Cloud-Based Or On-Premise Phone System- The Tough Decision

Businesses cannot afford to follow- One size fits all! 

In today’s day and age, when there’s no dearth of options, it has become even more difficult to make the right choice. There are hundreds of solutions to the same problem. But the solution that works for your competitor- may not work for you. 

Today, we’ll be talking about the business area where one wrong choice can break the deal for you. 

And that is – Communication.

A well-established communication system is an asset that has the potential to skyrocket your business-customer relationship. Let’s see how!

• A survey by New Voice Media says- 75% percent of customers still believe calling is the most effective way to get a quick response from businesses.
• A similar study backed by American Express says- About 46% of consumers reported that they still prefer speaking to a customer service agent for difficult inquiries such as making a complaint or disputing a charge.
• Lastly, according to a Forrester study, 69% of customers are more satisfied when they talk to an agent over the phone, as compared to other customer service channels such as emails or FAQ pages.

Now you know how seriously you need to take your phone calls. 

Modern Businesses have one simple solution to take care of this- Voice Over IP (VoIP) telephones.

But, it isn’t as simple as it seems. 

There are precisely two kinds of VoIP telephone systems

• Cloud-based or hosted phone systems
• On-premise or in-office phone systems

There’s a huge debate going on regarding which one is the best and which you should choose. Well, we cannot tell you that.

What we can assure is – by the end of this read, you’ll be able to decide what will work for your business.

Read along to know!

What is a hosted or cloud-based virtual phone system?

Cloud-based phone systems, as the name suggests, are business phone systems that are not physically present in your premises. They are rather present with your service provider at a data center away from your office. You will have to pay your service provider a monthly fee to use the system, which is connected to your office via a public or private Internet connection. 

What is an on-premise or in-office phone system?

On-Premise phone systems are PBX installations within the local area network (LAN). It is similar to a traditional PBX system and resides in your premises. Calls in this system go through a traditional phone company as well as voice over Internet Protocol (VoIP) using SIP trunking. It is mainly ideal for large organizations that already have the infrastructure required to host an on-premise phone system.

 What are these systems all about?

CLOUD-BASED PHONE SYSTEM: Cloud-based virtual phone systems are office phone systems that are not physically present at your premises. They are Phone systems where your phones connect through your Internet connection to a third-party, i.e., a service provider that maintains the equipment at an off-site ‘cloud’ data center.

ON-PREMISE PHONE SYSTEM: On-premise phone systems are business phone systems that are present on the premises. The hardware in these systems is kept on-site in your server closet.

What are similar features?

CLOUD-BASED PHONE SYSTEM: You will find the same features in both the phone systems, some of them are- 

• Call control
• Call management
• Voicemail
• Messaging
• Web-based management
• Call training
• Analytics

ON-PREMISE PHONE SYSTEM: You will find the same features in both the phone systems, some of them are- 

• Call control
• Call management
• Voicemail
• Messaging
• Web-based management
• Call training
• Analytics

What is the cost involved?

CLOUD-BASED PHONE SYSTEM:

• Setup cost is low
• There are no maintenance costs at the business owner’s end.
• (OpEX)Operational expenditure is applicable.
• Potentially higher ongoing service.

ON-PREMISE PHONE SYSTEM:

• Setup cost is high
• Long-term maintenance costs at the business owner’s end. 
• No risk of fee increases
• The total cost of ownership is low, especially as the system grows.

What if we want to expand our phone systems?

CLOUD-BASED PHONE SYSTEM:

• Your provider does the work involved in the expansion.  
• Growth or retraction is not a hassle.
•  You always have an updated system as software updates happen automatically.

ON-PREMISE PHONE SYSTEM:

• You have complete control in terms of expansion.
• Every expansion increases the complexity of the system.

Who exercises the actual control?

CLOUD-BASED PHONE SYSTEM:

• Your service provider handles the software updates and maintenance processes for you.
• You gain the ability to allocate your IT resources to other revenue-generating tasks.
• Your service provider is better equipped and thus exercises the actual control over your system.

ON-PREMISE PHONE SYSTEM:

• You have to handle all software updates and maintenance processes; you have to get it done by your internal IT staff or outsource the task.
• You need to micromanage all the details by yourself.
• You gain control over every detail. 

Are there any more characteristics that we should know?

CLOUD-BASED PHONE SYSTEM:

• Service providers are experts who are better equipped than you to implement a solution.
• Some Cloud options are not cost-effective when deployed on a large scale.

ON-PREMISE PHONE SYSTEM:

• You can do what you want with your equipment, but with great power comes great responsibility, remember?
• In contrast to your service provider, you may lack enough internal resources or the budget to make highly customized changes.

But what about the implementation?

CLOUD-BASED PHONE SYSTEM:

• Implementation is quick and hassle-free. 
• There is a little dependency on in-house IT resources.
• Your service provider may or may not lend the facility to train your in-house users.

ON-PREMISE PHONE SYSTEM:

• Implementation is a lengthy process.
•  Implementation time and cost is higher as compared to the cloud-based phone systems.
• Your solution provider may or may not lend the facility to train your in-house users.

Can you discuss some of the pros?

CLOUD-BASED PHONE SYSTEM:

• Minimal hardware requirements.
• Complete geographical independence.
• Expansion is easy.
• Heavy backup.
• Rare disruptions.

ON-PREMISE PHONE SYSTEM:

• Operations costs get lower with time.
• Complete control over the system.
• You can know the cause of disruption in real-time.

What about the cons?

CLOUD-BASED PHONE SYSTEM:

• Some service providers may ask for high initial installation costs. 
• Service subscription for a few months. 
• Surprise charges may be added if you choose the wrong service provider. 

ON-PREMISE PHONE SYSTEM:

• The set-up cost is high.
• You may not enjoy complete geographical independence. 
• Expansion can be a mess.

What if we ask you to recommend anyone?

CLOUD-BASED PHONE SYSTEM:

If your business is experiencing growth and does not have in-house IT resources, then cloud-based phone systems are the way to go.

ON-PREMISE PHONE SYSTEM:

If your business can support an IT department and has the needed resources, and if you can handle complete control over your phone system, then an on-premise phone system is for you.

Let’s make your choice easier

In terms of payment-

• Choose an on-premise PBX system if you have the budget to pay upfront to buy the system.
• Choose a cloud-based phone system to take advantage of the tax benefits of OpEx, and instead of purchasing a phone system, rent it or purchase a phone service.

Think about your IT team-

• Choose an on-premise PBX system if you have the resources to maintain your own phone system.
• Choose a cloud-based phone system if you want your IT team to focus on revenue-generating projects instead of maintaining a phone system.

Are you a Control freak?

• Choose an on-premise PBX system if you want full control of your phone system.
• Choose a cloud-based phone system if you want to leave it to the experts- your service providers. 

Do you have more remote workers?

• Choose a cloud-based phone system if you have many remote workers or multiple offices to save money and avoid unnecessary hassle.

Do you foresee growth or retraction in your business?

• Choose a cloud-based phone system in that case so that changes can be made in a timely and cost-effective manner.

Conclusion-

You are indeed the sum of your choices! 

You need to have a thorough understanding of your business needs to make the right decision. Because in this case, it is not about which is a better phone system, but which phone system is best for your business. 

 The choices that you make today in terms of infrastructure will decide the trajectory of your business. Make sure it is a wise one!

Source: CallHippo