Facebook IPO May Have Far-Reaching Consequences

By | May 18, 2012

Most IT admins aren't exactly fans of social giant Facebook, and it's no wonder. The site hogs time that employees could be doing work or anything else useful and not everything that's found on the social media site is exactly business friendly. Now that its initial public offering--the Facebook IPO--is set to hit stock markets within the next few weeks, the way business IT views the sharing site may need to change.

The New Social Order

Facebook has over 900 million users around the world, 483 million of which are active every days and saw a 65% increase in net revenue last year, brining it up to $3.7 billion for 2011, according to an article at ZDNet. What it means is this little college company that could is not just going public but doing so with a bang, and in a format most pundits wouldn't have considered particularly profitable even a few years ago.

But just how does Facebook profit? Part of their revenue comes from games like Farmville and the other 'villes produced by Zynga, but most comes through advertising. Going public means Facebook needs to look for ways to impress shareholders, which in turns means mining user data for information--without advertising to users that their data is being mined. It's a delicate balance; if they delve too deeply, even die-hard fans will pull their accounts. But if they don't get enough information, their profit margins won't increase at a rate quick enough to drive higher stock prices. Tough call, Zuckerberg.

But why should midsize IT pros care about the Facebook IPO? Because it's one more clear example of the changing media paradigm in business. What was once simply social--something admins wanted kept out of offices, like iPhones or tablets--is now not only commonplace but one of the biggest stock market launches in recent memory. In order to stay ahead of employees and their tech needs, IT pros need to have a working grasp of social media, at the very least, or risk becoming redundant.

Oh, and it's not just Facebook.

Posts and Tweets

A recent FT article talks about the move away from traditional advertising methods in the UK, such as the Yellow Pages and print advertising, to sites like Facebook and Twitter. The most popular way to advertise a business is now through Facebook, with over one-third of all UK businesses choosing the social site, and Twitter accounts are quickly catching up. Similarly, a New Scientist article found that across Europe, businesses are excited about using social media tools and believe they will result in increased collaboration an innovation and will help find better employees.

What's interesting about the New Scientist findings is that many countries where expectation is highest for social media outcomes are also experiencing economic slowdowns that may prevent just such gains. Such data is admittedly that of correlation, not causation, but it raises an important point for midsize IT: business leaders aren't always right.

Sure, the Facebook IPO looks great and by all indications should see great success on the stock market, in turn leading to greater use by business as an advertising tool. But what if it doesn't? It's then that managers and CEOs will turn to IT admins and ask what went wrong because Facebook is "technology," and isn't that what these admins are getting paid to make best use of?

IT pros need to be on board with social media in order to do three things: address employee needs, especially with the emerging BYOD trend; ensure that IT security standards are maintained even in a media-rich world; and be prepared to deal with fallout if the use of Twitter, Facebook and other social ventures don't pan out quite as predicted.

This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet. Like us on Facebook. Follow us on Twitter.

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