An extranet is a private network that uses Internet protocols, network connectivity, and possibly the public telecommunication system to securely share part of an organization's information or operations with suppliers, vendors, partners, customers or other businesses. An extranet can be viewed as part of a company's Intranet that is extended to users outside the company (e.g.: normally over the Internet). It has also been described as a "state of mind" in which the Internet is perceived as a way to do business with a preapproved set of other companies business-to-business (B2B), in isolation from all other Internet users. In contrast, business-to-consumer (B2C) involves known server(s) of one or more companies, communicating with previously unknown consumer users.
Briefly, an extranet can be understood as a private intranet mapped onto the Internet or some other transmission system not accessible to the general public, but is managed by more than one company's administrator(s). For example, military networks of different security levels may map onto a common military radio transmission system that never connects to the Internet. Any private network mapped onto a public one is a virtual private network (VPN). In contrast, an intranet is a VPN under the control of a single company's administrator(s).
An argument has been made that "extranet" is just a buzzword for describing what institutions have been doing for decades, that is, interconnecting to each other to create private networks for sharing information. One of the differences that characterized an extranet, however, is that its interconnections are over a shared network rather than through dedicated physical lines. With respect to Internet Protocol networks, RFC 2547 states "If all the sites in a VPN are owned by the same enterprise, the VPN is a corporate intranet. If the various sites in a VPN are owned by different enterprises, the VPN is an extranet. A site can be in more than one VPN; e.g., in an intranet and several extranets. We regard both intranets and extranets as VPNs. In general, when we use the term VPN we will not be distinguishing between intranets and extranets. Even if this argument is valid, the term "extranet" is still applied and can be used to eliminate the use of the above description."
Another very common use of the term "extranet" is to designate the "private part" of a website, where "registered users" can navigate, enabled by authentication mechanisms on a "login page".

Security
During the late 1990s and early 2000s, several industries started to use the term "extranet" to describe central repositories of shared data made accessible via the web only to authorized members of particular work groups.
For example, in the construction industry, project teams could login to and access a 'project extranet' to share drawings and documents, make comments, issue requests for information, etc. In 2003 in the United Kingdom, several of the leading vendors formed the Network of Construction Collaboration Technology Providers, or NCCTP, to promote the technologies and to establish data exchange standards between the different systems. The same type of construction-focused technologies have also been developed in the United States, Australia, Scandinavia, Germany and Belgium, among others. Some applications are offered on a Software as a Service (SaaS) basis by vendors functioning as Application service providers (ASPs).
Specially secured extranets are used to provide virtual data room services to companies in several sectors (including law and accountancy).
There are a variety of commercial extranet applications, some of which are for pure file management, and others which include broader collaboration and project management tools. Also exist a variety of Open Source extranet applications and modules, which can be integrated into other online collaborative applications such as Content Management Systems.

Industry uses

Extranets can be expensive to implement and maintain within an organization (e.g.: hardware, software, employee training costs) — if hosted internally instead of via an ASP.
Security of extranets can be a big concern when dealing with valuable information. System access needs to be carefully controlled to avoid sensitive information falling into the wrong hands.
Extranets can reduce personal contact (face-to-face meetings) with customers and business partners. This could cause a lack of connections made between people and a company, which hurts the business when it comes to loyalty of its business partners and customers.