Article by Andrew Wiggin

Is Hosted VoIP better than a regular PBX? Or will an on-premise PBX be better suited for my business requirements? The Hosted vs. On premise debate is interesting and there’s no clear winner. Whether you should choose one or the other for your organization depends to a large extent on your VoIP/ PBX requirements. To take this crucial decision, it is very important to understand the differences between these options.

What is Hosted VoIP?

As the name itself suggests, Hosted VoIP solutions use a third party to provide ‘hosting’ capabilities. As a user, you need not worry about the space and cost of installing the PBX system in your premises.

The greatest advantage of hosted solutions is that they have minimal setup and activation costs. Hosted PBX phone services are considered as the perfect business solution for small companies and SOHOs.

What do we mean by On-Premise PBX?

An On-Premise PBX can either be old-fashioned or one that incorporates VoIP technology. As a business, you have to purchase the hardware and the PBX hardware resides in your premise. Since a third party does not host it, an premise-based PBX has major implications related to cost and space.

Furthermore, you are responsible for the maintenance of the PBX system as well.

Cost Comparison

Hosted VoIP solutions have much lower setup and operational costs as compared to the one that takes up space in your office. There are many hosted VoIP providers which allow you to enjoy Hosted VoIP services for as low as less than $ 20 per month per user.

In contrast, there’s a major up-front cost involved with a regular PBX, often in the tens of thousands of dollars. Furthermore, you will likely need to incur additional maintenance expenses on a periodic basis as well.

Premise Based PBX is no match for Hosted VoIP as far as cost effectiveness is concerned.

Scalability

Most Hosted VoIP providers can scale your VoIP system in a matter of seconds. User administrators are often given access to easy-to-use web interfaces that allow them to add additional users and extensions. Contrary to this, PBXes can be a nightmare in terms of scalability, depending on what type of hardware you have. You may need to buy additional lines, get them configured to work with your VoIP PBX and even test them before you can use them. This means that you will likely need someone to come in to do all this work for you, meaning you will fork over more money everytime you add/subtract users.

Hosted VoIP solutions can be scaled in hassle-free manner by contacting your hosting provider. Scaling an on-premise PBX can sometimes be a daunting task.

Maintainability

Since there is no on-premise equipment for a Hosted VoIP solution, it has minimal (often zero) maintenance costs. You not only save on money but also on space and time as well.

Maintainability is a challenge for regular PBX solutions. You need to hire a dedicated PBX Administrator to manage the PBX solution if you don’t already have an IT person. Furthermore, you need to ensure that there are no downtimes and outages/ issues must be fixed quickly.

Hosted VoIP beats PBX hands-down in terms of maintainability.

Control & Flexibility

The On-Premise PBX offers a higher degree of control and flexibility to an organization. Since the PBX is managed in-house, you have control over what features can be used and by whom. If you want to add a new feature, you can do so without having to approach a third party.

Hosted VoIP solutions also offer flexibility in terms of features and settings. As mentioned earlier, some providers lay it all out in an easy to use web portal, where you can configure features as you please. However, you will not get the flexibility to make full customizations or add any features not already supported. You depend on your hosted VoIP provider for upgrades.

On Premise PBX offer more control and flexibility as compared to Hosted VoIP solutions.

Wrap-Up

Having compared Hosted VoIP and the on-premise PBX head-to-head on various metrics, we come back to the same question – Which works better? The answer depends on an organization needs. Hosted VoIP is the way to go for SOHOs and small companies. Companies that demand full customization of their communications system( with the deep pockets ) can opt for the premise based PBX.

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Tags: Between, Choosing, Hosted, OnPremise, Solution, VoIP