An extranet can be viewed as part of the company's intranet that is extended to users outside the company. It has also been described as a "new state of mind" in which the Internet is utilised as a way to do business with other companies as well as to sell products to customers.

An extranet application can help companies to exchange large volumes of data using Electronic Data Interchange or to share product catalogs exclusively with wholesalers or those "in the trade". It also allows for collaboration with other companies on joint development efforts as well as developing and sharing training programs with other companies. The extranet provides or accesses services provided by one company to a group of other companies (eg. an online banking application managed by one company on behalf of affiliated banks) and allows one to share news of common interest exclusively with partner companies.