Voice over IP (VoIP) telephone services are becoming huge business among small-and-medium sized enterprises. Between 2010 and 2011, revenue for VoIP hosted phone systems grew by 33%, and it shows no signs of slowing down.
It's easy to see why VoIP is popular among growing businesses. It's less expensive than traditional telecommunications, it gives you more options for expanding your communication and data services, and it's easier to manage as well.
The only real question for businesses looking to move away from traditional copper wire service, is deciding whether to use an outside hosted VoIP service provider or to create in-house virtual phone systems. These are different solutions for different kinds of challenges, so let's quickly look at the differences.
On-Site vs Hosted Phone Systems
Broadly put, the difference is simply who is running your communications system in the end. You can hire an outside service provider to give you VoIP service much like your long
distance provider currently does, or you can create your own in-house PBX and run everything onsite.
For a new business looking towards its first steps into VoIP, going with hosted phone systems makes sense for a number of reasons:
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It's generally much cheaper to begin. Most hosted VoIP providers can work with your existing equipment, meaning minimal upgrade costs.
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It's faster to install. A company with experience in moving enterprises from copper to VoIP is going to be able to do it quickly and more efficiently than if your operation tries to do it from scratch.
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You know who to call for support. One provider means one point of contact. If your service goes down or needs support, there's never any doubt who to call to get it fixed.
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Less on-site expertise is needed. Trying to host your own phone service would almost certainly require hiring new talent to manage and oversee the system. Hosted providers remove that requirement.
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Set monthly rates make budgeting easy. Most hosted VoIP services have a flat monthly fee that covers both data and equipment costs, potentially reducing much of your communications budget to a single line item.
The Tradeoffs of On-Site VoIP
So, hosted phone services are generally a good choice for newcomers or for businesses which don't have the cash to make a large up-front investment in new technology. None the less, there are tradeoffs to consider, especially when looking at long-term returns from on-site solutions.
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You're often locked into contracts. Just like with long distance or cell service, if you're dissatisfied with the service, you may be trapped for years.
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You're reliant on their tech support. If your network fails at 3 AM in the US and on-site workers in India can't log in, will your VoIP service be available and ready to respond? For some, the answer is "yes," but it's far from a sure thing.
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Service can be spotty. Many hosted services, especially discount ones, simply use the public Internet for IP communications, leading to uneven or unreliable service. An on-site solution can tap into your own distributed network to speed service.
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Those monthly fees continue to drain your budget. The tradeoff to the low startup costs of a hosted service is that you keep paying, month after month. On five- or ten-year projections, on-site solutions generally have a hire ROI.
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You can only adapt as quickly as they can adapt. Having an on-site VoIP service gives you far more flexibility to alter your communications needs to suit ever-changing business environments.
The Bottom Line
So, the truth about VoIP phone systems is that both options available can be good choices, depending on your individual needs and budget. We generally recommend on-premise solutions when possible, but hosted phone systems have helped plenty of SMBs move to 21st century communications
