Extranets add value to organizations by allowing them to freely collaborate and communicate more effectively with partners, customers and clients; however they may pose certain security threats to an organization if not properly implemented. In the business-to-business market, an extranet can give an organization a significant edge to its competitors by saving them money by reducing overhead costs and streamlining business functions.
An extranet greatly improves flexibility by making applications and information available to customers, clients and partners, allowing all the involved parties to operate with convenience. Since all the organization's associates have been granted direct access to information on the network,and productivity and efficiency is improved because tasks that were initially done manually are automated, making bottle necks a thing of the past and significantly increasing productivity.
If properly implemented, an extranet can help improve an organizations security by creating different access levels, thus easily controlling who can access company data. However, extranets may also leave company systems vulnerable to security breaches since they give outsiders access to internal databases and systems. Another major disadvantage of extranets is that they are costly to implement. Organizations will have to bear the cost software, hardware, manpower and other associated costs such as training employees and external affiliates to use the extranet. Despite the fact initial startup costs are high, an organization can experience cost reductions in expense areas in the long run.