While companies are interested in the business benefits of social networks such as Facebook, they also worry about their possible downsides, as I blogged back in January.

An alternative that makes sense to a growing number of companies, including Wachovia, is creating internal social networks for their employees. Among the features planned for Wachovia's network, according to a CIO Insight article, are employee-authored blogs, wikis and an internal encyclopedia (Wachopedia?). Unlike turning workers loose on Facebook, an internal network makes it less likely they will expose sensitive company information to outsiders or spend hours taking movie quizzes and "poking" colleagues.

But confining social networking to an internal site won't miraculously make all of the potential pitfalls go away. Internal networks face five key challenges, according to a Gartner report cited in an internetnews.com article. They are: ensuring they deliver business value; overcoming cultural barriers, especially traditional command-and-control hierarchies; ensuring employee privacy; governing participants' behavior; and ensuring that participants balance professional and social time.

The issues of privacy and behavior are addressed in more detail in this Computerworld article. The author, a security consultant, poses some interesting hypothetical questions. Among them: Is it enough, from a legal perspective, to remove employee-posted content that harms another employee? If sensitive information about a European employee is posted in the U.S., does this violate European Union privacy regulations?

After concluding that an internal network's potential benefits outweigh the possible risks, he offers a concise list of advice based on the seven Safe Harbor privacy principles. In order to satisfy the Choice principle, for instance, he suggests employing a tool that allows users to submit complaints about posts or even delete them.

CIO.com blogger Esther Schindler touches upon the issue of cultural barriers. While folks like software developers don't need to be coaxed into participating in social networks, she writes, upper-level executives are often uncomfortable with the idea. Some execs may worry that their authority will unduly influence other participants. Schindler writes:

Many business executives and IT managers are familiar with the phenomenon whereby their just-in-passing thought ("Maybe the product should have a whizbang feature?") percolates to the top of the software requirements priority list -- much to their astonishment. That'll be true in any venue, whether the conference room or the online community. It'll even be true if the boss isn't participating, but if the enterprise community thinks she might.

Other execs may not like having their authority taken away, adds Schindler:

Will your "bright idea" be perceived to be as bright if you sign in as TearJerkerFan instead of Grand Poo-bah? Would you see that as a Good Thing or an ego-bruise?

Such authority issues could get even messier in professional peer networks not confined to a single company. IBM's newly launched SOA social network is an interesting example of an entity that is far broader than an internal network yet more purposeful than a Facebook. Participants in 120 countries interact using IBM's Lotus Connections, which also gives them the ability to integrate with other networks like Facebook and conduct virtual meetings in Second Life, according to a vnunet.com article.

Sandy Carter, IBM channels and marketing VP for WebSphere and SOA strategy, says the network's goals include sharing best practices, accelerating SOA adoption and bringing together the business, IT and academic communities.