A woman comparing benefits of Hosted VoIP to traditional PBX services.

The SMB Communications Showdown: Hosted VoIP vs. On-Site PBX

Establishing new investments in infrastructure is an essential part of growth. Companies everywhere are beginning to scale their operations and look at more efficient ways to manage their costs,

One of the first steps that most small business owners take when building out their corporate structures is deciding on how to manage their internal and external communications.

When starting out, most companies traditional tend to invest in on-premise PBX phone systems for handling their call volumes. These have been the de facto corporate communication solutions for years. However, as newer technology has become readily available, many organizations are now benefiting from VoIP hosted solutions to manage their communications.

So which solution is right for you?

Here are some considerations to make when comparing hosted VoIP to PBX solutions.

What are the Differences Between PBX and VoIP Systems?

On-premise PBX (Private Branch Exchange) systems were the gold standard in office communication for many years. PBX uses a traditional analog system and consists of direct line-to-line communication.

When a call is connected, it is physically connected on-premise through an exchange network managed by your telephone provider.

VoIP (Voice over Internet Protocol) systems are different. They use the internet to transmit data packets (converted voice signals) from your connected network.

VoIP puts your phone system on the same digital network as the rest of your business. It increases the efficiency of your data network and eliminates the need to manage two separate networks.
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Comparing Flexibility Between On-Premise and Hosted Phone Solutions

When it comes to comparing the flexibility and scalability of in-office communication systems, VoIP solutions are much more capable than older PBX systems. One of the largest differentiators is how easy it is to add new users and capacity to a VoIP system.

A Hosted VoIP phone system supports the frenetic growth that many small businesses face without a large up-front investment.
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As your call volume scales over time, adding another line on a VoIP system is as simple as adding a new user license on your account (no need for additional hardware).

On the other hand, PBX systems come with a pre-determined number of lines. Any change to that format requires expensive delays as telephone providers install new phone lines and upgrade equipment.

Measuring the Quality and Reliability of Hosted VoIP vs. Traditional PBX Systems

One advantage of using an on-premise solution is that it is directly connected to your network through your telephone provider, meaning there are usually very few connectivity and outage issues.

VoIP systems are connected to the internet. Therefore, there is always a chance of server issues leading to dropped calls or interference. However, many of these risks are easily mitigated. You can do that by ensuring your Internet Service Provider (ISP) has you set up on a high-bandwidth plan.

Related: The Rise of Cloud-based Applications

There are a number of providers now that have plans dedicated to businesses using VoIP solutions. These providers are able to support their clients’ needs with minimal downtime.

Many companies choose to supplement their VoIP systems. They sometimes use a PBX solution as their backup in case of any power outages.

Weighing Costs and Overall Efficiency

If you’re evaluating a system that offers the best balance between value and efficiency, then a VoIP system is the better choice.

When it comes to upfront costs for setup and monthly management fees, VoIP systems allow companies to only pay for the services that they need at any given time. The only costs associated with a hosted phone solution is the cost of the phones themselves and your internet connection – that’s it!

When deploying a PBX system, you usually purchase more connectivity options than you need. Over time, if you grow your workforce or call volume increases, you’ll need to purchase new hardware and services from your telephone provider. It’s an extremely inefficient process.

It’s also one of the main deciding factors in companies choosing VoIP solutions as their preferred method of communication.

When choosing the most sustainable communication methods for their office environments, hosted VoIP solutions are the way to go. The cost-savings and overall efficiency of VoIP compared with traditional PBX systems is hard to ignore, and many companies have already begun making the transition.