Traditional on premise phone systems sometimes referred to as TDM (Time Division Multiplexers) or PBX (Private Branch Exchanges), have come a long way. They have morphed into a digital delivery of voice communications and multimedia sessions referred to as VoIP (Voice over internet Protocol) networks. Industry specialists say the two growing trends are the elimination of hardware and transformation of IP communications to be more application orientated.

If you’re a business still using an on premise phone system with a dial tone, don’t worry as you’re not on your own. Many businesses are using a hybrid model, on premise IP PBXs that incorporate both analogue and VoIP endpoints to reduce cost. A cloud PBX may be able to support a hybrid cloud model with analogue terminal adapters (ATA’s).

There are pros and cons to each hosted PBX and on-premise PBX.
There are some key differences to each of the systems, these should be reviewed and become part of your decision-making process when choosing one or the other. Making the move to a hosted VoIP business phone system would be beneficial regardless which of the two systems is ultimately chosen. Knowing the differences should lead to a better hosted telephony system and a higher level of satisfaction for all users; the company, employees, and customers.

What is Cloud PBX/VoIP?
Hosted PBX, cloud PBX or hosted VoIP, otherwise known as an Internet phone system, is one where the provider/vendor is responsible for housing the IP-PBX as well as handling the technology required to provide the services to the phone system. The desk sets will plug into a router and therefore the calls, signalling, and features are handled through an IPPBX server at the provider’s location. The provider of the hosted PBX charges a monthly fee that is inclusive of a minute’s package and additional features. Charges can also be at a per minute call price. Either one can be affordable depending on the rates. A company that knows the amount of minutes spent on the phone in a given month can make effective cost comparisons. Extended features may come with additional cost.

What is On Premise PBX?
On-premise PBX is also referred to as an IP-PBX phone system.
It is like a traditional PBX system that resides at a location, such as a computer equipment room or phone closet. The main distinction is that IP routing is done with more current technology. The signalling is done with an IP phone to the IP-PBX server utilising local area network. Calls can go through a traditional telephone company as well as VoIP using SIP trunking. Gateway cards are used to connect the system to the traditional phone service supplier. The provider can be the one that already provides service, though a SIP trunk can be configured for use with an Internet service telephone provider (ISTP).
An Asterisk primarily based system is that the cheapest choice for on-premise PBX thanks to the pliability that’s offered with open supply software system.

Hosted IP-PBX versus On-premise IP-PBX
There are some differences between the two options. Understanding benefits and limitations makes it easier to determine the best option for any business. Cost, scalability, and other considerations are laid out clearly to make it possible to compare the hosted VoIP for business and the on-premise IP-PBX phone system within the same categories to learn of the greatest differences.

Costs
Purchasing associate on-premise IP-PBX phone system involves shopping for hardware, which includes a server with the proper number of interface cards (if needed) to be able to connect the telephone company with the IP phones. Hosted IP-PBX only involves purchasing IP phones, though a router and network switch may be needed to ensure there is one specifically dedicated to VoIP.

Hosted VoIP for business:
• Lower initial hardware and set-up cost
• Any upgrades are at the customers expense
• No maintenance costs of the IP-PBX, but all on-premise and remote phones and network devices are the responsibility of the customer or managed services provider (MSP)
• Low monthly service cost
• Easy to add extra lines, great for scalability
• Upgrades, updates and patching will be included, providing enhanced security management
• New and advanced features should be optional depending on the vendor, may come at an additional cost

On Premise PBX:
• Higher initial hardware and set-up cost
• Potentially higher ongoing maintenance costs
• Lower monthly cost after expenses are covered
• Ability to SIP trunk to achieve lower price calls

Hardware, such as server, software, routers, switches and battery backup can be very specific for the individual system. £4,500 to £7,000 is typical for purchasing a server with the necessary software and cards. Ongoing server maintenance cost would become the burden of the owner.

Expansion Costs
There are costs to consider for expanding.
Adding additional phones to an on-premise PBX is as easy as buying additional IP phones, unless any kind of additional licensing is required. With hosted PBX, however, additional IP phones are purchased and added to the service plan requiring additional programming time by the customer. This can also increase the monthly price, depending on how the company sets up the plan.

Pros for Hosted VoIP for Business
• New feature installation is handled by provider
• Picking and cancelling virtual numbers is easy and fast
• Moving a phone system is easy. Just need Broadband
• Hosted provides edge border controllers or various other forms of NAT software to assist navigate routers
• Patches and upgrades of the IP-PBX are handled by the provider
• Loss of Internet or catastrophic event has no effect on operations because calls can be sent to voice mail or a mobile phone. This is because of redundancy within an off-site facility that has safeguards as well as backup power sources.

Pros for On-premise PBX
• Having on premise PBX gives user full control
• New open source feature sets can be added without any license fees
• Current carrier does not have to be changed
• VoIP trunks can be added to save on calling costs
• Server ownership reduces expenses but over a long period of time
• With SIP trunking, loss of Internet or catastrophic event has reduced effect on operations because calls can be sent to another number or a mobile phone. This is due to failover within an off-site facility that has safeguards as well as backup power sources.

Cons for Hosted PBX
• Connections and voice quality are a result of Internet connection/bandwidth
• Loss of internet leads to loss of telephone service
• Flexibility of system is limited
• Customisation of options could also be slow or unavailable depending on supplier
• Fees can be increased, and cancellation fees can be charged

Cons for On-premise IP-PBX
• On-premise IP-PBX needs in-house expertise who can manage it properly or additional costs incurred to out-source to IT MSP
• Expansions could result in complex projects depending upon the supplier
• On premise IP-PBX manufacturer could go out of business, leaving problems with managing root problems and EOL hardware
• Technician may need to be called for upgrades and patches on software (and costs can be incurred)
• Loss of power or PBX failure will result in callers not having the ability to get through, which stops business operations unless you have a SIP provider

By looking at the pros and cons for both the hosted VoIP for business and an on-premise IP-PBX, it allows a business to determine the best phone system based on risk analysis, cost and network.
Businesses will benefit in one over the other, so it is a matter of making comparisons prior to choosing one to have installed.

VoIP for business is becoming more application-based, transitioning from hardware systems to software that is leased in a cloud service.

Think about VoIP as an application, rather than a piece of equipment, if you don’t have the data centre infrastructure but a cloud available to lease space from, it’s a huge change in turn up timeframes and disaster recovery.

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Call us on 0121 312 0801 or email [email protected] to discuss your business needs.