Facebook, Twitter becoming business tools, but CIOs remain wary

Will 2010 be the year Facebook and Twitter take over the business world? The social networks are growing in popularity by the day, both for personal and business use, yet many IT and business executives remain wary of the risks posed by the online services and skeptical about potential benefits.
A number of Web-savvy CIOs are using Twitter to spread their views, engage with colleagues and discuss technology, yet a survey shows that more than half of CIOs in the United States do not allow employees to log onto social networking sites "for any reason" while they're at work. Another survey conducted in the United Kingdom found that nearly three-quarters of the top brands had no official presence on Twitter, despite the service's potential for reaching customers.

Business users are logging onto public social networking sites far more often than social networks sponsored by their employers, but attempts to block such activity simply will not work, says IDC analyst Caroline Dangson, who researches enterprise collaboration and social technologies.

As workforces become more distributed, and even office workers spend time working at home, people will use personal devices for business use and it will be difficult for IT to make blanket proclamations banning tools as widely used as Facebook and Twitter.

"This concept of trying to control or block [social media usage], it is not going to work," Dangson says. "There's going to be a divide, with some companies that shun public social networks and are fearful of using them, and some who embrace it and take the risk."

An IDC survey of 4,710 U.S. workers in October found that 34% use consumer social networks like Facebook and LinkedIn for business purposes, and 9% use microblogging sites like Twitter for business purposes.

Yet many of their employers are trying to stop them from doing so. A Robert Half Technology survey of 1,400 CIOs from U.S. companies with at least 100 employees found that 54% completely prohibit use of social networking sites, such as Facebook, MySpace and Twitter, while at work. Nineteen percent allow social networking sites for business purposes only, while another 16% allow "limited personal use." Just 10% permit use of social networking sites "for any type of personal use."

Some brands have begun using Facebook and Twitter to reach consumers, both to promote themselves and communicate about company failures. Rackspace, for example, has used Twitter extensively to communicate with users after several power outages knocked customer services offline.

But large companies are also avoiding social networking sites in droves. New Media Age, a United Kingdom publication, analyzed the top 500 U.K. brands and found that 74% have no presence at all on Twitter, and just 10% use the site daily.

Dangson believes Facebook is a good setting for businesses to reach consumers, but that there is a greater business opportunity in Twitter, particularly in business-to-business markets, because "everything is public and open."

Twitter "is a fantastic direct marketing tool," she says. "People have opted in to follow you and follow your messages."

Others tout the potential of LinkedIn, another major social network that is business-oriented, and often used to build business relationships and find new jobs.

Users of Facebook and Twitter likely care only about the sites' usefulness, but many financial analysts have wondered how these social networks can create a compelling business model. Out of all of them, LinkedIn may have the greatest financial future, and potential to be acquired by a larger company, says Robert Armstrong, a financial analyst and senior columnist at Dow Jones Investment Banker.

Major Web properties like Google and eBay have been successful because their business model is based upon transactions, he notes. Facebook and Twitter seem to lack that advantage, but LinkedIn is centered around a pretty major type of transaction the hiring of a new employee.

Even if you're not seeking a new job, LinkedIn may be the best place for IT folks looking to exchange information with colleagues. An IDC survey of 204 IT decision-makers found that LinkedIn is the best social network for finding information to support IT purchases. Twitter was ranked second, followed by Facebook, MySpace, and YouTube.

Clearly, use of social networks will continue to increase in 2010. Company executives need to accept this reality–they don't have to take a hands-off, anything-goes approach, but they do need policies governing employee use and a strategy for corporate use, analysts say.

In the next year, CIOs will get more involved, and "we'll see companies writing policies and guidelines," partly to protect workers, Dangson says. Businesses will also increase use of Facebook and Twitter for customer relationship management, she predicts, saying this is "the most compelling business case for public social media sites where customers frequently voice their opinions on matters of everyday life, including the brands in which they interact."

Forrester analyst Augie Ray, who studies social marketing, says companies like Best Buy and Comcast are have done a good job interacting with customers on social sites. This is necessary in part because consumers' attention has been distracted from traditional forms of advertising.

"They're embracing it because they have to," Ray says. "Brands that do get it, understand that they can engage with and have a two-way dialogue with consumers."

Companies need a strategy that takes into account who their audience is and how they prefer to be reached, Ray says. Social media efforts can't be half-baked. Starting a company Facebook page, putting a lot of effort into it up-front and then never updating it again is not effective marketing.

Businesses should also have a plan for how to use social media in times of crisis, because Facebook and Twitter are often the most direct ways of reaching customers. The moment a public relations crisis happens is not the time you want to be asking the question "how will we respond?" Ray says.

Companies looking to improve brand image via social marketing also need to be wary of the legitimate privacy concerns their customers may have. Marketers need to be transparent about what data they collect and how they are using it, Ray says.

"As individuals become more concerned about information they're giving up and how they're using it, that's going to have a big impact on companies," he says. "There's certainly some concern in the marketplace and government entities about use of marketing data. … Marketers just want to be fully transparent, which they haven't always been."

Privacy and security concerns also have businesses wondering how they can use social networking to improve collaboration among internal employees, without exposing themselves to risk. Companies are wary of employees releasing sensitive information like layoffs and acquisitions.

"The risk that comes with social media is how viral it is," Dangson says. "It's the risk of scale that can work both ways."

That's why many businesses will opt to create their own internal social networks, which can be controlled and open only to employees, and perhaps to business partners.

In 2010, you're likely to hear the phrase "Facebook for the enterprise." Salesforce.com recently announced "Chatter," a social-networking application that is designed for internal business use but can also incorporate content from public social networking sites by taking advantage of the Facebook and Twitter APIs. Therefore, employees can receive in the same feed a mix of private content from their bosses and fellow employees, and public content from Facebook and Twitter that is related to their jobs.

Bruce Francis, vice president of corporate strategy for Salesforce, says he doesn't know anyone without a Facebook account. Eventually, he thinks employees will develop extensive corporate profiles as well, and relationships between the public and corporate profiles will develop.

"The question we are asking everyone is 'why is it you know more about strangers on Facebook than you do about your colleagues and employees?'" Francis says. "You know who has gone to the movies, but you don't necessarily know about when one of your key sales reps has just visited a major account."

Even though many CIOs seem wary of social networking in the workplace, Francis is confident that IT executives will ultimately embrace the trend.

"I think that every CIO is looking at what's been going on with the rise of social networks like Twitter and Facebook," Francis says. "Companies are wondering, 'how can I capture that energy, that relevance, that better way of managing all the information that's important to me, how can I capture that for my company?'"

Just as in Facebook, Chatter allows people and applications to send users news in real time, but the security model will allow IT to determine what types of information employees can see. Salesforce believes this granular privacy control will help assuage concerns businesses have about the security of public social networking sites.

There are also private alternatives to Twitter, such as a service called Yammer, which lets companies create streams available only to their own employees. New privacy controls for Facebook, which have been criticized by many users for making too much information public, may ultimately make it easier for people to present different information to business colleagues and personal contacts.

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