Choosing Your Business Phone System – Hosted vs On-Premise

If you’re looking to upgrade your phone system and weighing the differences between on-premise and the option to host in the cloud, consider the following factors to get the solution that best meets your needs:

1. Feature Costs. Obviously the most important factor to consider is which features are offered in each. Most hosted providers don’t offer the same features that are available in their premises-based solution. If critical business communications features like queues, IVRs and conferencing are missing (or cost extra) then it’s difficult to make an apples-to-apples comparison.

Tip: Look for vendors with solutions that offer all features in both their hosted and on-premises phone system solutions.

2. Upfront Costs. Hosted unified communications (UC) solutions have a low upfront cost and are typically charged as a monthly per user fee. Using UC with an on-site server has a higher cost upfront, but then no recurring monthly fee. Above a certain threshold it becomes more cost effective to purchase your own equipment than to pay a monthly fee.

Tip: Hosted tends to be the most attractive for businesses with five to 15 employees. However, even larger businesses with 100 or more users may choose a hosted phone system due to other advantages.

3. A hosted UC solution can often have a very low total cost of ownership due to the savings in IT personnel. This is because hosted providers take care of server configuration and ongoing maintenance.

Tip: Consider the size and structure of your business which can help you decide on hosted UC over premises-based UC.

4. Existing Infrastructure. Consider your current technology infrastructure. Are you using a legacy system to connect your phones to the Public Switched Telephone Network (PSTN)? Legacy connections like Time Division Multiplexing (TDM) can be expensive. You could see a cost savings in switching to a SIP trunk or by using a hosted UC provider.

Tip: You can save money by replacing your legacy TDM connection with modern a SIP trunk

5. Scalability. If going with a premises-based solution, you will likely want to purchase a larger appliance than is initially needed to accommodate future expansion. With hosted UC, new users can often be added to the phone system on an as-needed basis, and without having to worry about upgrading hardware.

Tip: Be sure to account for future growth when considering your options.

6. Revertibility (Can you go back?). Regardless of whether your existing system is a premises-based or cloud solution, when considering a move to a new business phone system it is wise to ask if the transition is revertible.

Tip: A truly flexible solution allows you to move between on-premises to hosted to hybrid and back again, seamlessly and with a minimum of friction.

7. Disaster Recovery. It is a necessity to have a thorough disaster recovery and contingency plan. If your main office becomes incapacitated does your phone system allow remote connectivity over mobile devices? Hosted UC has the additional advantage of keeping you connected even if your office is out of commission.

Tip: Look for mobile integration. It can be a lifesaver during unexpected catastrophes.

8. Security. Outsourcing your IT can bring with it serious security implications. Smaller businesses may find that a hosted provider does a better job of keeping data secure. This is because of the dedicated pool of resources the provider invests in keeping all of their clients’ data safe. However, if your business must comply with security regulations that require data to be stored on-site then a hosted solution will not be a good fit.

Tip: Ensure that your vendor has resources to keep your data secure.

Purchasing the right phone system is important for the success of your business. Determining which solution is right must involve multiple factors, including whether you are interested in a capital expenditure or the flexibility of a month-to-month expense. And that decision starts with understanding the differences between a hosted and premises-based VoIP solution.

Once you are able to weigh the pros and cons of on-site and hosted solutions, and determine which features are most needed from each solution, you can then be confident that you are on your way to choosing a phone system that gives you the greatest return on investment.

Find out what the future holds for Unified Communications and Collaboration in Australia at the Integrate Conference. Find out more here.

Read this article on ARN.