The success of your business relies on an effective exchange of ideas that is made possible by seamless communication. When that communication is over the phone, your phone system goes a long way to retaining business opportunity, clients, and outside vendor relationships.

Understanding the difference between a hosted (cloud-based) phone system and an on-premise (non-hosted) phone system are what you need to consider to determine which is right for your business.

There are pros and cons to different telecommunication systems. So, in this month’s blog, we explore cloud-based and on-premise solutions so that you can determine what is the best system type for your business.

Hosted Phone Systems
A hosted phone system is a cloud-based phone system hosted by a phone service provider. Hosted systems, also known as cloud-based system and more often VoIP (Voice over IP) Systems, offering users all the popular features of a traditional phone system while eliminating some of the time and upfront expenses associated with on-premise phone systems.

With a hosted phone system, business owners benefit from virtually every aspect of their telecommunication solution being managed remotely. New installations and ongoing desktop phone changes can be managed quickly using an existing internet connection reducing start up and down time when new employees come on board or change desks.

As far as the pricing for VoIP Systems, companies are usually charged an initial installation fee followed by subsequent monthly charges with consistent monthly billing.
Advanced features for cloud-based phone services
When “going to the cloud” business owners can take advantage of a wide variety of feature such as call forwarding, video conferencing, auto attendants, screen sharing and voice mail to email conversion.

What are the benefits of a Hosted Phone System?
For small to mid-size companies, cloud-based phone systems can be an inexpensive alternative to an on-site system. When you implement this type of solution, you eliminate some of the upfront installation costs for the phones, and you may never need to pay for onsite service as most changes can be managed remotely by the provider.

A VoIP service enables you to pay a fixed service fee to the provider for the hosted system allowing companies to more accurately budget for telecommunication services each month.

What is not to like? Here are a few disadvantages you may want to consider.
Since companies with hosted systems rely on an outside organization to maintain their business’ communication channels, any changes to numbers, adding users or unifying your communications will need to be handled by your provider.
Also worth considering is the lifetime cost of the phones. You will need to consider the pros and cons of buying a system outright versus paying as you go. If you are making a decision on cost alone, irrespective of some of the hosted features, a VoIP system may run you more than if you bought the system and hosted it in your space.

What is a Non-Hosted (On-Premise) Phone System?
If you prefer to own your system and maintain it independently, then a non-hosted solution might be right for you. For this solution you will need a variety of on-premise equipment. For starters, a Private Branch Exchange or PBX which allows for a connection between internal devices through an extension number. Most non-hosted office phone systems use a PBX system. Then you’ll need the phones themselves and all the cabling. Other ancillary equipment may also be necessary for additional features.

Benefits of a Non-Hosted Phone System
Using an on-premise solution enables companies to customize their phone systems and allow for a more personalized approach to how calls are accessed and addressed. Some organizations feel that the security of a non-hosted system is better as the phone system is under their own care to protect data security and avoid data exposure.
Pay now or pay later. What you need to consider.
You can usually expect to pay a larger upfront cost for an on-premise solution as hardware costs like the PBX, phone hardware and the phone installation have to be made upon implementation.

To offset these larger upfront costs, the non-hosted solution typically has a lower total cost of ownership which will be realized over time. Fear not if you think on-premise solutions are right for you, as there are many leasing programs available to allow you to pay for your system over time. Also you will need to consider the physical space you will provide at your place of business (such as a telecommunications) that you will need to house the PBX equipment.

When determining what is right for you, consider the following questions to help you decide which phone solution is a better fit for your business.
  • Do you have a preference of paying up front or paying monthly?
  • Is balanced billing important to your bottom line?
  • How do I compare the total cost of ownership versus initial capital outlay?
  • How important to your business, to compliance is housing data on-site?
  • What are the features you want from your phone system?
Still need help deciding whether to make the switch to VoIP or keep your legacy system? Discuss these options with your IT provider today.