Hosted PBX Versus On-Premises

Just for the increased efficiency and cost savings alone, you don”t have to sell most businesses on the advantages of switching over from an analog-based to an IP-based telecommunications system. However, once the decision is made to convert, it”s up to you to decide which type of IP telephony system is best for your company. Do you go with a hosted service or managed? Virtual or on-site? The following highlights the best and worst of both types of service; your business requirements will decide which is the best for you.

Virtual or On-premises: What”s the Difference

Other than the fact that one type of service remains in the cyber world and one requires you to house and maintain the system hardware at your location, there are other factors that will determine your choice. The main factor is cost, not just for system initiation, but also the cost of equipment purchase, the cost of system upgrades and maintenance and the hidden cost of your time and effort. On overview of the costs might look like this:

Cost of Hosted PBX

– Less initial expense, other than the cost of IP PBX-enabled phones
– No monthly maintenance costs
– Upgrades are usually included in the contract, at no additional expense
– Ability to add new lines without increasing bandwidth
– Outages result in less down-time and data loss, since everything is processed and stored in a virtual environment


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Cost of On-Premises

– Higher cost up-front for equipment, but lower cost per month
– All maintenance is your responsibility
– Initial programming and upgrades are your responsibility
– All staff training is your responsibility
– Outages may result in loss of service, data and productivity

Other than cost, there are advantages and disadvantages that might further affect your decision.

Hosted PBX

Since you”re utilizing someone else”s resources, you”re limited in your capacity as far as bandwidth, connection speed and storage by the provider”s technical capabilities. However, technology has made it possible for service providers to allow a higher capacity for their customers than most businesses need to function well. You”ll also have the benefit of accessing a lot more features than with a non-hosted service. Relocations are also much more convenient, whether it”s an inter-office move or you”re taking your whole business to another building. Since your PBX is virtual, all you have to move is your desks, people, and phones, plug everything back in and get to work. Outsourcing your service also means you don”t need to have a dedicated IT person or team, so you and your staff can focus on conducting business instead of system maintenance.

On the down side, you won”t have the ability to tweak your system, and the features you can access are limited by your service plan. If customization and having total control over your telecommunications system is important for you, this could be a problem. You also have to consider the volume of business you. If you have a huge growth spurt, your plan may no longer have the resources to service your needs without affecting system lag times.

On-premises PBX

Choosing an on-premises PBX system will require you to out up more money up-front, and you will also have to spend more in financial and human resources on maintenance and upgrades, programming and expansion. You”ll also require more physical space to house the equipment, and a dedicated IT person to service it. However, you”ll have total control over how you tailor your system to suit your business, and you can use unlicensed, customizable features from any open source developer. Since you own your own server, it will cost you less over the life of the contract.

The downside of ownership is that you may have to deal with business disruptions is you need to expand you capabilities, and the up-front investment is cost-prohibitive for small to mid-sized companies.

In the end, it”s all about getting the best level of service so that you can provide your customers with the best possible service. The best virtual PBX system is the one that offers you the amount of services you need, the flexibility to expand as needed and a price that fits your budget. Fortunately, there are hundreds of service providers to choose from, and there are many consumer reviews available to help you sift through the best of the best. VoIP services are much less expensive than traditional telecommunications systems, and shopping smart will save even more without risking the quality of the services you provide for your customers.

Osho Garg

About Author
Osho is Tech blogger. He contributes to the Blogging, Gadgets, Social Media and Tech News section on TecheHow.