Extranets: Forgotten, But Hardly Gone

Sometimes, the 'next big thing' disappears from the spotlight only to quietly emerge as a widely adopted fact of life. That describes the rise of extranets in the enterprise since the mid-'90s.
Posted October 30, 2002

David Haskin

Sometimes, the "next big thing" disappears from the spotlight only to quietly emerge as a widely adopted fact of life. That describes the rise of extranets in the enterprise since the mid-'90s.

"There are a lot of extranets in place," said Ray Valdes, research director of Gartner, Inc. "They (enterprises) are chugging away, building them slowly."

Extranets provide behind-the-firewall access to customers, remote employees, contractors, suppliers and others. Since the advent of the World Wide Web, many analysts and industry observers have touted extranets as the next big thing. The only type of extranet that has not survived the hype, according to Valdes, is business-to-business (B2B) portals.

"A lot of people were burned by B2B portals," Valdes said. "They got the idea that they could revolutionize their marketplace and they spent a lot of money. Then, nobody came."

Beyond that failure, however, enterprises have deployed extranets to meet a wide range of needs, Valdes said. In particular, he's said there's been a surge in the last year of what he calls "internally facing" extranets, which make data available to far-flung employees. In addition, Valdes noted ongoing deployment of extranets for communicating with customers.

For an example of a successful deployment of that type of extranet, you need look no further than your wallet.

MasterCard's Extranet: Priceless

To users, credit cards are simple things. You hand your card to somebody and, a minute later, you sign a slip and you are on your way.

To MasterCard International and its member institutions, however, credit cards are a complex business, made simpler and more profitable by MasterCard Online, the company's massive extranet. The extranet is not aimed at cardholders, but rather is designed for the more than 5,400 banks and other financial institutions that access MasterCard Online.

MasterCard Online gives employees of those member institutions access to 50 products and services ranging from manuals and publications to security information, according to Ron Eastman, director of MasterCard Online. MasterCard Online was started in 1995, but Eastman said its greatest growth has been in the last two years.

Now, he added, the extranet "has become the natural way for us to do business."

It's About Content

Valdes said that content is the key to extranets. Eastman agreed that was true with MasterCard Online.

"Typically, members are looking for operational information like manuals or operations bulletins or research services to find out about payments or chargebacks," said Thom Wham, vice president of member services. "Without the extranet, it would be a phone call or fax machine interchange -- at best e-mail -- and the turnaround would be hours or days."

Besides general information, Wham noted that a lot of confidential data also is available via the extranet.

"We're dealing with cardholder account numbers, transaction details and so on," he said. He added that an entirely different system handles real-time transactions between cardholders and merchants and that the company has a Web site for the public.

The content mix of MasterCard Online is working, Wham and Eastman said. The site has 25,000 individual users and logs about 6000 unique visits a week. Overall, member institutions can access about 50 terabytes of information, they said.

Nuts and Bolts

Wham said MasterCard started building its platform in 1995, but the underlying technology has come a long way since then.

"In the early days, we were totally client-server," he said. "Since then, we've moved to a purely Internet environment. We now spend very little on the client-server side other than to keep the doors open."

The transition to a fully Internet environment was slow because banks, particularly those outside of North America and Europe, was hesitant to add Internet access. "The banking industry isn't always on the cutting edge of technology in the global environment," Wham said. "That made it a challenge."

A team of about a dozen programmers and analysts is devoted solely to building and maintaining MasterCard Online. In addition, departments that offer services on the extranet have employees devoted to the extranet.

"When you pile us all together, it's a pretty big family," Wham said.

Security is always an issue with extranets and Wham and Eastman said they are comfortable with their solution. They said MasterCard Online uses two-way SSL. Users enter their names and personal identification numbers and, for particularly secure parts of the extranet, a secure number that changes regularly.


While Eastman and Wham wouldn't share specifics about MasterCard Online's return on investment, Wham did acknowledge that "it's significant." He cited one of what he said was many examples.

"We used to send out member billing reports via paper, fax or even microfiche," Wham said. "We were spending half a million dollars a year distributing these reports plus about 10 percent of all the calls that our support center received were related to accessing or interpreting those reports."

Now, members can download the report, drop it into their accounting package and easily access the information locally.

"I've had customers say they wanted to hug me -- they say they're saving two to four hours a week in their accounting department," said Wham. "Plus, it has reduced our support costs and postage and distribution. It can be expensive sending an inch-thick report to (a member institution in) Kuala Lumpur."

He and Eastman stressed that there are similar results for most of the other 49 products available via MasterCard Online. Besides improving the company's bottom line, MasterCard Online also has improved how MasterCard's customers feel about the company, which is important in a competitive business. "We track loyalty pretty closely and, over the past four years, our results have jumped up dramatically," Wham said.

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