hosted vs on-prem

Hosted vs On-premise Phone System? What You Need to Know

Brett Harney Collaboration, Hosted Phone, Unified Communications, VoIP

hosted vs on-prem phone systemRegardless of the industry, you’re in, your company’s phone system is a lifeline of your business. Think about it: you invest resources in research and development, product packaging, customer service, sales and marketing, and many other business areas. You may spend money to build a mobile-friendly website, write blogs, and run email campaigns. All of these activities are designed to get the phone to ring. But what happens if a current customer or prospect calls the organization, and their call gets dropped? Or what if clients can’t reach their account representatives quickly? What if employees can’t collaborate to solve customer problems? What impacts do these issues have on the company’s brand or bottom line?

The high cost of a low-quality phone system

Unfortunately, the costs are high.  Not only can it lead to higher maintenance and infrastructure costs, but it can also hurt a company’s reputation. Your employees are also constrained because they have outdated calling features, fragmented applications and tools, and limited mobility capabilities. In short, the total impact of not having a robust communications solution can likely drag any organization down.

Where do you go from here?

So what’s the alternative? For many, the answer is upgrading out-of-date phones, which are generally traditional Private Branch Exchange (PBX) phone systems. The trick is identifying what an upgrade looks like, and what features, functionality, and benefits your business can expect by making the switch. This is particularly important if you’re signing a contract to extend services. As an example, one of our customers recently got into a difficult situation signing a three-year agreement with a POTs reseller. Later they wanted to ‘convert’ those lines and locations into a hosted system, and they didn’t realize this wasn’t an option! Knowing what to expect with your phone system can save you big-time money and headaches. Let’s dive into PBX systems, and hosted vs. on-premise VoIP options, so you’ll be better prepared. 

  • On-prem PBX phone systems – Most people assume PBX phone systems are traditional landline phone systems, and businesses have to have all of the equipment on site. But that’s not necessarily true. PBX phone systems allow companies to communicate internally (inside the office) and externally (with the outside world) using different communication channels, including analog, Voice-over IP, or ISDN (Integrated Services Digital Network). In an on-prem scenario, companies keep a server on-site, or at a data center to run the phone system, and they are responsible for upgrades or expansion of the system. Some companies may also rely on managed IT providers to handle their on-prem PBX system.
  • Hosted PBX system – Hosted phone systems, on the other hand, are virtual phone systems that run over a broadband connection. The only hardware required for the business is the physical phones and a network PoE (Power over Ethernet) switch. The hosted PBX provider is responsible for housing the IP-PBX equipment and managing the phone system. The hosting PBX provider charges a monthly fee that includes maintenance, specific features, such as minutes, conference calling, call routing, and more.
  • On-premise VoIP – Unlike PBX, VoIP technology converts voice calls into a digital signal, allowing companies to make calls directly from a computer over the internet. There are generally two categories of VoIP phone services: on-prem VoIP and hosted VoIP. On-premises VoIP runs at the company’s office, and it’s typically managed and maintained by internal personnel. An on-premise system generally involves higher upfront costs because it includes buying the phones, server, other hardware, and licensing.
  • Hosted VoIP – Hosted VoIP communication tools leave all of the expensive and complicated network equipment and installation to the service provider. A hosted phone system has lower upfront costs, including purchasing the actual phones and ‘softphones,’ which can turn a laptop, tablet, or smartphone into an office phone. Businesses pay a monthly subscription fee to account for the cost of labor for the configuration, maintenance, and features. Although it’s an ongoing expense, hosted voice VoIP is more manageable, flexible, and cost-effective, compared to other options. 

What are the biggest benefits of hosted VoIP?

Depending on the organization’s size and specific communication needs, companies can potentially save big and reduce management headaches by switching to hosted-VoIP. Here’s a quick rundown of the top 5 advantages of hosted VoIP.

  • Business continuity – What happens if there’s a loss of internet or a disaster? Because service providers host the phone system at an off-site facility, all communication features remain available.
  • Up and running fast with minimal equipment – While vendor support can vary, starting VoIP services requires a minimum of internal IT skills. Hosted VoIP providers or technology partners handle servers, regular maintenance, upgrades of a hosted voice communications solution.
  • Useful features – Upgraded features make it easy for employees – whether in the office or working remotely – to stay in touch with co-workers, partners, and customers. Features like call forwarding, follow me, caller ID, DID calling, VM to email, and auto-attendant, are just a few of the reasons why hosted VoIP solutions make sense.
  • Instant mobile capabilities – For companies supporting a remote workforce, hosted VoIP can eliminate the confusion of lost or missed voicemails or juggling an office phone number and mobile phone number. Teams can enable phone calls to ring simultaneously to an office phone and mobile phone, allow for mobile call transferring, or activate cellular failover if needed.
  • App integration – Hosted VoIP services offer integration with other business applications such as Google Apps, project management software, or CRM systems. Integrations can streamline manual processes and help you better serve customers with direct dialing, mobility, chat features, voicemail to email, and more. 

Evaluating your options 

Adopting any new technology can sometimes be a scary proposition. However, the risk of not upgrading could also hold your company back from seizing new opportunities. If you have questions and your situation or want to learn more about the pros and cons of hosted VoIP, get in touch! At CTG, we love helping our customers experience the full benefits of cloud communications – cost savings, reliability, productivity, and better customer service. Don’t wait!