Comparing Hosted VoIP and Premises-based Phone Systems

Deciding Between a Cloud-based and Premises-based Solution

Download the Free Guide

Hosted vs On-Premises UC: Which is right for your business? Download the free guide

Buying a Voice over IP (VoIP) phone system can be challenging. One critical decision that must be made is to determine which is better for your business: a premises-based solution (in which the hardware appliance is kept on-site in your server closet), or a hosted PBX solution (where your phones connect through your Internet connection to a provider that maintains the equipment at an off-site cloud data center). Educating yourself on the benefits and potential challenges that come with using either a hosted or premises-based phone system can help you make a good decision to ensure your business needs are met and you get the greatest value for your investement.

Features

The first and most important aspect to consider is understanding which features are offered. Many hosted PBX providers don't offer the same features in their hosted product as they do for their premises-based solution. If critical business communications features like queues, IVRs and conferencing are missing, or cost extra, then the product may not be a viable solution. Digium's hosted PBX offering comes with all UC features included so you don't have to worry about lack of features when choosing a cloud solution. 

Upfront Cost

Hosted VoIP solutions have a low upfront cost and are typically charged as a monthly fee per user. Using VoIP with an on-site server has a higher cost upfront, but then no recurring monthly fee. Above a certain threshold it becomes more cost effective to purchase your own equipment than to pay a monthly fee. Hosted VoIP tends to be the most attractive for businesses with 5 to 15 employees. However, many large businesses with 100 or more users often choose a hosted phone system due to other advantages. It is always best to speak with a knowledgable VoIP specialist who can help you weigh the unique aspects of your business to help you decide. 

Total Cost of Ownership (TCO) 

A hosted PBX can often have a very low total cost of ownership due to the savings in IT personnel and because your hosted provider takes care of server configuration and maintenance. Depending on the size and structure of your business this can be an advantage of hosted VoIP over premises-based VoIP. 

Existing Infrastructure

Consider your current technology infrastructure. Are you using a legacy system to connect your phones to the Public Switched Telephone Network (PSTN)? Legacy connections like Time Division Multiplexing (TDM) can be expensive. You could see a cost savings in switching to a VoIP trunk or by using a hosted VoIP provider. To help you determine what these savings might look like and if it's worth the switch, use this online VoIP cost calculator to learn what your Return On Investment (ROI) savings will be. On the other hand, if you like to keep your existing TDM or POTS lines, then a premises-based solution with telephony interface cards will be the best way to go. 

Scalability

Finally, consider how your business may grow in the coming year. If there is potential for rapid growth you will need to consider how this will impact your purchase. If going with a premises-based solution, you will likely want to purchase a larger appliance than is initially needed to accommodate growth. With hosted VoIP, new users can be added to the phone system as needed. A unique advantage of Digium's hosted UC solution is the fact that the same software is running on both the cloud version and the on-site, premises-based version. This allows for seamless integration. Users at the main office can be on a dedicated server running on the premises in your IT closet while users at the remote office have their phones connected to the cloud. By peering the cloud instance to the on-site server users will have a uniform experience regardless of which technology they are connected to.

Summary

Purchasing the right phone system is important for the success of your business. There are many factors that come into play when deciding between a hosted and premises-based VoIP solution. Each has its strengths and weaknesses. To make the best decision sign up for a free consultation with a Digium VoIP specialist. They can provide you with additional information, tips, and advice regarding your communications needs to ensure you end up with with the best phone system for your business. 

Chat Now