We are throwing around the idea of introducing social media as an internal communication method for our organization via two options – 1) an external social media site (facebook or twitter) or 2) via an upgraded intranet software.  I’m sure companies have done it both ways and there are pros and cons for each.  I would love to get a discussion going here to gain some new perspectives. 

Hi--The first things that come to mind to me are that 1) you'd have better control of things if it was on your own intranet (i.e., you could moderate the discussions and communications and remove anything that was inappropriate, etc.) and 2) promoting the use of Facebook or Twitter for work-related reasons could cause employees who may originally go on these sites to communicate regarding work, but then may stray and start conducting more personal, non-work related activities while on these sites.

Are you trying to build a communication method in which you can notify employees of company changes, benefits enrollment, company function announcements....?  If you already have a company intranet site that the employees have access to, why would you not just build this into your current intranet site?  Or are you trying to build a communication method in which employees can socialize?  If so, I would caution you on this because it has the potential to open a can of worms that can come back to haunt you.  I suggest analyzing potential liability factors on this and definitely seek legal counsel advice.