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Hosted Phone System vs On-Premise Phone System – Which Way to Go?.

[fa icon="calendar"] 2/6/2015 / by Mark Nelson


Which is best for your Business?

Buying a new business phone system can be a daunting task……

......one of the most crucial decisions to be made is whether a Cloud PBX or an On-Premise Solution is the way to go. There isn’t a right or wrong answer as the pros and cons for each option means that what works for Business A wouldn’t necessarily work for Business B.

It is your choice and educating yourself at the initial stage of your research will ensure your business needs are met and you get the greatest value for your investment.

What are Cloud Phone Systems?

A Hosted or Cloud solution is where the provider is responsible for housing the telephone system (usually in a large data centre) as well as handling the technology to connect the users and calls to the solution.  In an age where more employees are working from their home or even at remote location halfway across the world, a Hosted PBX is the ideal solution for a business in need of mobility or for those that don’t have the physical office space to store hardware. Read this article for more information - What is a Cloud Phone System?

What are On Premise Phone Systems?

An On-Premise solution refers to the more traditional scenario where a physical telephone system is housed on site.

In the case of a business phone system this is typically a server or hardware appliance that is installed on-site with the day to day management of the solution is carried out by and managed by your own IT resources.

7 Factors to Consider:

There are some major differences between the two options and familiarising yourself with these will make it easier to choose which way to go: 

1. Cost

Total_Cost_of_OwnershipOn-Premise phone systems will incur a much larger initial cost as there are lots of large costly pieces of hardware required to set up the solution. However after this there are no recurring monthly fees to consider. A cloud phone system has a very low upfront cost and typically all elements that make up the solution, including handsets that are on site, are charged as a monthly fee per user. Above a certain threshold you will find that it often becomes cost effective to purchase any handsets upfront though and then just pay the remainder as a monthly fee.

2. Support / Maintenance

With an On-Premise Solution you will want to ensure you have some form of maintenance contract in place to give you piece of mind if something was to go wrong. With a Cloud Phone System you tend not to have to worry about this as the solution tends to be ‘fully managed’ which means it’s the responsibility of the provider. You may want to ask them for their SLA when there is a fault and what the lead-time is for replacement handsets would be though. 

3. Existing Infrastructure

Often a good starting point is to look at what you are currently using. If you are currently using a traditional telephone system on antiquated PSTN (analogue) lines then the switch to a modern On-Premise solution could be far higher than the switch to a Hosted solution. If however, you like your handsets and want to keep them as this will keeps costs down or if you are a in long term contract for your existing telephone lines then a replacement On-Premise solution would be the way to go. 

4. Expansion

Projected-Staff-GrowthWhichever way you go, a new Business Phone System is a financial investment and so it is prudent at this stage to consider how your business may grow of the next year or even 3 or 5 years. Is there potential for rapid growth as with an On Premise solution this would mean you may want to purchase a larger telephone system to accommodate this. You may also find you get a larger discount with your initial purchase and if so then you may be better to purchase some additional spare handsets at that stage for any future growth.  With a Hosted solution new users can be added as and when needed with the just the outlay for a new handset and the increase in monthly fee.

5. Failover

With a Hosted solution the handsets are 100% dependent on the internet at your premises, if this goes down or if there are any network related issues on site then you run the risk of having total failure until the network issue/internet connection is restored. With an On-Premise Solution you can still have failure, there is more hardware on site that could go wrong but with a solid support contract in place you could have an engineer repairing or replacing any faulty parts within just a short time.  

6. Software & Hardware Updates

Communications are developing all the time – with new features, applications and also security updates. These need to be factored in when choosing your next business phone system. With an on premise solution downtime and cost will need to be factored in for software updates and possible hardware updates to ensure your solution is up to date.

Cloud phone systems include automatic software updates on the servers – and most good providers will carry out this work without any downtime for your phone system.

7. Do your Research

Regardless of your chosen path, choose your provider/supplier carefully. Take your time to research reputable companies; look for who has accreditation, ask about their response times to faults, ask to see some testimonials from other customers and ask around for recommendations. This is a sensible approach with either Hosted or On-Premise however the Hosted market is still in its infancy and lots of providers are seeing this as a great revenue source and jumping on the bandwagon unprepared. These Providers can often be inexperienced and not have the correct or suitable infrastructure in place to install and maintain the solution they promise.

Topics: Business Telephone Systems, Cloud Communications

Mark Nelson

Written by Mark Nelson

Helping Companies Leverage Unified Communications to Grow their Business and Increase Productivity

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