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What is Extranet? Definition, Implementation, Features

Last Updated : 26 Sep, 2021
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Internet is a network of networks connecting millions of people throughout the world. While the internet is a public network available for everyone and anyone, there are also private networks like intranet and extranet which are much more secure and limited. Intranet is available only within an organization while extranet is available for both internal and external members. 

What is Extranet?

An extranet is an organization’s private network and its available only for selected users. It’s a way to connect to third parties like vendors, customers, and partners in a secure and controlled way. The users typically have a login mechanism such as username and password to access the network. Extranet in simple terms provides a secure network for an organization to share information with relevant people outside the organization. It is part of an organization’s intranet divided via a firewall. 


  1. An e-commerce site exchanges information with its retailers, a supplier’s through an extranet network.
  2. Multinational organizations handle their project information, clients and communicate with another organization over an extranet network.
  3. University provides an e-learning platform for their students over the extranet network.

Implementation of extranet

An extranet is implemented as a Virtual private network (VPN) that provides secure communication between the organizations. VPN creates a secure connection over a public network such as the internet. The VPN is formed on Internet Protocol security (IPsec) which provides an extra layer on the already present TCP/IP i.e. Transmission Control Protocol/ Internet Protocol.  

The IPsec connection (tunneling) provides:

  • Privacy: To maintain confidentiality between the sources.
  • Integrity: To protect and share the data securely between the resources.
  • Authentication: To allow only authorized users on the network.

IPsec Protocols: It makes use of two protocols Authentication Header (AH) or Encapsulating Security Payload (ESP). One or both of them could be used to protect the IP packet. Which protocol to used depends on the security needs of the network.

  • Authentication Header (AH): It is used only for authentication and does not provide encryption. Data origin authentication, integrity, and anti-replay services are provided.
  • Encapsulating Security Payload (ESP): It provides authentication, data integrity, anti-replay, and encryption. Both authentication and encryption services can be used or only one of them could be used while using these protocols.

Features of extranet

Following are the features of the extranet:

  1. Data security: Sharing confidential data is of utmost priority and the extranet provides a safe environment for data sharing between the organizations. This decreases the chance of loss of confidential data and increases productivity.
  2. Faster communication: Extranet allows to connect multiple organizations and escalate the communication between them.
  3. Flexibility: Extranet provides a flexible and scalable environment to work on for everyone involved, which also increases the productivity of the organization.
  4. Cost: It may decrease the cost of paperwork and travel to some extent.
  5. Authentication: It provides authentication mechanisms like username and password. Therefore, only authorized users can access the network.


  • Security: Extranet is formed as a Virtual private network (VPN) as it assures a protected and secure communication across the network. The information shared between the organizations could be highly confidential and an extra level of security makes sure that none of it is lost or accessed by anyone else other than the parties involved.
  • Data: Sometimes there could be a large amount of data to be transferred between organizations. An extranet allows a large amount of data transfer across the network in a secure fashion.
  • Network Sharing: One or multiple organizations could connect via the extranet. For example, three organizations collaboratively working on the same project could make use of an extranet or an e-commerce site sharing its network with various small businesses.
  • Communication: It is a medium for internal and external members to connect or organizations to connect to third parties. Instead of allowing third parties in the company’s intranet network and giving access to the internal resources, the extranet provides a lot more flexibility and security for everyone to communicate.


  • Complex Security: Extranet needs an additional firewall if hosted on its own server which expands workload and complex security mechanism.
  • Hosting: Hosting could be an issue as it requires a high bandwidth internet connection. A High bandwidth internet connection may not be possible for everyone, which would lead to inefficiency in work.
  • Expensive: It is costly compared to intranet due to the extra layer of security and hosting charges.
  • limited: It can only be accessed through the internet. So, the work would came to halt or slow down if the internet goes down.

Difference between internet, intranet, and extranet

            Points      Internet Intranet Extranet
Define:                           It is a network of networks connecting millions of people and devices across the world.   It is an organization’s private network only available for authorized internal members.   It is an organization’s private network but is available for both authorized internal and external members.
Access:  Public  Private  Private 
Security:          Low High High
Users: Everyone Employees or authorized people within the organization.  internal and third parties like partners, vendors, customers. 
Cost: Low compared to intranet and extranet.  Low compared to extranet and high compared to internet.  High compared to both internet and extranet. 

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