The proliferation of hosted-private branch exchange (PBX) solutions has led to a surplus of information about 
these virtual telephony systems. But small business owners should consider the pros and cons of both hosted and on-premise systems when evaluating a new system for their offices.
Software Advice has recently put together an article discussing the five important considerations for small business owners deciding between Cloud-based and on-premise systems. The team at Software Advice suggests that buyers consider the following:
VoIP Vs. PBX Phone Systems
1. The Real Total Cost of Ownership
On-premise systems typically require a large upfront investment, while hosted VoIP systems are paid for with more affordable, monthly payments. But buyers should consider the total cost of ownership (TCO) of these systems in addition to the initial capital necessary to purchase a new phone network.
For example, a recent study showed that after only three years, the TCO of Cloud-based systems was greater than on-premise solutions. In addition, while the initial investment was largely absorbed in year one for on-premise systems, costs increased at a steady rate with hosted PBX systems.
2. The Value of Specific vs. Bundled Functionality
Today, the technical capabilities of hosted and on-premise systems are largely equal. One difference, however, is how these features are bundled. Hosted providers commonly bundle features and charge a set per-user price. On-premise, on the other hand, often provides buyers greater flexibility on the features and functionality they want to pay for (particularly, offering more customization for specific users).
If customization is important, buyers should make this clear up-front when working with providers. Buyers may have to shop around to find a hosted provider that offers the perfect bundle. Alternatively, buyers should have a detailed list of features for hosted providers to ensure they are given an accurate price quote.
3. Ease of Customization
Customization is often attainable with on-premise systems, as an on-staff IT professional commonly oversees the system’s deployment and management. With hosted systems, customization is often handled by the provider. While vendors may offer some customization, they are often unable to make extreme customizations for every customer.
If your system requires advanced customization, on-premise PBX may be a more reasonable option. If choosing a hosted option, work with a vendor to discuss the exact customizations you need and what they can offer.
4. User Experience
To ensure voice quality, on-premise systems will prioritize data traffic. With hosted solutions, voice and data packets will often fight for preference, which leads to deteriorated voice quality.
Hosted vendors may offer a Session Border Controller (SBC) device to help improve data quality, but this will considerably add to system’s cost and complexity. If you think voice quality may be an issue in larger networks, consider this when evaluating hosted vs. on-premise systems.
5. True Costs of Tech Support
If your company currently manages your own data, chances are you already have a well-staffed IT team--and implementing a hosted system is unlikely to eliminate your existing staff. Rather, this just transfers support responsibility to a third-party and adds to your current support costs (rather than reducing them).
If you currently don’t have an IT team, then hosted can potentially save your company from having to hire technical staff members. However, you should also consider how relying on third-party support works with your company’s current strategies. If your telephone system is critical to your business, you should be very comfortable with your vendor that will be responsible for system support.
For more information on both on-premise and hosted PBX solutions, check out the following article from Susan Campbell at Software Advice: Are On-Premise PBX Systems the Best Choice for SMBs?
