What is an IP PBX?

An IP PBX is a phone system that operates over the Internet (or Internet Protocol, “IP”) as opposed to traditional analog phone lines. They generally cost less and provide as good or better quality than traditional landlines. The result is a phone system that helps businesses communicate easier and more cost-effectively.

A good IP PBX differs from a standard business phone system in that it is capable of providing Unified Communications tools as well. These tools might include softphone applications for mobility, advanced call routing, conferencing, voicemail, chat, integration with email modern business technology like CRMs, and other robust calling features.


What is a PBX?

PBX stands for Private Branch Exchange, which is a term that originated with the original implementation of call switchboards, where operators would manually switch calls to the correct line or extension by plugging (or switching) cords. Similar to that concept, the term PBX today still refers to a telephone system that allows calls to be “exchanged” (or switched) between different “branches” (or lines) within a business. It’s just all done digitally now instead of manually.

Things to Consider When Comparing IP PBXs

When comparing different IP PBX options, there are a few things to consider in order to find the right fit for your business. First, you’ll need to know exactly which features come with each IP PBX.

One of the biggest advantages of an IP PBX over traditional phone systems is the advanced features they’re capable of delivering, so be sure to know what each one offer out of the box.

Another thing to consider is whether you want a hosted (“cloud”) system or an on-premise system. There are significant differences and advantages with each setup, and your business’s needs should determine which one is the best fit. We’ll discuss this more below.

A third thing to consider is where you see your business in the near future. If you’re expecting significant growth, you’ll want to make sure the IP PBX you choose can keep up with those future demands. After all, the last thing you want to is invest in a new phone system now and then have to upgrade the entire system again in a short time when you outgrow it.

Let’s look at each consideration for IP PBXs in-depth.

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IP PBX Features

Quality IP PBXs typically offer enterprise level features for a price that fits well within many small businesses’ budgets. The advanced features of an IP PBX typically provide more efficient call handling, mobility for its users, and an easy to use admin interface that reduces complication.

A few common features to expect in an IP PBX include:

  • Mobility
  • Status indicators
  • Auto-attendant (also known as an “IVR”)
  • Call rules
  • Voicemail to email
  • Find me/Follow me
  • Conferencing
  • Integration with other business apps
  • Chat
  • Call reporting
  • Switchboard
  • And more

IP PBX vendors will often price their features differently, or as add-on items, so it’s important to know exactly which features come with an IP PBX before making a decision.

If possible, it’s usually best to see if you can find an IP PBX that comes with all features included, that way you know you’re getting something that can meet all your needs now and in the future without having to pay more down the road.

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Cloud or On-Premise

One important decision to make when looking at IP PBXs is whether you want a hosted or on-premise system. Let’s look at the primary differences between hosted and on-premise PBXs.

A hosted IP PBX is a phone system in which the components and hardware that actually “drive” the phone system are not physically located at the place of use.

So instead of having an IT closet filled with a bunch of servers and wiring for your phone system, those components would instead be housed at an offsite (or “cloud”) data center.

Hosted phone systems offer similar features and quality to that of an enterprise-level phone system without having to make the substantial upfront investment that typically goes along with it. So if you’re looking for simplicity, scalability, and a low monthly payment, a hosted IP PBX solution might be right for your business.

Learn More about Hosted IP PBXs

However, if your focus is more on getting the most power, control, and stability from your phone system, then an on-premise solution might be just what you need.

An on-premise IP PBX is a phone system where all the hardware and components that power the system are physically located on-site at the place of use.

If you prefer to manage your own business phone system, a premises-based IP PBX provides an end-to-end UC solution with enterprise-class features. If you have the resources to manage and maintain it, owning your phone system definitely has its advantages

Because hardware is located on-site and resources are dedicated to one particular business or operation, on-premise IP PBXs offer added control, power, stability, and quality. Because of they offer more power and control over dedicated resources, on-premise systems tend to be a better fit for stable operations with less fluctuation in resource needs.

If you’re unsure which system would be best for your situation, check out our Hosted vs. On-Prem Guide. It will help you determine which phone system deployment strategy offers the best value for you and your business or organization. Get the Guide

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When considering an IP PBX, you’ll want to make sure you get one that is flexible enough to keep pace with your business needs now and in the future. In particular, it’s always smart to find an IP PBX that uses the same phone system software regardless of whether it’s deployed on-premise or as a hosted solution. Doing so, for example, would enable your business to go from an on-premises system to a cloud-based one (or vice-versa) should your business needs change over time.

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