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Cloud versus On Premise Phone Systems. Which is Better?

Netari Blog - Cloud versus On-Premise Phone Systems.  Which is Better?

Choosing your right voice product has become more difficult than ever – as technology has advanced, we’ve gone from analog exchanges to digital and now virtual systems. Picking the ideal office phone system for your organization will increase profits and productivity, and increase greater long-term value.

Choosing a business telephone system

Until a few years ago it was pretty simple; you picked the brand and the hardware, had your lines installed, your handsets connected and if you needed to take more calls, you added more lines. But as the functionality of telephone systems has increased, the buying process has become much more complicated.

This post is designed to help you understand the benefits of each type of phone system in the market, and give you some ideas to help you in the decision making process. Don’t just think about what you need today, but instead consider the features and functionality you will need in the years ahead.

Telephone systems today fall into four principal categories:

  • PBX phone systems

  • IP enabled phone systems

  • IP PBX systems

  • Hosted IP telephony

Traditional PBX Phone Systems

Phone systems have evolved dramatically in recent years. This is principally due to the increase of high-bandwidth connectivity and the demand to integrate multiple services into one connection (i.e. voice, data and video). Many businesses still think that investing in a PBX phone system is a safe solution, but what many businesses fail to realize is that as phone systems continue to evolve and integrate with a company’s network environment, the traditional PBX platforms are becoming obsolete.

However, purchasing a PBX phone system might be right for your business if all you need are basic features. If you’re looking for a long-term, scalable solution then traditional calls and lines is not the way to go.

Some businesses prefer to operate on traditional PBX phone systems with their own in-house overheads. Usually this is in the form of a communications room that is run by an IT team. Purchasing a PBX phone system also gives you full ownership of the hardware unlike in other phone system solutions like cloud-based, hosted phones. For companies operating out of one building, the PBX phone system can be just as beneficial as a virtual system.

The emergence and acceptance of Voice over Internet Protocol (VoIP) as a preferable business application has influenced the demand for hybrid phone systems and IP phone systems, which combine the best of PBX functionality with the flexibility of an IP architecture.

IP-Enabled Phone Systems

For most businesses, new technology is seen as a risk which makes them tentative to upgrade or migrate to a full IP/VoIP environment.

An IP enabled PBX phone system can easily address communications challenges and adheres to those who are hesitant to migrate completely by using or combining Session Initiation Protocol (SIP) connectivity, digital extensions and ISDN trunks; meaning that you have the option to make calls completely via the internet, or the traditional Public Switched Telephone Network (PSTN).

This not only extends the longevity of a traditional PBX phone system (for instance, moving to virtual extensions when you run out of physical extensions) but also allows businesses to deploy new and seemingly ‘risky’ applications at their own pace.

Pure IP Phone Systems

IP PBX phone systems are rich in features and functionality, often designed to be modular, extensible and flexible. An IP PBX is based on open standards technology so that they can be fully developed with third party applications. This gives businesses the option to migrate to a fully managed, unified communications solution.

IP PBX phone systems are convergence ready, improve network scalability and support multiple offices, remote and mobile workers, and changing IT environments.

Investing in IP PBX phone systems removes the need for confusing and costly ISDN circuits in order to drive down costs, while maximizing efficiency in your workplace. Using SIP technology, businesses can still access the PSTN allowing voice traffic to be sent over a data connection. An IP PBX solution is also able to switch calls between VoIP and traditional phone lines while still offering the same functionality of your traditional PBX phone system. The ability of an IP PBX to use modern and traditional voice connections also provides built-in redundancy in the event one of the connections experiences an outage.

Hosted Telephone System

Unlike most telephone systems that require connections to the PSTN, hosted telephones, also known as a ‘cloud PBX’, is delivered completely over a broadband connection or SIP protocols. In essence, the so-called ‘hosted’ phone system is ‘hosted’ off-site in a secure data center. You gain access to the system by way of an intuitive dashboard or high-quality IP handsets.

Instead of purchasing or leasing the system outright, a hosted or cloud-based phone system is charged on a fixed monthly fee per user, and the hardware is owned and maintained by the service provider. Telephone systems installed at the customer’s location generally have a lifecycle of around five to seven years, whereas a hosted phone system is software based and upgraded on an annual basis through the service provider. Essentially, with a hosted phone system, you are space-sharing with other companies on the same platform. This is ideal for companies that don’t want to pay licensing, maintenance and software upgrades in order to have phone service.

Side-by-Side Overview

Key issues to consider

1. Connectivity

If considering a move to an IP based communications or hosted phone system, it is of utmost importance that your business has the level of correct network connectivity in order to properly support the solution.

When the internet was created, it was not designed to handle VoIP as VoIP was non-existent at the time. While the internet can handle, to some degree, VoIP traffic, it has to be configured over a fast network such as fiber broadband or MPLS, which provides greater benefits, better quality and bigger cost savings.

VoIP will continue to replace legacy ISDN telephone services, so for large businesses wanting to make the most out of a voice-over-data service, the key component will rely on the correct type of connectivity.

The benefits of upgrading your connectivity in an IP environment:

  • Access to more robust features that aren’t available with standard PBX systems or ISDN channels

  • Potential for full migration to Cloud services or unified communications

  • Lower cost SIP trunks

  • Multiple Quality of Service (QoS) at all points

  • Increased functionality

  • Improved voice quality

  • Improved security

  • Site to site VoIP

  • Remote access for home workers

  • Combined voice and data on a single line instead of multiple lines for separate services

  • Disaster recovery

  • Easy network management

To maximize your investment into a next generation telephone system will require an early review of your current infrastructure. For example, most credible providers will not be able to guarantee QoS with a VoIP over ADSL solution. The old saying, measure twice and cut once definitely applies. Using a consultant or talking directly you’re your carrier early in the process will help identify any potential quality-related issues that may come up – such as insufficient bandwidth.

2. Quality of Service (QoS)

Quality of Service – or ‘QoS’ is an industry-wide set of standards for ensuring the high-quality performance of critical applications such as voice traffic. The goal of QoS is to provide for the successful delivery of voice traffic over a network by ensuring there’s sufficient bandwidth, that latency and jitter are controlled, and to reduce the possibility of data loss.

The networks performance will need to be evaluated at its most vulnerable (i.e.: busiest time of the day) so that congestion can be considered. Sufficient bandwidth must be made available for future applications such as video conferencing.

QoS provides the following benefits:

  • Ensures that time-sensitive and mission-critical applications (such as voice traffic) have the resources required, while allowing other applications to access the network

  • More control over network resources allows you to manage the network from a business viewpoint rather than a technical perspective

  • Improves user experience

  • Reduces costs by using resources more efficiently, thereby delaying or reducing the need for expansion or upgrades

QoS depends on the type of connectivity and network solution used by your business. When implementing a VoIP or IP PBX phone system, it is highly recommended that you invest in a QoS network that will prioritize your voice traffic.

Costs comparison – what you can expect to pay for per system

It is best to look at your phone system as a long-term financial plan. For example, you may think that by owning your phone system (such as a PBX system) you may be better off, but maintenance, licensing and support for a five to seven-year period can be expensive.

Costs also need to be measured against the long-term savings to your business and overall productivity enhancements. You will also need to bear in mind ongoing costs such as adding new users, moving offices and other service costs.