Explanation of the Internet, Intranet, and Extranet, and their Business Value
Target Audience: Business persons wishing to
technologies to add, extract, and uncover new sources of value.
This document provides a simple explanation of the Internet, Intranets
and Extranets, and explains how these
technologies can be of benefit to modern businesses.
The Internet is a public network offering a variety of facilities
- The World Wide Web (WWW): Used to display hypertext documents and
interactive hypermedia, allow input into forms, and deliver distributed database
- e-mail: Useful for inter- and intra- organisational communication,
- FTP (File Transfer Protocol): for exchanging files.
The Internet can be of business value through:
- marketing: development and promotion of products and
- sales: processing of business transactions, and
- service: provision of information.
- Internet advertising / brand development / corporate image.
- Product Differentiation: Use of the Internet to offer
unique features and electronic services and to create institutional distinctiveness.
- Product Innovation and Growth: Creation of new products
and services, and new markets; Mass customisation of products; Global
- Delivering attractive value-laden content at a reasonable price.
This entails the provision of easily accessible, regularly updated, diverse and elegant
- Dynamic adaption to customer behaviour
- Quicker time to market.
Online, instantaneous quoting.
Faster transaction speeds
Secure transactions and order processing
Automatic integration and communication with back-office workflow
Improved user interfaces that are intuitive and hide the
complexity of the underlying technology
Automated reminders and re-ordering
- Faster customer service
- Customers engage in self-service thereby reducing
administrative and processing overheads. For example, customers can check their own
account information, track parcels, and perform interactive needs analyses, without
needing human assistance.
- Provision of any time of day or night services and
facilities to customers and employees around the globe transcends the limitations of
time and place.
- Availability of real-time, up-to-date information.
- Reduced lead times
- Reduced consumer search and selection cost
- Feedback from clients
- Cost Advantages. The Internet can decreased the marginal
costs of marketing, sales, and service.
- Improving the information metabolism of firms. New Internet
information technologies, such as e-mail filtering, can help reduce co-ordination costs
and mitigate the information overload, thereby speeding up the "information
metabolism" of firms - that is, the ability of firms to take in, move, digest,
and respond to data. The Internet provides a useful and low-cost mechanism for information
storage, transport, and processing. The Internet thus becomes an avenue for improving
communication and co-ordination and streamlining business processes.
- Improving the effectiveness, and thus profitability, of management
decisions and actions. The Internet can add value by providing managers (including
human managers and software agents) with relevant and reliable information, in the right
format, anywhere, and in real-time. For example, managers can do market research through
transaction analysis and can view up-to-the-minute management reports.
is an Intranet?
The Intranet is a private network that uses Internet
software and standards to connect internal employees. The Intranet is
effectively an in-house version of the Internet. The Intranet is fast becoming the network
platform of the future. It is also becoming the dominant environment for developing corporate
|The Intranet can be of
business value as a means for connecting staff and improving internal communication
and co-ordination. The Intranet provides a means of connecting business units
across multiple computing platforms. The Intranet thus facilitates effective
re-engineering by allowing business processes to be built across organisational
barriers. Effective re-engineering streamlines the internal value chain and
can drastically reduce costs and lead times, and improve flexibility and
||The Intranet is well-suited
to a variety of enterprise applications including:
- workflow applications
- human resource applications
Examples of human resource applications include use of the
Intranet for performance management and benefit scheme administration.
For instance, staff could tailor their own benefits package without creating additional
paperwork for the Human Resources department. The Intranet can also be an effective training
and information dissemination tool, providing employees with access to
up-to-date information and tutorials.
Traditional Client/Server Applications
The Intranet is
an ideal mechanism for replacing traditional, platform-specific client/server
applications. Traditional client/server applications promote 'islands of automation'
within companies, by restricting inter-departmental communication and causing rework,
duplicate data capture, and errors as data is passed between different applications and
operating systems. Intranets, which are platform independent, promote cross-functional
co-operation, electronic integration, and business synergy.
The trend towards integrating with business partners means that
Intranets are no longer strictly private networks, and companies are granting access to suppliers,
vendors, customers, and other business partners. This extension of
the Intranet to permit controlled access to specified third parties has been termed
Extranets can fully support all transactions between business partners,
as well as provide value-added information. Extranets are appropriate for infrequent, ad
hoc transactions, and short-term trading relationships as well as for regular transactions
and long-term trading relationships.
The Extranet can be of business value as a means of connecting buyers
and sellers. The advantages to be found are:
- Extranets promote value chain integration. Extranets, which are
inter-organisational networks, permit closer integration of adjacent steps in the
value-chain, and allow joint, interpenetrating processes at the interface between
value-added stages. Barriers between the organisation and business partners and
customers are lowered. Electronic integration leads to greater efficiency, data
integrity and fewer errors as data need only be entered once, at its source.
For example, the customer fills in an order form on-line, and the order details are
automatically written to the database or electronically forwarded to the workflow system.
Tighter coupling of business partners results in time savings and faster, more
cost-effective client service. Integration can also lead to the elimination of
duplicate tasks and resources. Finally, integration can result in entirely new
business models through intermediation and disintermediation.
- Extranets provide the benefits of Electronic Data Interchange (EDI).
Electronic Data Interchange (EDI) is the inter-process communication
business information in standardised electronic form. Amongst the benefits of EDI
- Reduced time and expense of paperwork. EDI provides fast,
inexpensive, reliable connections to suppliers and customers. Fully digital information
exchange eliminates paperwork.
- Improved speed and efficiency in filling orders (i.e.
reduced cycle and order fulfillment times)
- Quicker transfer of business documents
- Faster customer service
- Fewer errors
- Automatic audit trails
- Expanded customer/supplier base
- Reduction of manual, labour-intensive activities
- Automatic integration with internal business workflow systems
- Extranets help improve customer relations and foster a better
understanding of customer needs. This is achieved through transparent customer
tracking and transaction analysis, personalization, direct feedback from customers, and
pro-active provision of information to customers. Client and supplier services are
improved and become more cost effective, especially as clients and suppliers engage in self-service.
For instance clients can perform a computerised analysis of their needs, can check their
own account information, or can track the status of orders and deliveries without needing
- Extranets can help to lock in partners and customers. Information
gathered on customer needs and behaviours represents a switching barrier as
"customers would need to teach a competitor all that information".
- Extranets reduce inventory and improve inventory turnover rates.
- Extranets reduce procurement costs and time. Extranets reduce search,
selection, and transaction costs. The purchasing process is thus quicker,
more convenient, and cheaper. The use of advanced computerised search engines as part of
the Extranet helps customers to quickly locate the cheapest or most appropriate products.
- Extranets have global reach. Because the Internet is used as the
platform for the Extranet, the Extranet network has global reach.
- Extranets enhance the firm's flexibility. Because the Internet is
an open, public, ubiquitous network it is easy and cheap for new trading partners to
connect to the Extranet network (which has the Internet as its foundation).
- Extranets improve management decisions through up-to-the-minute
management reporting on transactions and web-site activities.
Can LodeStar Consulting Assist Us?
LodeStar's mission is to
provide substantial value to a local and international client base through business
consulting and system development focusing on leveraging the strategic
potential of the Internet, Intranet, and Extranet for competitive advantage. This is
achieved by building 'fourth-generation' Internet applications tied to enterprise
databases and by re-engineering business processes where necessary to exploit
the opportunities offered by technology. LodeStar develops leading-edge Internet applications that link suppliers, customers, and
employees to reduce transaction costs and improve co-ordination and information flows
across the entire corporate and industry value chain.
strives to be the service company of choice for organisations seeking direction and
assistance in initiatives to extract, add, and uncover new sources of value from Internet,
Intranet, and Extranet technologies.
Please view our Company Brief
for Company Directors and Line Management, or our Company Brief for Information Technology Management
for more information about LodeStar's core competencies, technology skill-set, accolades, and clients.
Please view our document entitled Addressing
Internet Security for a simple explanation of Internet security issues and the
technologies available to comprehensively address these issues.
For enquiries about any of LodeStar's services please contact us.
Copyright © 1998 LodeStar Consulting.
All rights reserved.
Revised: April 21, 1998.