13 Nov 2020
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The Pros & Cons of Hosted vs. On-Premise VoIP Solutions

Is your company debating between a hosted PBX or an on-premise VoIP solution? Both are good choices, but they come with unique pros and cons. By breaking these down, we can help you make the right choice for your business.

Hosted PBX

A hosted PBX is a cloud-based phone system. Basically, a trusted hosted PBX provider supplies all the hardware, software, and maintenance for your phone system. They provide the whole service; you just use it and pay for it. It’s a popular choice for growing businesses with a lot of benefits and a few drawbacks. 


The Pros of Hosted PBX

There are many good reasons to choose a hosted PBX, including:

Savings. You don’t pay to maintain hardware, since the provider is the one managing all the hardware. Speaking of, because the provider is managing all the hardware, you save your IT department time as well. 

On top of that, you can reduce the costs of local calls by up to 30% and international calls by 80%. 

Low Setup Costs. The provider does all the setup while you avoid the capital expense of a bunch of hardware. 

Remote Training. A hosted PBX is basically a remote service already. Adoption and onboarding is made easy by remote training. 

Scalability. You can add and remove seats to your hosted PBX with the click of a button. If you’re in a business that expands and contracts seasonally or you need to be able to grow quickly, the inherent scalability of a hosted PBX is pretty attractive. 


Potential Cons of a Hosted PBX

Cons are in the eye of the beholder, but hosted PBXs come with a few drawbacks. Depending on what you need, of course. 

System Control. Your system might come with a portal to control some stuff at your end, but wider control of the system remains with your provider. For some businesses, this is ideal—the provider takes care of everything. But for some who want their own IT taking care of their own system, this can be a point of friction.  

Equipment Purchases. Depending on the service agreement, you may need to purchase handsets and network equipment from providers. Other providers, such as ThinkTel, offer options to choose a device that can be bundled with these components and paid monthly.

Call Quality Depends on Network Connection. In an ideal world, your hosted PBX provider is also an ISP that already manages your network connection. But if that isn’t the case and you have a bad network connection, getting your phone service over the cloud might not be ideal. 


On-Premise PBX

Many businesses have an on-premise PBX. It’s a location-based phone system, which means that all the hardware is at your businesses physical location. If you make a call, it will go through your call server over a dedicated voice network connection. So, is it better or worse than a hosted PBX? Well, it depends on your needs. An on-premise PBX comes with its own pros and cons. 


The Pros of an On-Premise PBX

An on-premise PBX comes with some unique selling points. These include: 

Zero Risk of Price Hikes By Service Providers. Not paying a monthly fee to a hosted PBX provider means you’ll never see an increased fee. 

Control of Your PBX System. If you have unique needs or serious security concerns, retaining full control of your own PBX system is a major selling point. 

Complete Customization. Again, if you have unique needs or just want options not afforded by hosted PBX providers, you can build your own system however you want. 

Scalability Without Price Increase. You want to add seats to your system? You won’t have a service provider charging you more money. Although, you may need more system and channel capacity, if you’re adding a lot in terms of step functions. 


Potential Cons of an On-Premise PBX

Just as with a hosted PBX, the potential cons of an on-premise PBX are in the eye of the beholder. But here are a few. 

High Installation Expenses. When all your equipment is your own, you’ll have high upfront capital costs. 

Long-Term Maintenance. Once you pay those big capital costs, you’ll need to invest in long-term maintenance of your newly purchased toys. 

Service & Support From In-House IT. When you have an on-premise PBX, maintaining it 24/7, until it needs to be replaced, becomes a big job for your IT department. They also become responsible for growing your system with your company, replacing pieces as necessary. As much as your on-premise PBX is a resource, it also requires extensive resources to manage properly. 


So Which Is Best?

Which is better, a hosted PBX or an on-premise PBX? This depends on your business goals, immediate communication, and productivity needs. If your company has the IT expertise needed for installation and the capital to invest in equipment, then an on-premise PBX might be feasible. For most organizations however, the lower costs, minimal maintenance, and major flexibility of a hosted VoIP phone platform are enough for them to make the leap to a cloud option.

Need some expert advice? Reach out to our team or request a sample quote to help you make an educated decision on which one is the right fit for your organization.

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