May - 2013 - issue > In My Opinion

Social Media is a Boon for Businesses but Only if they Manage the Risks

Dave Maquera
Sunday, May 5, 2013
Dave Maquera
Based in San Diego, EdgeWave (NASDAQ:EWVE) develops and markets on demand, on premises, and hybrid Secure Content Management (SCM) solutions to the mid-enterprise and service provider markets.

The growth of social media has been incredibly fast – more than anyone could have predicted and certainly faster than our ability to immediately grasp its power or its risks. Statistics showing that 80 percent of companies have Facebook profiles and 74 percent have Twitter accounts signify the pervasive reach of social media as organizations scramble to cultivate its marketing potential. However, stories about Twitter breaches by former employees, or workers hacking into the company Facebook page and posting damaging or inappropriate content, demonstrate that organizations have much work to do if they are going to harness the benefits of social media and avoid the risks.

The rewards of using social media to further a company’s goals are very real. Many businesses are finding that social networking engagement can offer returns that can be realized quite quickly. In a study, where McKinsey Global Research surveyed 3,000 business executives, 63 percent of them reported their companies had significant business gains from using social media. These gains included increased revenue, more effective marketing and lower total cost of ownership. McKinsey hypothesized that companies could be leaving as much as $1.3 trillion on the table by not actively participating in social networking.

The less obvious cost of lost opportunities from failing to leverage social media tools is also important. In addition to the competitive disadvantages, our next generation of workers has been raised immersed in social media from a young age, predominantly accessed via the mobile devices they are never without - iPhones, iPads, and all manner of Android devices. This is how they communicate with each other and we should not expect them to change just because they enter the workforce. Social media is part of their lives and they have learned how to be productive using it. In an interesting survey done of high school seniors, it was found that 69 percent of them use social networking to talk to their peers about homework. This shows they are learning to use social media to be productive in school – why would not they be able to do the same in the workplace? Attracting talented employees and getting the most out of them will demand that companies find a way to make the workplace more amenable to the way younger workers communicate and collaborate - and that means giving them access to social media in the workplace.

Social media engagement and employee access comes with responsibilities. However, organizations need to understand that social media engagement and employee access comes with responsibilities that reach far beyond their corporate-sanctioned content and communications. As regulatory agencies continue to assess corporate involvement in social media, more rules and guidelines are on the horizon. Just this year, the Federal Financial Institutions Examination Council (FFIEC), an interagency body empowered by virtually every financial regulatory agency in the US, issued new guidelines for social media use. Late last year, in response to growing student use of social media, the FCC added new rules to CIPA (Child Internet Protection Act), mandating that schools take a more active role in preparing students to be “good digital citizens”. And this is only the beginning. The SEC and FINRA are also creating new rules that address social media use, with other regulatory agencies not far behind. When we look at what’s happening in the UK and Australia, where efforts to regulate social media are moving even faster, you find that Facebook content is being closely scrutinized, with regulators examining posts for infractions such as misleading statements, or inappropriate material aimed at underage targets. It is not difficult to predict where US regulatory requirements might be headed, particularly considering that the FCC has already weighed-in on behalf of CIPA. And because social media has long tentacles that connect your corporate profile with thousands of other profiles and their content – it is not difficult to imagine the immense scope of vulnerabilities you may face now and in the future. Beyond violating regulations and the ensuing fines, unmanaged social media content leaves you open to legal liability, alienated customers, and serious brand damage.

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