Do I need Hosted/Cloud Phones? Premises based Phones?  A Hybrid platform?

‘What is right for my business?’ is a question we are asked frequently here at TotalComm.  There are three main types of business phone systems; Hosted or Cloud Phones, Premises based Phone platforms and Hybrid Platforms.  We understand that finding the right phone system for your business can be overwhelming, so we have broken down the pros and cons of each type to help you make an informed decision and find the platform that would work best for your business.

Hosted Phones (a.k.a. Cloud Phones)

Hosted Phones (Hosted PBX) is a business phone system that is hosted in the cloud, usually provided by telephone lines and/or your internet carrier.  The basis of the platform is that the provider has a large scale platform and your business connects subscriptions per user/device to connect to that platform via the internet as opposed to being a physical system that is stored on your business premises.

• Benefits of Hosted PBX:

  • Offers Enterprise Features – Especially for Small and medium businesses. You gain features such as voice mail to email, call recording, mobile and desktop applications with the ability to work remote as a standard built in feature.
  • Overall Low Initial Cost – Billing based on a monthly subscription per user of device provides a low initial up front cost.  There may or may not be small upfront costs for setup on a per user basis and possibly the purchase of the IP telephones and/or a network switch to enable you to use IP Phones on your network, however the ongoing monthly rate is usually very cost effective compared to older model On Premises-Based telephone systems using analog or digital (ISDN-PRI) lines and the associated costs with upkeep that most businesses historically have experienced.
  • Maintenance Fees Are Included – The monthly rate per user usually includes all remote user support for the platform.
  • Ease Of Billing and Budgeting – The per user pricing model with tiered options allows the customer to choose who needs what and pay for the number of users on a monthly basis, similar to how you are billed for your internet. Allowing businesses to know the costs involved upfront with no surprise fees or upgrade costs and are able to budget accordingly.
  • Straightforward Self Administration – Day to day administration is easily available, usually via a customer portal allowing for name changes, password resets and call flow changes.  Depending on the provider, your team may have full access to program the system entirely to meet your needs.
  • New Features – Are pushed out to users as they are deployed on the backend of the platform ensuring you are not using obsolete technology.

• Cons of Hosted PBX:

  • Slower, Less Personalized Support – This the biggest possible downside in our opinion, but it depends on what service level you need in your business. If you are highly technical and prefer to administer your own system and only ask questions when something unique comes up, this isn’t a con to you. If you prefer to have your provider provide support and make changes on your behalf while you focus on your business, then this is a Con.  With Hosted PBX platforms, you usually email or call support to get in touch with a support person that will look up and provide the answer to your question or perform that task, but usually without having an overall knowledge of your business, your unique setup and an understanding of your goals with the platform and most likely never heard of you before.
  • Remote Support Only – Usually, there is no ongoing onsite support or onsite visits to understand the site and it’s needs. There are clauses in the agreement that you sign that states your site is ready for VoIP.  The best way to handle the initial deployment is to perform a VoIP audit ahead of time, but you may want to engage a trusted partner when onsite support is needed and explore white glove services at an additional, but sometimes necessary cost.
  • Limited flexibility – Hosted PBX platforms are feature rich compared to older and most likely, your current phone system.  However, the provider usually decides what features will be rolled out and limits the ability to creatively design the platform to meet your personalized needs and when changes to the platform happen including removing a feature you use, you have no choice but to adapt to that change.
  • Relies Fully On The Internet – Although options with mobile application provide some resiliency options as you can use Wi-Fi or mobile data and operate from anywhere in the world, the day to day operations rely 100% on the internet.  This means limited communications during outages, but more importantly, if your internet becomes ‘slow’, that is where you will experience ‘choppy’ calls.
  • Lack Of Integrations – Although usually you can get a base integration with the largest 3^rd party providers of services, such as Salesforce, you are limited to only those partners that have been fully certified.

Premises-Based Phone Systems

A Premises-Based PBX is a business phone system that is physically onsite and includes some sort of server hardware and is connected to phone lines onsite in some fashion.

• Benefits of Modern Premises-Based PBX:

  • Lower Total Cost of Ownership (TCO) In Most Cases – Most hosted platforms compare the cost of a premised based platform, using older analog or digital telephones based on what you are replacing opposed to what is available in comparison as well a using a 5 year or shorter costing model.  With modern Premises-Based platforms with lower cost per line options and that are software driven, the TCO model should be spread across 10-15 years (or longer) as you ‘lease’ the platform initially and that cost goes away at the end of the term and then you own the licenses and only pay for telephone lines and support. Only 10% of enterprise customers use hosted phone solutions partially due to this.
  • More Control Of The Platform/Integrations – Modern Premises-Based platforms are yours to control, program and use as desired and are not shared among numerous customers and possibly in an environment that you don’t control.  You now have the ‘backend’ and the flexibility to integrate with and use features to meet your needs. Most hosted phone platforms provide a standard set of integrations to all the big industry providers such as Salesforce.  With the right modern Premises-Based platform, you have the ability to have integrations into almost any software or IoT devices that you may utilize in your business.
  • Flexible Payment Structure (Capex/Opex/Blend) – One major difference with Premises-Based platforms is the flexible payment options you have from paying for the platform in full and only paying for telephone lines and support, to leasing over a longer period or any combination of the above.  If you prefer to buy things opposed to have monthly commitments, this is an option for you.
  • Personalized Support – Usually provided by a company where this is their core business, with live answer and a dedicated senior technician that knows your goals, individual setup and can consult where needed for planning and design purposes.  Since the support provider usually is the company that provided the platform or is an expert on it, the level of support and support options are greater than with hosted phone platforms.
  • Deployment Flexibility – Modern Premises-Based platforms are not like older PBX systems (Nortel/Toshiba/NEC) where you were required to use proprietary servers with numerous interface cards which over time limited your ability to have new features and required expensive hardware upgrades to evolve.  Modern Premises based platforms are software driven, with options to use your onsite virtual servers or a server your provider installs with options for proprietary servers with any blend of those options across multiple sites.
  • End Point Options – Options for Digital and VoIP Phones with the ability to blend them as needed for your business.  This flexibility allows you to use existing cabling and limits the need for additional network equipment to operate the phones while still meeting your needs.  Hosted Phone platforms use IP telephones and require network setup to operate correctly.  You may choose to utilize digital telephones at one location and then have remote IP telephones all connected to the Premises-Based phone platform.
  • Options For Telephone Lines and Failover Lines – Although hosted phones provide the option to not be tied to your location and work from anywhere as a standard function, Premises-Based platforms allow any combination of phone lines and phone line resiliency to support your business as needed.  This can include traditional lines with failover to VoIP if it suits your needs.

• Cons of Modern Premises-Based PBX:

  • Onsite Server, With Possible Power and Connectivity Issues – When using traditional telephone lines, things can happen outside your building that impact them, such as construction which may accidentally ‘cut’ a cable.  Power outages can take down your platform.  All of these are to be considered when choosing the right platform.
  • Outdated Hardware – Most modern Premises-Based phone platforms are now software driven and hardware independent, but legacy PBX platforms or modern platforms installed on proprietary servers create a possible limitation of hardware becoming outdated leading to hardware upgrade requirements.
  • Site Specific – Premised based phone platform are usually installed onsite at your business or main business location.  Moving locations may require additional costs whereas hosted phone providers are usually ‘over the top’ of your internet and you simply move your internet and IP telephones and update your billing and 911 records and continue with your business.
  • Support Options – Although previously listed a ‘Pro’, you need to choose the right partner and have options if you have issues with the current provider.  Since the lifespan and TCO is lower long term with Premises-Based platforms, you need to choose a good partner and support plan that meets your needs.
  • Limited Self Administration – Most modern Premises-Based phone platforms are designed with limited self administration, since it is a platform with full access to all system functions.  Usually, customers can perform simple administrative functions, but usually prefer to engage their support partner for ongoing support and administration.

Hybrid Phone Platform

A Hybrid PBX is a Phone System that combines the use of VoIP handsets which are used over the internet with more traditional, Premises-Based PBX.

• Benefits of a Hybrid Model:

  • Best Of Both Worlds – This model is using the purchasing options of the premised based PBX and overall lower Total Cost of Ownership and blending it with the benefits of the hosted phone model.  This option is usually used in Enterprise scenarios or in Small and medium businesses that have needs that blend with both the Pro’s of hosted phones and Premises-Based phone Platforms.  Modern Premises Based platforms are software based as mentioned, which allows it to be purchased, then installed in your new or existing cloud environment and you own the platform outright and only pay for lines and ongoing support as needed.  This provides the benefits of the hosted phone platforms, with the benefits of the modern premises based platforms

• Cons of a Hybrid Model:

  • May Not Be Cost Effective For Small Businesses – For Mid-market and Enterprise customers, this is a much lower TCO over hosted phones, however, for the SMB market, the overall costs to setup the backend can price it out of reach for some businesses that may not need this level of functionality.  This Hybrid model is where 85% of enterprise customers fall into in today’s phone market.  The Hosted Phone model scales down remain cost effective for small businesses.

In summary, one size does not fit all and platform is not better for everyone over the other.  All businesses are different and the various types of phone platforms provide you with a range of options and the opportunity to find a solution that will best suit your business. We always advise talking to an expert so you able to take their recommendations into consideration as well. It is good to find a provider like TotalComm that offers options from all three solutions so they are able to find you the best fit for your business. Our team of experts are ready and waiting to help you get the most out of your new phone system so get in touch.