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Buy a PBX or host in the cloud?

Mitchell's picture

Every business needs a reliable phone system. Whether you're a small company that's growing every month, or an established business that's having problems with its current phone system, it's important to have a sound and cost-effective communications system.

Luckily for business owners, these days the options for office communication systems have increased hugely. The introduction of cloud-hosted PBX systems alongside the traditional on-site PBX systems has changed the business communications playing field entirely.

But how do you know which options are best for your business? Here are some practical questions you need to ask when considering a cloud-hosted or on-site PBX system:

1. What is the cost of ownership?

Traditional on-site PBX
There is the capital outlay, which is not just the price for the system, but also includes any installation costs. If you have multiple branches, each of your branches will require a PBX system, not just your head office. If you own a PBX, you will need to factor in the ongoing maintenance costs. Depending on the complexity of the PBX, maintenance can be expensive, especially if only a select group of experts are able to maintain it. Ongoing maintenance costs can occur if the system has any problems, if you need to change any configurations, or if you need any upgrades.

Cloud-hosted PBX
A cloud-hosted PBX service is 'software as a service', and does not present the risks and costs of PBX ownership ? these remain with the service provider, which manages and maintains the PBX in the private data centre. The primary on-site equipment required is a VOIP-enabled phone, to connect to the hosted PBX over your Internet line. You may also need to upgrade your Internet connection in order to cater for greater usage. A back-up access point, such as a 3G router, should your primary Internet line go down, is also essential. However, even with these requirements, the capital outlay for a cloud-hosted system would still be significantly less.

2. What is the cost of phone calls?

Traditional on-site PBX
You need a PBX to make calls, so these rates should be made clear upfront. Look carefully at the details. Is there a connection fee? Is there a minimum amount payable for each call? Do you have to buy a bundle of minutes in order to qualify for the lower rates, and if you don't use that bundle by the end of the month, do you then lose it? The telecoms regulations in South Africa are lowering the rates to call mobile phones every March for the next two years ? will you get the benefit of those rate drops?

Cloud-hosted PBX
VOIP is used to make calls in a hosted PBX, giving you access to highly competitive calling rates. VOIP calling rates are, in general, more aggressive than the rates from the incumbent operators. VOIP rates are also now more competitive than the rates you used to get on least cost routing (LCR) devices, which were the boxes with SIM cards to make calls to mobile phones.

3. How does the system scale as my business grows?

Traditional on-site PBX
There is a limit to the number of extensions the PBX can support. When your company grows beyond a certain size, like 10 or 20 or 50 employees, you will need to buy a totally new PBX or pay for an upgrade. But you also need to think about scale, especially if you have multiple branches. An on-site PBX is exactly that ? its 'on-site' so everywhere you have a 'site' you will need a PBX system. Each time you add a new office or branch, you will incur additional capital outlay.

Cloud-hosted PBX
There is no limit to the amount of extensions you add as the service provider can manage its scale of operations without the physical limitation of a box. Because it's irrelevant to a hosted PBX where each person is connecting, as you add more branches or offices, locally or internationally, they can all still connect to the same system.

4. What happens if I need more telephone numbers?

Traditional on-site PBX
Typically, each additional number must be ordered, which can take a few weeks. This also incurs additional monthly line rental fees for as long as you use the number.

Cloud-hosted PBX
Additional numbers can be obtained for a small activation fee or at a significantly less rental, as you do not need to pay for a physical line connection.

5. What happens if I don't like the system I have and want to change?

Traditional on-site PBX
Contracts are typically for 24 months and can be even longer if you are tied to a financing agreement to pay off the PBX over a few years. This makes getting out of the contract very difficult. With this kind of lock-in, you are precluded from benefiting from new products and technologies that become available.

Cloud-hosted PBX
Contract terms are month to month, as with most 'software as a service' products. So you are not tied down to a system you don't like or that ceases to meet your needs.

6. How flexible is the system to change settings to suit work patterns?

Traditional on-site PBX
Changing any configurations would require an understanding of PBX equipment and most businesses simply won't have that expertise in-house. This means you would need to call on your service provider to make changes even as small as changing an IVR or changing extensions.

Cloud-hosted PBX
Hosted PBXes expose their features and functions through a Web interface, so you can log into your account online and opt to change settings like IVRs and extensions without waiting for a 'service provider' to help you.

7. Can the system help me control and manage my costs?

Traditional on-site PBX
You can only control costs of which you are made fully aware. Receiving a bill at the end of the month makes it impossible to be proactive about your telecoms expenditure. To block things like international calls, or to cancel a number you don't need would, in most cases, require you to make a call to the call centre and/or write a letter to your service provider. Additionally, it would generally be impossible to obtain a breakdown of your costs per staff member, or per department, without installing an additional system.

Cloud-hosted PBX
Access to real-time reporting of the costs you are incurring puts you in control of your expenses. Cloud systems can even allow you to set a maximum expenditure budget for specific people if you need to contain costs. Through the online interface, you can subscribe and unsubscribe for services on the fly.

8. What happens when I need an additional feature?

Traditional on-site PBX
A PBX box will have the same features it had when you first bought it and unless you purchase an additional module or upgrade, you will not be able to get more features as you need them. Generally, functions like call recording, telephone management system (TMS) that provides costs breakdowns per department, and SMS messaging are completely separate systems.

Cloud-hosted PBX
The hosted PBX would typically have a comprehensive set of features that you would previously only get in the top end PBX systems. These were typically too expensive for most businesses. Furthermore, the features and functions are developed on an ongoing basis and will be automatically upgraded when a new service is rolled out without purchasing a new system.

As with any new concept and idea, there is the expected initial reluctance to switch to a cloud-hosted service. We like to 'own' things ? even our PBX box. However, building expertise in and maintaining systems that are just as easily sourced from the cloud will begin to make less and less sense, because it diverts critical resources from core business areas. Why do you want to be in the business of phone systems in addition to your main business?

Eric Schmidt, CEO of Google, said: ?Conventional wisdom on cloud computing was that these were toy systems that were not going to be reliable and that people would never store their information in the cloud.? But that is all wrong ... think about what is really going on here. Wouldn't it be better to have a qualified professional who is operating at absolute scale with a very strong incentive to keep you happy, and trust them to do what they do? It actually works.

Rapelang Rabana

Rapelang is the Global Head of Research & Development of Telfree, a pioneering next-generation operator. TelFree has the potent blend of being able to compete on a level playing field with incumbent operators, through its carrier network for voice and SMS, as well as leverage its IP-based platform to provide innovative products like Office Connection - the no-fuss cloud-hosted PBX.

- IT-Web