Replacing a Phone System? How to Choose Between On Premises or Cloud Hosted
The question for office phone systems is no longer “VoIP (Voice over Internet Protocol) or TDM (Time Division Multiplexing)”? The PBX with traditional analog phones (TDM) is dead. The question now is just what the best approach to VoIP is. There are two basic choices, and either one can be better in some business situations:
- On premises. The business has its own IP-PBX (Private Branch Exchange) server to handle all calls. The connection to the outside world can be either a connection to the public phone network with a normal phone number, or SIP (Session Initiation Protocol) trunking to an Internet VoIP service. With SIP trunking, the phone service is entirely Internet-based, just as it would be with a cloud service.
- Cloud (aka hosted). An offsite cloud service handles all incoming and outgoing calls. The VoIP phones are connected to a router, like other devices on the Internet. They might be part of a business’s data network, but often they’re on a separate network to get the best quality of service.
Advantages of Each Approach
An on-premises system offers these advantages:
- A business can keep its existing connection to the public phone network. After the one-time cost of the server, ongoing costs are lower.
- The business isn’t limited to the features the hosting company offers, but can add any features that the server is able to support.
- There’s no waiting for a response to support requests.
The main benefits of a cloud system include these:
- Management is simpler. The hosting company usually takes care of hardware, upgrades, and maintenance.
- Location is flexible. Phones don’t all have to be in the same building. Employees can use IP phones from home.
- If the office loses its Internet connection for a while, its number isn’t completely offline. The cloud service still gets calls and can take voicemail till the connection is restored.
- Scaling is easy. Adding more phones is simply a matter of requesting a service upgrade.
Different Businesses, Different Tradeoffs
The cloud hosted approach offers some special advantages to a small or rapidly growing business. If an office has just a few lines, an on-premises server is more expensive per phone. The company probably can’t afford to employ a specialist to manage the server, so maintenance will be an issue. A growing company will probably have to upgrade its server before long, requiring more investment and disrupting service during installation. On the other hand, it can overestimate its growth curve, and then it could be stuck with a more expensive server than it needs.
An on-premises system works best for a relatively large, stable business. It can spread out the cost of the server over a large number of phones, and it can keep an in-house IT staff to deal with the server and phones. A business with multiple facilities in different cities it will need an IP-PBX server at each location. If it uses SIP trunking for all-Internet phone service, they can all share the same main phone number.
It helps to think about what the company is already familiar with. Does it already use cloud services and understand how they work? Then it’s likely to be comfortable with cloud hosting. Does it already have a successful IT department or partner like CORE that likes to get its hands on things? Then they won’t have much trouble taking on a VoIP server, and they might not be so happy to relinquish control to a cloud provider.
Some risks cut both ways. Either approach runs some risk of losing support. A cloud provider can go out of business, and so can the company that maintains an on-premises server. Costs are never fully predictable. Rates can change for cloud services, and local servers can require upgrades to handle increased usage.
When choosing, always compare the best with the best. There are top-quality cloud VoIP hosts, and then there are ones that offer unreliable service, aren’t very flexible, or don’t have the necessary features. A good IP-PBX server will do the job, but one that’s underpowered and doesn’t offer a high quality of service will be unpleasant to live with. Phone service is important to any company, and compromising quality for a few dollars in savings will lead to trouble.