Hosted VoIP vs. On-Premise

Should our company purchase a hosted phone system or an on-prem phone system?

If you’re asking this question, you are not alone. The list of hosted PBX vendors is growing rapidly and this technology is obviously on the rise… But is it the best fit for your company? Is it stable? Are the vendors reliable? Is it too expensive?

In this new video, AeroCom President, Mike Smith, explains why hosted VoIP is the best fit for most companies. He reviews why the vendors are more stable, why the service is more resilient, why the cost is lower, and more.

Want to know which vendors Mike says you should quote, based on your company’s requirements? Click this button and he’ll tell you!

Ask Mike

About Mike
Mike Smith is the Founder and President of AeroCom and has been helping companies with telecom and cloud services since 1999. He has been the recipient of numerous business telecommunications industry awards and in 2011, he was honored as one of the top 40 business people in Orange County, CA., under 40 years old. You can also hear him as the host of the popular Information Technology podcast, ITsmiths with Mike Smith. Follow Mike on LinkedIn, Twitter or SpiceWorks.

Transcript

Should your company purchase an on-premises phone system or should you purchase a hosted PBX or a cloud phone system? I know a lot of you out there have an end of life phone system and those are the things you’re thinking about. Especially larger companies are starting to really contemplate, hey, should we go with this hosted phone system thing or should we get something on-prem?

My answer to that 99% of the time is you need to go with a hosted system, and let me tell you why. Number one is stability. This is probably the biggest objection I hear about cloud phone systems, but it’s actually the opposite of what people think. Companies will say, “Hey, we have a large company, we have 1000 employees, and our management team really wants to go with an on-prem phone system because we feel these vendors are more stable as opposed to cloud, these small cloud-based phone systems.

It’s actually the opposite. Right now, in 2019, there is so much popularity for hosted or cloud PBXs that the entire market is making a monumental shift in that direction. All the large on-prem phone system manufacturers are struggling dramatically. They are really suffering as their business is basically disappearing in the blink of an eye. So in terms of company stability, you definitely want to look towards cloud companies as opposed to on-prem companies. The cloud companies have a much more stable future than the on-prem companies.

In five to 10 years it is going to be more, and more and more difficult to find replacement parts for on-prem phone systems, and to find vendors who are going to be able to service your on-prem phone system, just because so many people are going to cloud. There’s not much business for these vendors to sell these on-prem phone systems, so they’re just stopping selling them, they’re stopping support of these systems.

So if your management team is stuck in a paradigm from 15 years ago and thinking that on-premise phone system companies have more stability than cloud companies, you really want to look at the economics and even take a look at these companies financials. The large on-prem phone system companies’ financials versus some of the big names in cloud phone systems. You’ll see, it’ll be staring you right in the face, that cloud is where it’s at.

Okay, another reason why a cloud phone system is a better option than an on-prem phone system is redundancy. So, just like everything else in the cloud, no matter what happens to your site, phone calls will always be answered with a cloud phone system. So if your site loses power, or if your lines get cut, if there’s a backhoe cut somewhere and all the internet goes down, your phone calls are still going to be answered. And, if you have a mobile app with your cloud phone service, you’ll have a mobile app on your phone and a software client on any computer where you can still answer calls. So in essence you’re walking around with your phone system on your mobile phone. So in terms of redundancy, cloud has way more redundancy than your on-prem systems ever had.

Okay, and one of the big ones is cost. I hear a lot of companies will say, “Oh, cloud phone systems are really expensive. You have to pay for them every single month and the cost never goes away.” But what they really haven’t seen, if you’ve looked at the right cloud phone systems, the right hosted PBX companies, the cost is probably about the same as your company is currently paying for landlines. So, yes, you do have to pay a monthly fee per user per extension every single month until the end of time if you have a cloud phone system, that’s true, but you’re also going to have to pay a monthly fee till the end of time if you have phone lines.

So, either way you have a monthly fee, and if the cost is the same, you might as well get the phone system included and all the maintenance included with it. So because that, that’s probably the biggest driver that’s creating this huge tidal wave of business to these hosted phone systems, is that the cost is what companies are already paying anyways, relatively speaking. So it makes it an easy decision when you compare that, add that up with all the other benefits that hosted phone systems bring.

And the final reason I want to bring up that makes cloud phone systems superior is just flexibility, is everything else in the cloud is just the same way, they’re completely flexible. So as your company scales up and scales down, the phone system can scale with you. You do not have to purchase a phone system that is going to be as big as your company, whatever need 10 years from now, and as small as you’ll ever need 10 years from now. You can scale it up and scale it down. So, if you want to turn on a feature or turn off a feature, try new things, try new providers, it’s completely flexible. So just another benefit of cloud phone systems.

I don’t mean to say that cloud phone systems are always the best solution. There are certain rare instances were on-prem phone systems are a better fit. Like, for instance, if you have a remote location that has zero high speed internet connectivity, it’s really bad internet connectivity, probably not a great spot, obviously for a cloud based or hosted PBX. And there’s a few others here and there, but they’re really rare. For the most part, if you really look at it, cloud phone systems are the future. That’s why a lot of companies are going in that direction, and that’s why all the money in this marketplace, in this industry is going to hosted PBX service providers.

If you have any questions, let me know. I hope that helps a little bit. I’m always happy to answer your questions. Feel free to email me or call me 714-593-0011, and I hope you have a great day.