In our last post we discussed the reasons for why I think every business owner needs to look into a VOIP solution.  In this article we discuss which type of general VoIP system is right for your business.

In general there are two types of VoIP solutions: a “hosted PBX” or an on premise PBX system.

The term PBX stands for Private Branch Exchange (PBX) and applies to VOIP, analog and digital business phone systems.  Essentially it’s the system that provides you dial tone and has the intelligence to route the call internally or externally send the call to voicemail, etc.

On premise PBX systems are placed at your business location most often as a hardware device however there are software only VOIP systems that can run on your existing server equipment.  The phones are connected to the on-premise system are connected over the existing computer wiring in your office.

With a hosted PBX system, the phones are connected over the existing computer wiring in your office however the calls  are sent and received through an offsite system that resides on the Internet. The phone registers with the Internet based hosted PBX and the call routing takes place on the other side of your Internet connection.

Hosted PBX

A hosted PBX system replaces your phone system with one that is running in an off-site location that is managed and owned by the VoIP service provider.  What’s nice about a hosted PBX solution is that it requires no special equipment on premise besides the phone.  The biggest drawback to the service is its dependant upon your Internet connection and assumes your connection will be up all the time.  The connection also needs to be clean and not overloaded. If the Internet connection is down or is overloaded, you will not be able to make or receive calls, the call quality will break up, you will hear echoes or stuttering and worse yet the call may drop completely. In most scenarios the equipment is rented to you by the service provider.

Pros:

• On-site equipment is not needed.
• Upgrades and maintenance are performed by the VoIP provider.
• Ideal for businesses that are light phone users with little dependency on phone an fax for conducting business.
• It has all the features and functionality you would expect from a VoIP system.

Cons:

• Call quality can be poor, especially if bandwidth is low.
• If the internet goes out, so does the phone system.
• Some VoIP providers are not able to incorporate emergency-911 tracking in to their systems.
• Despite improving technology that lowers costs, the savings are almost never passed on to the client.
• Internet bandwidth and availability will determine the call quality and the number of phone lines that can be supported.

On Premise PBX

An on premise VoIP system can be much more cost effective while providing superb call quality.  However, an on premise PBX system does require some special equipment in the office.   In most cases the equipment easily integrates with the existing computer network, making it a minor issue.  On premise PBX systems can be ideal for any business regardless if they are light or heavy phone users.  Internet services can still be leveraged to reduce the overall communications costs while still leveraging traditional phone lines for high priority call such as inbound sales calls or faxed orders.

Pros:

• On-site systems currently have the best call quality.
• On-site VoIP equipment can also be purchased outright and can last 5 to 10 years.
• Lease-to-own monthly payments are comparable to hosted PBX monthly costs, and end after the term.
• VoIP systems on-site have complete VoIP features plus they can be customized for specific business needs such as IVR, call centers etc.
• Can integrate with computer and CRM systems to pull caller information up when an incoming call arrives.
• On premise systems are robust and reliable and can make use of all telephony connections such as SIP trunks, PRI, and traditional analog phone lines.

Cons:

• Requires special on-site equipment and network set up.
• The business owns and is responsible for upgrading and maintaining the equipment on its own or through their VOIP reseller.

Both VoIP solutions are feature rich, but in most cases an on-premise PBX system is the way to go – especially if your business depends on relationships that require phone and conference calls.  A correctly planned and installed on premise PBX system is more robust than a hosted solution, so it does not suffer from Internet outages.  On-premise systems can also be linked together to support multiple locations, small branch offices and home offices.

Between an old analog phone system and the two general types of VoIP solutions,  the decision to switch to VoIP is not a difficult one.  Additionally, knowing how your business truly uses it's phone system will help you decide which general type of VoIP solution is best.  This is mainly due to the fact that any VoIP solution you go with is going to have all the features available.