Owens & Minor Inc. gave its customers access to data that helped them manage their purchasing budgets, monitor order-fulfillment rates for service-level compliance, and check their eligibility for volume rebates. The service was a hit. Customers paid only a nominal fee to access the 150-Gbyte data warehouse, dubbed Wisdom, via an extranet. And it was a boon to Owens & Minor, helping to bring in more than $60 million worth of new business in the first year.

The 120-year-old Richmond, Va., medical-supply distributor is an exemplar for how business-intelligence extranets can give companies a new way to serve their best customers and, in some cases, create revenue streams or even lines of business, says independent analyst Phillip Russom in Waltham, Mass.

Business-intelligence extranets use query, reporting, and analysis software running on a Web server outside the host company's firewall. Subscribers to an extranet's services access the business-intelligence tools through a Web interface, which retrieves the data or analysis results from a database inside the firewall.

Many, if not most, extranets offer information that's a by-product of a company's main business. The data is provided as an additional service, either free or for a fee. Though such services may bring in new revenue, to most businesses their value lies in attracting and keeping customers.

For companies whose business is data, extranets are a more-efficient way of delivering products to clients. NetRatings Inc. uses a business-intelligence extranet to give subscribers quick access to its 5-terabyte data warehouse of information on Internet use collected from 200,000 Web surfers. Through the NetRatings site, advertising agencies, media companies, packaged-goods vendors, and Internet companies such as Yahoo Inc. and America Online view and analyze Web-site traffic data.

"Our clients are looking for pretty basic data access," says Sean Kaldor, analytics VP of the Milpitas, Calif., company. NetRatings uses DataBeacon Inc.'s reporting and data-publishing software in its extranet, which presents data in a spreadsheet format.

Owens & Minor may use Wisdom II to create benchmarks customers can use to measure the performance of their purchasing operations, Stoller says

At the other end of the spectrum, business-intelligence extranets are taking companies such as Owens & Minor in new directions. The distributor has created Wisdom II, a data warehouse that collects data from hospital purchasing systems for everything from bedpans to capital equipment. The data is organized and presented to customers through an extranet for analysis. "It's a complete picture of all the money they're spending on purchasing activities," information management director Don Stoller says.

Unlike the nominal fees it charged for the first-generation Wisdom, Owens & Minor is charging each customer a one-time fee starting at $75,000 for the installation of the Wisdom II system, plus an 18% annual maintenance charge. Nine health-care institutions have signed up so far.

Wisdom II may be expanded to include hospital accounts-payable and budget data, and Stoller says he might use Wisdom II to create purchasing benchmarks that customers can use to measure the performance of their purchasing operations. Owens & Minor is also in talks with several online health-care marketplaces to host their business-intelligence extranets. "It's opened up a lot of new areas for us," Stoller says.

One measure of the adoption rate of business-intelligence extranets comes from Business Objects SA, which has been aggressively targeting its WebIntelligence software for extranet use. In the quarter ended March 31, the vendor's license and service revenue from extranet products reached $23.5 million, a 39% annual increase.

Such extranets are built almost entirely for business-to-business use. That's because business users understand far better than consumers how to manipulate data and select parameters for reports, Russom says.

But they can be very economical for B-to-B applications. Carl Warren & Co., which provides claims and litigation-management services to health-care, high-tech, retail, and transportation companies, inaugurated its extranet in March. Previously, the Phoenix company delivered the information in paper reports. "It's going to be a tremendous cost savings for us," chief technology architect Paul Park says. "Some of our clients receive pallets of reports."

Another insurance company, Maritime Life, is using Crystal Decision's Crystal Enterprise reporting software as the foundation of its InfoCentre extranet. InfoCentre provides access to policy-holder data for the banks, brokerages, and independent insurance agents that sell the Halifax, Nova Scotia, company's life-insurance and other financial products. Distribution partners use the extranet to look up policy values, expiration dates, or the status of pending claims and applications. They also can obtain Maritime product information such as policy rates and download customer statements and product literature.

InfoCentre has reduced Maritime's costs, because it's easier to maintain than the cumbersome client-server system it replaced in December and has cut the number of calls Maritime service agents have to answer. But all that's secondary, says Joe Malek, retail systems VP. "The big driver is that it puts information and services at the point of need," he says. "It shortens the servicing life cycle, so we have more satisfied distributors and customers."

Federal Express Corp. also is assembling a business-intelligence extranet that will let shipping companies providing FedEx service in countries outside the United States gain access to reports about revenue, shipping volumes, transit-time analysis, and other performance data. Queries such as "How many packages arrived in Vietnam after 5 p.m.?" will be possible.

The International Strategic Information System, which is expected to go live by Labor Day, will use Information Builders Inc.'s WebFocus software to access data loaded into an Oracle data warehouse. "This will give us a common frame of reference for decision making, contract compliance, and communication," says Joe Namie, global service program administrator at the Memphis, Tenn., company.

Extranets can provide data access and analysis services that aren't possible any other way. MasterCard International Inc. has a 47-terabyte Oracle data warehouse of credit-card transaction data valuable to the 28,000 banks and other financial-services companies that issue MasterCard credit cards. Using apps built on Business Objects' WebIntelligence software, banks can analyze operational data to see how quickly they're authorizing charges and how much fraud they're experiencing.

"Before this, it was difficult for them to get any kind of feedback on their operational performance," says Andrew Clyne, MasterCard's VP of information delivery architecture. Card issuers view not only their own operational numbers but also aggregated metrics to see how their performance stacks up against other financial institutions.

Online travel-service providers have discovered that business travel managers are willing to pay for data and business-intelligence services that let them control their travel expenses. In the past, client companies relied on written reports from travel agencies or data supplied on tape by credit-card companies for such information.

GetThere LP, a Menlo Park, Calif., subsidiary of Sabre Holdings Co., has offered its Direct Observer business-intelligence extranet to its business customers since 1998. GetThere's main business is providing a hosted travel-booking application that employees of GetThere's customers use to make reservations that comply with clients' travel guidelines. Direct Observer captures expense data when bookings are made and loads the information on a daily basis into a Web version of Cognos Inc.'s PowerPlay analysis software.

For a fee, travel managers can use Direct Observer to access the data and analyze travel spending by vendor (airline, hotel, and car-rental agency), employee, trip, and destination, says Jay GaBany, GetThere's product marketing director. The system compiles three years of data that helps customers spot spending trends and develop forecasts. With the daily updates, a number of companies have been able to stop some employees from traveling when managers saw that more people than necessary were planning to travel to one event.

TRX Inc., a travel-processing and outsourcing firm, goes even further by collecting travel and expense data from some 400 sources, including airlines, car-rental companies, and credit-card issuers, on behalf of travel managers at multinational companies. The information is consolidated in an Oracle data warehouse, where query and reporting software from Actuate Corp. is used to format it and make it available to clients through a Web browser, says Gil Siler, development VP at TRX's data-services operation in Atlanta. If clients choose, they can select the Actuate report they want from a menu and drill deeper into the details. Travel managers use the intelligence to keep spending under control or negotiate volume deals with travel-service providers.

Business-intelligence extranets are also prevalent among energy companies, which use them to let commercial customers access power-consumption data, and among brokerages, where institutional investors analyze their portfolios' performance, analyst Russom says.

Generating new business is a key driver behind these business-intelligence initiatives. Direct Observer has attracted at least a dozen new customers to GetThere, with $50 million to $100 million in annual bookings, GaBany says.

The revenue generated by the MasterCard Online extranet data service is welcome, but the main goal is to build loyalty with issuing banks by making them more competitive against banks that issue Visa credit cards, VP Clyne says. "It's gotten rave customer reviews. Customer satisfaction and sales have gone up," he says.

Access Business Group, an Ada, Mich., division of Amway Corp., provides outsourced manufacturing, warehousing, and shipping services and uses its business-intelligence extranet as a market differentiator and selling tool. Offering access to production and distribution data attracts customers that might otherwise be reluctant to turn such operations over to another company, says Craig Abbott, business-intelligence supervisor. Access Business Group runs its extranet on Siebel Systems Inc.'s Siebel Analytics. Prospective customers "were impressed they wouldn't have to lose that visibility into their business," he says.

Some see customer satisfaction as the only purpose of a business-intelligence extranet. "The way we look at it, our customers own the data, and they expect to have access to it," says Ron Berger, managing director of IS at Emery Forwarding, a Redwood City, Calif., provider of transportation services to heavy cargo shippers.

Emery uses Brio Software Inc.'s reporting software to give customers free access to data, including rates and freight status, on all shipments in the previous 48 hours. In a few weeks, Emery plans to add historical shipping data to the mix for spending-trend analysis.

Business-intelligence extranets remain relatively narrow in scope, Giga Information Group analyst Keith Gile says. One company controls the data and provides access to a selected number of customers and partners for reporting and minimal analysis. "It's still limited, still primitive," he says. Data integration behind the firewall is a stumbling block to wider use of such extranets because software vendors all have proprietary approaches to developing, storing, and delivering analytic functionality, Gile says. The XML standard could help foster a common format, but most business-intelligence tool suppliers have little or no XML support.

Though business-intelligence extranets might seem like a natural fit for partners in a supply chain, the approach has been slow to catch on because of the data-ownership issue. Gile says all partners would have to agree to give one company control of the supply chain's data. "I haven't seen many companies running to give up control of their data," he says.

Also unclear is just where Web services will fit into the picture. Business Objects recently offered a software development kit for building Web-services applications. And reports built with Crystal Decisions tools can be exposed as Web services because of the company's support of Microsoft's Visual Studio .Net development tool. But more tool vendors must support Web-services standards before Web services can become a major factor in business-intelligence extranets.

Security also remains a concern. Operators of these extranets are taking precautions to ensure that only authorized users see sensitive data. Because Cognos PowerPlay wasn't designed for extranet use, GetThere developed user-authentication features that it wrapped around the Cognos software. Says GaBany, "The worst thing that could happen is for one customer to see another customer's data."

While many of these companies are first-generation adopters of this new type of collaboration and data sharing, they're already reaping benefits such as customer loyalty and increased revenue.

Photo of Stoller by D.A. Peterson