The world of business communications is ever-changing. Recently, one of our clients asked, “What’s the difference in Hosted PBX vs On-Premise PBX?” While communication is at the heart of every business, sometimes finding a telephone system that meets your business requirements can be challenging. Here’s what you need to know when it comes to hosted PBX and on-premise PBX systems.

1. Both can use VoIP technology

Both hosted PBX and on-premise PBX refer to phone systems that can leverage VoIP technologies. Instead of traditional phone lines (commonly referred to as plain old telephone service, or POTS), VoIP uses the internet. VoIP has many advantages over traditional analog phone lines, the biggest of which is typically cost savings. VoIP- based phones tend to be less expensive, particularly for long distance calling rates. Because they use the internet, most VoIP technology also offers advanced features not available on traditional analog phones ­­like unified messaging, CRM integrations, and “find me/follow me” call routing.

2. Hosted PBX deployment vs. On-Premise PBX deployment

There are, however, significant differences in terms of deploying the two telephone systems. As you can imagine, an on-premise PBX system has a much more costly and lengthy installation process. With on-premise PBX, you are responsible for purchasing and maintaining all the equipment in-house. In addition to the cost of the equipment, an on-premise PBX system will also require skilled IT technicians to do the installation and deployment may take longer as they get up to speed on the new equipment.
Hosted PBX, on the other hand, is located “in the cloud” and fully-managed by your service provider.  Your service provider is responsible for all technical aspects, including provisioning, maintenance, upgrades, and user support. And while they do charge you a fee for this service, (Yazatel doesn’t), the overall cost is typically significantly lower than deploying an on-premise system.  Aside from the telephone on the user’s desk, there’s no other equipment to manage or set up on-site, making it a quick and painless process for the customer, with minimal downtime.

3. Resource and infrastructure requirements

With an on-premise PBX system, you not only have to purchase the equipment, but you are also responsible for managing, operating, upgrading and securing the PBX system, which requires significant staff resources and expertise. If you are a small business with limited resources, you may not have the IT support agents in-house to manage this type of phone system.  However, if your business already has a PBX system, the initial CapEx investment may not be a concern and you may be able to get more mileage out of your current equipment, including handsets or hardware, then an on-premise system might be the answer.
Conversely, with hosted PBX you don’t own the equipment, so there is no ongoing maintenance required on the customer’s part, freeing up your staff’s time to focus on more strategic initiatives. Furthermore, you can get a choice of desk phones at a per-seat, per-month price that you can easily upgrade, giving you added flexibility. Moving to a single hosted PBX provider also simplifies your process by eliminating the need for multiple vendors including ISP, local and long distance carrier, PBX maintenance, conference call provider, and IT consultants. Lastly, you can scale easily as there is no hardware to configure and new lines can be added virtually, and quickly.

4. When it comes to cost optimization, size matters

Both hosted and on-premise PBX systems have cost savings compared to legacy phone systems.  If you have already invested heavily in the cost of a PBX system, utilizing SIP trunking might be the way to go. Additionally, an on-premise system can be the strategic choice for an enterprise-level organization that can afford to invest more resources up front, as it can bring long-term cost savings at a large scale, compared to hosted VoIP.
The hosted PBX model offers a fixed, measurable and often transparent pricing structure that empowers all clients with enterprise-grade phone systems at affordable subscription fees and zero CapEx. The biggest cost saving is in the initial purchase, since there no expensive equipment to buy.

5. Consider your communication requirements

It’s important to consider your communications requirements prior to committing to a telephone system. Each system offers unique features. An on-premise PBX will offer far more options for customization, if you have the IT team to manage it, and can offer more features and security options. However, organizations that lack adequate infrastructure capabilities, redundant components, and backup run the risk of service downtime if something goes wrong with their phone hosted PBX system on-site. On the other hand, with hosted PBX, by leveraging the cloud you can to extend your service to any device- smartphone, laptop, tablet, in the event of a network disruption. Additionally, you have the added convenience of being able to manage your system from anywhere using an online portal. CRM integrations are also available for hosted PBX systems, providing more visibility into the customer on the phone and efficiency for your sales teams. Lastly, hosted PBX is a great option for businesses looking for a scalable system that can grow with them.
Is it time to get your phone system in the cloud? Contact us to learn more about Intelligent Communications from Yazatel.