Phone Systems

Business Phone Systems – Premise or Hosted?

Traditional (digital) business phone systems tend to last anywhere from 10-15 years. Depending on the age of your existing business phone system, you may be considering an upgrade sometime soon.

If you haven’t yet begun researching replacement options, you’ll be surprised to learn that digital phone systems have quickly and quietly gone the way of the dodo bird. IP phone systems are replacing their digital counterparts for good reason. Digital systems primarily relied on hardware components to function. Bulky chassis housed physical cards which were then tied to physical phone lines.

IP phone systems operate more like PCs and servers.  That being the case, business phone systems in today’s world can either reside on-premise or in the cloud. Keep reading to learn, which would be the best option for your business.

IP Business Phone System

Major manufacturers of traditional business phone systems are restructuring, closing, or abandoning those divisions within their organizations. This is in large part due to the continued proliferation of the migration from traditional to premised-based IP business phone systems. In short, if you have a Toshiba phone system now, you simply won’t be able to rip and replace it with a new Toshiba system in a year or two.

IP system manufacturers like Digium are displacing traditional system manufactures for a variety of reasons. IP systems offer:

  • More/better features
  • Simpler moves, adds, and changes
  • Better integration with third-party applications
  • More cost-effective carrier options
  • Presence management and unified communications options

Much like a traditional system, you’ll still need to choose a platform which fits your particular business needs. Additionally, depending on the system, you’ll need to purchase new IP handsets which work with the system.

Advantages of replacing your old traditional system with an IP system are several, and it’s where the industry as a whole is moving. One of the significant concerns, however, is cost. Just like your old system, an IP-based system is a considerable capital expense. The benefits of utilizing a premise-based IP business phone system include:

  • Control and security – local presence means local control.
  • Scalability – IP systems are primarily software-based, which allows them to evolve with changing technology quickly.
  • MACS – Flexibility in making moves, adds, and changes.

Consulting with an IP telephony expert ahead of your current system’s end of life is the best course of action you can take to ensure when the day comes, your decision will already be made.

Hosted Business Phone System

A popular alternative to installing a whole new IP-based system is to move away from your traditional system into a hosted system. A hosted IP system, or Cloud PBX, moves the one-time capital expense to a monthly cost. While IP handsets will still need to be purchased, there are a wide variety from which to choose, allowing for greater flexibility in spending. Traditional and IP premise-based systems require the use of the handsets built to work with their system.

A hosted system works just like a regular business phone system, but rather than residing in your physical office space, it resides in the cloud. Cloud-based IP phone solution benefits include:

  • Cost – Cloud PBX platforms are typically much more cost-effective as businesses pay for only those seats they need, rather than paying for an IP system which will offer (for example) “up to 100-1000 users” when the business may only have 15-20 users.
  • Usage – Premise-based IP systems will still require connectivity to a PRI or SIP trunk in most cases. Hosted PBX seats can often be bundled with a bucket of local and long-distance minutes. In many cases today, hosted seats include unlimited local and long-distance calling.
  • Cloud-based phone service is automatically updated and upgraded by the provider, saving businesses on the licensing and upgrade costs they would have to pay with a premise-based system. Additionally, because the provider is updating and upgrading the HPBX platform, the hassle of actually performing the upgrade, testing, and support fall to the hosted provider.
  • Cloud-based PBX systems reside in secure data centers. Data centers are governed by service level agreements, which force them to guarantee uptime. It means that the data center is always online, even when your office is offline (often due to power or internet outages).
  • Lower Hardware Maintenance – Because the system is hosted and maintained by the provider if a system-related hardware component fails, it’s the responsibility of the provider to repair or replace. The only hardware the client has to maintain are the physical handsets.
  • Hosted phone handsets are interchangeable amongst providers, which protects clients from potential manufacturer obsolescence.

Cloud PBX is a fantastic option for the SMB market because it allows growing businesses the flexibility to add users quickly on an as-needed basis, and at a cost that’s manageable to budget

Not every business is a good candidate for Hosted PBX, so talking to a telephony expert well versed in both IP systems and Hosted PBX solutions will give you a leg up when it’s time to choose.

Work with a Telecom Company Experienced in Transitioning Traditional to VoIP

Modern Telecom is a Cleveland-based Internet telephony agent experienced in helping SMB’s transition to VoIP and unified communications solutions. For a free telecom audit, click below and find out how much you could be saving today!


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