. "Web development costs in Colorado are 30 to 50 percent cheaper than on the East and West coasts." Nichols said.

That still raises the question, should you simply do the development yourself? The answer is yes, but not for the reason you may think, said Dohann Robbins, CEO of American Floral. Exchange, an online flower distribution in Boulder Designing your website won't save you money. In fact, AFE will have spent around $1 million on the creation of its extranet -- the foundation of its business. Moreover once designed, it must constantly be improved and updated, which means it becomes an ongoing expense.

Still, if an intranet or extranet will be critical to your business plan, then your company should design it and maintains it not hire those functions out. But you may be faced with a chicken-and-egg syndrome in order to attract the kind of talented web designers you will need to care for your site, you've got to probe to them that it's a great site -- and probably be willing to pay top dollar. The workfore currently is experiencing a severe shortage of capable web developers.

So you may be forced to have your initial site designed by a consultant -per your specifications.

"Before you do any coding, make sure your architecture is complete. The architecture of a website is the same as that for a building. It's a written document tat specifies what the site does and how it holds together." Robbins said.
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Date:Apr 1, 2000
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