Up-Front Costs
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Hosted VoIP has some hardware and installation costs that need consideration such as your phones and LAN switches.
The largest hardware costs are the phones. (This may be true with either hosted VoIP or a premise business VoIP PBX.)
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There will be expenses such as phone hardware, rack space, power, cooling etc...
The larger the business, the greater the Capital Expenditure costs.
Hardware needs to be installed and qualified staff or contractor costs will be incurred, meaning installation costs are high.
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Ease of Set-Up
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One of the great benefits of a hosted VoIP service is how easy it is to set up an extension or phone at remote locations. If you are going to keep hold of your internal phone numbers, there will be charges incurred in protecting and migrating your phone directory to a cloud based PBX. Migrating numbers to a cloud based PBX will not be easy and may take some time to manage.
The provider's service depends on ease of connections and setup, therefore plugging in an IP phone and putting in the correct credentials should result in an instant dial tone. |
IT teams usually must take out and replace any existing telephony infrastructure. So the phone system migration may result in some communication downtime. You will need an experienced service provider team to ensure this is done correctly to avoid excessive downtime and installation errors.
With an on-premise PBX phone system you can set up remote phones or extensions off site, however it may be more of a challenge. |
Infrastructure Required
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The most important consideration is your internet connection, you need to make sure that your broadband or fibre can support your hosted VoIP.
Your internet connection aside, there is very little infrastructure required as the hosted infrastructure required to provide features (chat, presence, etc.) resides in the data centre of your service provider. Your IP connection to the cloud allows users to access that functionality. |
On-premise infrastructure may vary by vendor but will typically include: proprietary control units to house analogue telephony boards; server(s) for hosting voicemail; features (chat, presence, etc.); and sometimes management/administration functions. |
Provisioning Requirements
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Landline connectivity is provided in the cloud. The cost of this connectivity is bundled into your per-user fee. |
For in/outbound calling, you will require analogue land lines which will require a telephone company contract. |
Monthly Costs
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Hosted VoIP providers typically charge a monthly per-user licensing fee.
There are generally additional charges for some features, such as, multiple attendants, A call queue, Music on Hold or Message on Hold, if they offer it at all. |
There are no monthly licensing fees which could mean after several years your hardware investment has been returned.
With a premise based business VoIP phone system feature sets might be incorporated in the PBX software so would not cost anything additional once you buy the PBX. |
Maintenance and Updates
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It is the provider who maintains the Hosted VoIP PBX. They will be responsible to fix hardware failures and upgrade the versions of software just like any cloud based provider. Hosted VoIP limits your responsibilities.
With most hosted VoIP provider's service packages, technical support is part of the package. Troubleshooting remote problems can be a challenge, but having the ability to call a trained technician that can help solve issues is a big part of hosted VoIP solutions. |
An on-premise PBX phone system allows you to have total control over its use and operation. Making changes to the system or changing VoIP providers is easier and can be quick to do.
You just need to have the right people maintaining the system and managing your updates and features. |
Total Cost of Ownership (TCO)
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By using a cloud phone system you can save money in IT personnel as your hosted provider will take care of any server configurations and maintenance.
There will be no great up-front costs and the only fee you will need to consider is your monthly license fee, which can be an advantage of hosted VoIP over on-premise VoIP depending on the size and structure of your business. |
By using an On-premise phone system your main costs will be your hardware and your IT team who will take care of any server configurations and maintenance. There will also be the cost of electrics and phone contracts, however you won’t have monthly license fee costs and this can be an advantage of On-premise VoIP over hosted VoIP. You also will have complete control and flexibility over your phone system. |
Network
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With a hosted VoIP system a transfer from one extension to another takes place at the hosted provider's switch which would usually reside some miles away. This increased distance can cause certain latency and also increases the need for a constant robust Internet connection. |
On-premise PBX signalling over your own network (LAN) instead of over the Internet can be an advantage, especially on days where the Internet connection is not as good as other days.
When you transfer a call from one extension to another extension in the office the phone switch on the premise makes that happen. All the signalling occurs locally just feet away instead of miles. |
Disaster Recovery (DR)
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You are reliant on your Internet link and hosting service with some providers offering some sort of redundancy. One negative is you don't have immediate access to your equipment like you would with an on-premise phone system.
However, if something were to happen such as a fire or flood and you were unable to enter your business premises, with a hosted VoIP solution all you would need would be some IP phones and an Internet connection somewhere and you would be back in phone service/business. All the features, recordings and operation of your business phone system reside far away at another location and are not affected by the catastrophe back home. |
It can be expensive to include redundancy into on-premise phone system. Only larger enterprises can typically afford such investments. One on the plus points is that you have access to equipment for troubleshooting at any time.
In the case or a fire or flood affecting your business premises and your equipment gets destroyed. To re-establish phone service with an on-premise phone system you would need another phone switch and phones and would have to invest in the set-up once again which could create a significant amount of downtime for your business. |
