Hosted vs On-Premise Phone System: Which is Better for You?

How you invest in your phone service and what strategy you use are pivotal for your business. Quality of service for your telecommunication system is paramount for customer service and retention, as well as for daily company operations. How you decide between a hosted phone system or an on premise system is an important decision based on your company’s culture. You must know what these two types of phone systems are and the pros and cons of each.

On Premise Phone Systems

On premise, also known as PBX, refers to a phone system created from an on-site physical device and hardware owned by a company outright. The company itself is responsible for all maintenance and upgrades to the on-site server, as well as the expansion of the server. PBX is the more traditional phone system that still may work best for some companies.

Hosted Business Phone Systems (Virtual PBX)

Hosted phone solutions, or virtual PBX, uses an existing Internet connection instead of adding telephone lines. It is part of a larger phone system involving several clients where all hardware is located off-site in a data center. Virtual PBX is cloud based and uses a Voice over Internet Protocol (VoIP) solution. With compatible VoIP software, a hosted phone system can be used by remote employees globally. An employee can even use their cell phone for business calls. The only hardware a hosted phone system requires are physical phones and a network PoE switch. Instead of paying upfront like with PBX, virtual PBX typically requires a monthly fee.

Pros and Cons of On Premise

There is not a simple answer as to whether your company should go with PBX or virtual PBX.

With PBX, you own your phone system and hardware outright, and the total cost of ownership is lower than virtual PBX. You also have full control of your phone system to guarantee the quality of service better. Your IT team or representative can make necessary changes and adjustments at will. Overall, you are making a long-term investment with PBX versus paying a monthly fee to a vendor as an operational expense.

However, large upfront costs may not be in your start-up budget. You may not have IT resources or support to allocate to your phone system, and you may not want the responsibility and hassle of maintaining your phone system. Plus, if your phone system is on-site, it is susceptible to fire, flood, or any natural disaster.

Hosted Phone System Comparison

A cloud hosted phone system is right for many companies, as long as they have good, stable bandwidth. Cloud based phone systems are on the rise for several reasons. There are fewer upfront costs with a hosted VoIP business phone system, where a monthly fee is more manageable as an operational expense. Setup is quicker and easier, where there are no installation or maintenance costs. No training is required, and onboarding is not difficult for employees. If a company has multiple offices and several remote workers, virtual PBX is much more flexible. The telecom company responsible for your phone system is responsible for IT maintenance and troubleshooting, so no in-house IT department is necessary. If your company plans to expand, virtual PBX is much more conducive and cost-efficient for scaling than PBX. Disaster recovery is much safer and easier when your data center is off-site.

However, there are cons to virtual PBX. Having a cloud based phone system will cost more when you look at the total cost of ownership in the long term. Plus, there are risks to your quality of phone service based on using an internet connection. Increased call volume can make call quality drop. If your internet is down, then your phones will be down as well. When your phone system is based from an off-site data center, you may experience a decrease in call quality or even dropped calls due to calls going through several routers. With hosted phone providers, you would not have full control or ownership of your phone system, even if you need to address call quality impacting your business immediately.

How to Decide What’s Right for You: Cloud Based Phone System Vs. On Premise

To make the right decision for your company, you must assess the total cost of ownership and compare that with your budget. You want to ask yourself how much control you desire over your phone system and whether you are willing to spend the internal resources necessary to maintenance and repair an on-site phone system. You also must ask yourself if you plan to expand in the foreseeable future, as virtual PBX is much easier and less costly to scale. Ask yourself if you foresee having several remote workers, as PBX makes it hard for remote workers to connect. There is no clear-cut right answer, but using these factors to make your decision will set you up for success.

Call NTi today, where we can help you decide which phone system type is best for your company needs. There is a right answer for your company, and we will help you find it.

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