Does Your VoIP System Belong on a Cloud?

With innovation moving faster than the speed of sound, it’s difficult for small to mid-sized companies to keep up without a guide. IP telephony has now all but replaced digital phone systems as the standard for most home and office use, and now companies must decide between the investment in time and maintenance of an on-premises VoIP system and the up-front savings of contracting a hosted service like Cloud PBX for business.


Though these terms are often both used to describe one type of phone delivery system, they’re not interchangeable. They’re Internet-based communications systems, but IP telephone is the umbrella term for a range of communication services that use broadband connectivity, and Voice-over IP is a means of transmission under that service. IP PBX stands for Internet Protocol Private Branch Exchange, and refers to using broadband technology in conjunction with Internet Protocols to form a central switching station that connects all of a company’s phone lines to one external broadband connection. That allows a business to have multiple phones, each with a separate phone number, without having to pay for separate extensions or install a separate line for each phone.

When this technology was first introduced, companies had to purchase or lease all of the equipment and pay a monthly fee for the service. Adding a virtual, cloud-based service allows IP telecommunications to come into your office without the necessity owning and maintaining the hardware to run it. To assist you, the business owner, in making an informed decision regarding an upgrade of your telecommunications capabilities, here’s run-down of the three types of IP networking systems and their benefits.


Each type of service has different requirements regarding the investment in time, money and equipment, and there are advantages and disadvantages to each.
Hosted Service

This is a virtual service where you’ll either rent or purchase the phones, and the service provider retains ownership, houses and maintains all of the hardware and infrastructure necessary to run it at their own location. All you’ll have to worry about is paying a service fee and monthly subscription fee. If you’re on a tight budget, this is the way to go.

Pros: You won’t have to invest in equipment or worry about maintenance. Your biggest expense up front will be the cost of leasing the IP phones and paying for the service, unless you find a pay-as-you-go plan.

Cons: You’re stuck with the software and service the company provides, with no customization, and you may end up paying more over the life of your contract.

On-Premises Service

On-premises service is almost the opposite of hosted service. Your company will own and keep all of the hardware and necessary infrastructure at your location, and you’re responsible for all maintenance, and upgrades. Since you’ll only pay a monthly subscription fee for the service after the installation, you’ll pay a lot less each month. If it’s important for your company to own and control their equipment, this is a good investment.

Pros: Your company is free to completely customize the system and capabilities, and your overall cost through the life of the contract is less than with other plans.

Cons: With ownership comes an added – sometimes prohibitive – investment of money up-front, and time spent maintaining the equipment yourself.

Managed Service

Choosing a managed system will give you a combination of the best of both worlds. Your company owns the equipment, but the vendor does all of the installation, maintenance and system administration. You’ll pay a little more each month, but have more control over operations.

Pros: Depending on whether you purchase or lease your equipment, you may have more flexibility when it comes to customization, but you won’t have to strain your human resources with maintenance.

Cons: The initial cost is lower than with an on-premises system, but it’s more than with a hosted system, and you may experience disruptions if resources are spread too thin.

Choosing the best type of service for your business needs depends on the your current communications needs, your budget and your expansion plans for the future. A startup or home-based business might do better with a smaller financial commitment at the outset, while a large global corporation needs more flexibility and control over their system. Try to choose a service provider that can meet your current needs without straining your finances, but has the flexibility to scale up or down as your business requirements change.


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