When considering the purchase of a new phone system, the real choice is between a premise-based solution or a hosted solution.
All solutions fit into one of these two categories, regardless of how advanced or “leading edge” that solution may be. So with that
said, what are the key differences between hosted and premise-based solutions?
Let’s first define what solutions fall into the category definition of Premise Based. Bottom line, anything requiring boxes other
than routers/switches onsite, such as servers, PBX, Key Systems or Hybrid Systems would be considered Premise Based. Common vendors
for these types of systems include Cisco, Avaya, Shortel, Nortel, NEC, Toshiba, 3COM, Panasonic, Altigen, Fonality, and even
Microsoft’s new Response Point solution.
All of these premise-based phone systems share similar challenges.
• Significant Capital Investment
Each of these systems carry a hefty up-front price tag ranging from $800 - $1500 per seat, driven by
requirements. If you require advanced call-center capability like reporting, monitoring and recording, expect to spend over
$2,000 per seat up front.
• Technology Obsolescence
• One thing you can count on is for technology to continue to rapidly change and evolve. When you
invest in a premise-based phone system, you are marrying yourself to a today-technology that may be out of date tomorrow.
The system you just spent big dollars on now stays static as technology continues to evolve. To upgrade your system later
with either new software or hardware or both, can be very costly.
• Maintenance
Maintaining a premise-based phone system can also be very expensive. Studies show that SMB customers
spend anywhere from $3 - $8 per port per month in maintenance contracts. That can translate into hundreds of dollars in
additional expense, just to make sure your system can be fixed if it breaks. That typically doesn’t even cover simple Moves,
Adds, and Changes that can be very expensive in their own right. Most phone system changes have to be performed by an expert
technician that likely charges hundreds of dollars.
• Scalability
Certainly when buying a premise-based phone system, it is critical to think way ahead to determine
exactly what your staffing requirements will be 12 or 24 months from now. But what if you don’t know? What if you experience
more rapid growth than you were forecasting? Will your premise-based system scale to meet those needs? What if you guessed
wrong and purchased a system that scales much larger than you actually need a year from now? Is the system now too expensive
to maintain and overkill for your current requirements? Purchasing a right-sized premise-based phone system requires you to
be very precise in your prediction of what your business will look like in the future. Are you certain about what your future
needs will be?
• PSTN Connectivity
After purchasing your premise-based phone system, you still need to connect it to the outside world so
that you can make and receive phone calls. So now begins the painstaking work of selecting a local & long distance phone company,
one that will undoubtedly require you to sign a long-term contract in order to get competitive pricing. Ironically, this same
long-term contract that will secure you competitive pricing today, will prevent you from taking advantage of lower pricing in a
falling price market.
• Disaster Vulnerability
Perhaps the biggest challenge, and most commonly overlooked consideration of a premise-based phone
system, is its significant vulnerability to outages and disasters. With all the switching, software, and hardware intelligence
sitting at your location, you can lose everything if you lose connectivity to your location. During something as simple as a
power outage, or as disruptive as a cable cut, or as devastating as an earthquake, your customers may be completely incapable
of reaching you, and likely will receive disconnected recordings or fast busies…neither of these are good results.
How does Hosted VoIP stack up in these key areas? Let’s break it down.
• Lower Capital Investment
Upfront capital expense is dramatically lower. With a hosted VoIP solution, you only need to purchase
SIP phones, and can likely reuse your existing Ethernet switch. Your total upfront cost could be as low as $125, and should not
exceed $400, even if you choose a high-end Cisco or Polycom SIP phone.
• Protected from Technology Obsolescence
With a hosted VoIP solution, all technology upgrades are performed in the core of the network and are the
responsibility of the service provider. As we develop new features and capabilities, we push those to you at the edge so that you get
immediate benefit without having to upgrade your systems. Your “phone system” is constantly renewed with the latest in technology,
with no expense to you.
• Maintenance
With no other equipment required other than SIP phones, there is nothing left to maintain. The need for
ongoing maintenance contracts goes away. And on top of that, moves, adds, changes are now self-administered through a simple web
interface…no complex technical training or certification is required. Learn to administer your entire hosted VoIP solution in
minutes.
• Scalability
The beauty of hosted VoIP delivered via a SaaS model, is that the service is subscription based – you
can grow or shrink at will. Simply add phones and bandwidth as your needs increase, or simply turn users off if your needs
decrease. There are no long term contracts and you only pay for what you use.
• PSTN Connectivity
Your Hosted VoIP solution comes bundled with Unlimited Local & Long Distance calling, all you can eat
anywhere in the US and Canada. International and 800 usage is billed at a very competitive rate, with all services delivered on
one bill from one provider. And most importantly, you’re guaranteed this competitive pricing for at least 2 years without having
to sign a long term contract. In fact, you are free to cancel at any time for any reason.
• Disaster Vulnerability
With a Hosted VoIP solution, all intelligence is in the network. If you lose connectivity to your
location, or experience a power outage, simply reroute your inbound calls to any valid phone number anywhere in the world…in
seconds. And on top of this powerful rerouting capability, know that your Hosted VoIP provider has built in significant levels
of redundancy into the core of the network to protect against a network failure. The power redundancy and circuit diversity in
the core of the network is at a level completely impractical for a small or medium sized business to achieve on their own.
So in summary, if you are interested in protecting yourself from disasters and technology obsolescence, dramatically simplifying
the administration of your phone system, and maintaining the flexibility gained with a no-contract provider, while at the same
time reducing your total cost of ownership (TCO), then a Hosted VoIP solution is likely your better choice.