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    Hosted Voice vs. On-Premise Phone Systems: The Technology Showdown

    By: Matt Kanaskie
    November 9, 2017

    PBX Phone SystemsWhen it comes to phone systems, you have a lot of options. But there is only one system and method of delivery that is the best for your organization's needs. To help you determine which option is right for you, consider your organization's use of, frustrations with and wishes for a phone system; then, consider this...

    One of the choices you'll be faced with making is how your phone services are delivered. Important factors for making this decision include:

    • How do you want to pay for your phone system?
    • Where do you want to install it? 
    • Who do you want to have manage it and handle end user issues?
    • What carrier services are available at your location(s)?
    • Do you have a reliable infrastructure and the connections to support your entire company?

    Your two options are:

    1. Hosted Voice (Cloud-based)
    2. On-Premise Phone System (Infrastructure-based)

    Let's break each down, and then assess their pros and cons. In the end, I hope to leave you with a better understanding of which type of phone system is best suited for your needs. 

    Hosted Voice

    Hosted voice phones work the same as traditional phones - with a handset, cradle and buttons. But, rather than relying on a standard phone line, these phones have an Ethernet or Internet connection that carries phone calls over an IP data network, and ultimately, the cloud. This configuration allows you to save money on phone services because your calls will travel over a data network or the Internet, rather than requiring separate phone lines. 

    These phone systems are easily scalable and feature-rich (without driving the cost up), and you have the option to own or rent the hardware from a provider. 

    Hosted voice system

    Hosted PBX

    Built-in DR and redundancy Detailed network requirements
    Unlimited trunking Call quality issues
    Feature-rich – enterprise for SMB Integration complications
    Flexible deployment options Out of the box solutions
    Buil-in multi-location capability Transient service providers
    Flat rate operating expediture Higher TCO over time
    Always up to date and upgraded Do not own call platform
    Built-in maintenance Limited tech based on platform
    Less staff required Learning curve
    Purchase, lease, rent – lower Cap Ex Sharing voice and internet connection
    Includes local and LD Trouble with scale and cost
    Call Center Applications Extended features extra cost
    Quick deployment Cancellation fees
    Self-manage Doesn't accommodate simple phone needs
    Easy to move  Number portability challenges


    On-Premise Phone System

    A PBX, or Private Branch Exchange, is the traditional phone system that has existed in offices since the telephone was introduced. The simplest PBX phone systems available feature a box in your office that connects the internal devices and lines within your office to external lines, and is capable of carrying out multiple functions such as call holding and forwarding.

    VoIP (Voice over IP) is another on-premise phone solution that uses your network infrastructure to deliver voice service to end users. 

    Both on-premise phone systems are easy to use and manage, but less flexible as your company evolves. And, because your investment is made up front, the ROI over time is favorable. And, you own all the hardware. 

    Take a look at the pros and cons it has to offer below.

    On-Premise PBX

    Hosted PBX

    Ownership Capital Expenditure
    Financial Depreciation Lots of pre-planning scope
    Favorable ROI over time MAC charges – T&M
    Lower Total Cost of Ownership over time Customer managed tech curve
    Admin Control – Internal Maintenance contracts and cost
    Advanced Software Integration No built-in redundancy
    Rental, Lease and Purchase options Capacity and size limits
    Complex Call Centers Platform specific technology
    Long life expectancy Slow deployment
    Flexible deployment options Limited trunking capacity
    Self-manage Licensing management
    Carrier neutral – no change needed End of life, support or manufacturer


    Technology Showdown

    Both on-premise and hosted voice phone systems are effective and reliable phone systems that offer different benefits. These systems are compatible with different types of businesses, depending on what each business is looking for in a phone system.

    But this wouldn't be a showdown if a winner wasn't chosen. I can't honestly say one system/approach is better than the other. What I can say is this: each system is better for specific communication requirements based on your technology lifecycle, carrier options and existing contractual obligations. 

    For the most part, when advanced features and complex integrations are required and you have a robust and reliable data network and infrastructure, the on-premise system is often best. Alternatively, companies with a mobile workforce, seasonal changes in call volume, multiple locations or the desire to standardize your communication platform should consider adopting a hosted voice solution. 

    Connect with one of our phone system specialists to continue exploring your phone system options and receive recommendations specific to the needs of your organization: 

    Learn More About Phone Systems Contact a Marco Rep


    Topics: Phone Systems, Voice, Business Services, Hosted Voice, On Premise
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