Premise-Based vs. Hosted VoIP Phone System – How do I choose?

Premise-Based vs Hosted VoIP - How do I choose?Communications is the lifeblood of any business, but in most cases, it is not a critical component of the core business in generating revenues. Businesses today are being inundated with the idea of outsourcing their communications to a hosted VoIP (Voice over IP) provider that will manage that aspect of your business for you.

But, does that make sense for your business?

To help you decide which option is best for your business, we will discuss the primary issues you should consider when deciding to maintain an internal premise-based phone system or use a hosted or cloud-based VoIP provider.

Deciding between Premise-Based and Hosted VoIP

1. Company Culture & Internal Resources.

Do you currently outsource functions that are not directly attributable to the core business? In many cases, businesses do this as a result of limited company resources to manage an internal system, or because they want one less thing to worry about. If this is the case, it may make sense to outsource your business communication functions to free up time to concentrate on more core business needs.

On the other hand, if you prefer to manage and control the system using internal resources, or you have unique needs that cannot be addressed by a hosted solution, then the premise system may be best for you.

2. System Features.

This is a critical business decision because some hosted providers do not provide a comparable feature offering to a premise-based system. It is important that you understand how your company interacts with its customers so that you can be sure that the new solution enhances this communication. Otherwise, it could affect sales and company growth.

Do you have a contact center for customer service, accounting, or sales? How about a mobile workforce? If the answer is “yes” to any of these items, a premise-based system might be the better choice for your business.

3. Upfront Costs.

In general, a hosted VoIP solution will carry a lower startup cost because all that you will be required to purchase are IP phones. Hosted solutions don’t have ongoing maintenance fees, but they do have higher ongoing service provider costs. On the other hand, a premise-based solution will carry much higher startup costs and an annual maintenance fee, but lower ongoing costs and risk of fee increases from the provider.

Suggestion: run a 5-year total cost of ownership on both solutions to determine the business impact to your business.

4. Control & Scalability.

With a hosted solution, you will have limited to no control since the system resides in the “Cloud”.  Depending on the provider, you may have some control over making system changes yourself, but you will be at their mercy when it comes to such things as adding capacity, new locations, or optional features such as conferencing or mobility. However, the good news is the provider will be responsible for managing uptime with redundant systems in the cloud, performing system updates and ongoing maintenance.

In the case of a premise-based solution, you will have 100 percent control over the system with the exception of public network access. This means that implementing a redundant system and performing regular maintenance and system updates is your responsibility. Make sure that you closely examine the premise solution you select because some solutions, such as ShoreTel, provide free system updates with their maintenance plan so this could factor into the equation.

Remember that if your Internet connection goes down, you will lose service unless you have implemented a redundant solution. If you don’t want to be responsible for those redundancies, a hosted solution might be best.

5. Customized Applications.

Premise-based solutions are more conducive to specialized applications because the system database would reside on-site at your office for integration. For example, you may require a contact center that provides chat, email, or advanced features that are only available through a premise system, or specialized reporting requirements. Hosted solutions, on the other hand, are generally very good at integrating packaged solutions such as Salesforce or other cloud-based solutions.

Understanding how various applications need to integrate with your phone system may have a huge bearing on which solution you choose.

In summary, it is important to take the time to analyze your current business communications needs in relation to your customer base and future growth plans to determine your best course of action. If you follow these guidelines, it will lower your risk, improve customer service and sales, and help you choose the right VoIP system for your needs.

If you have any questions about the differences or if you want help determining which option is right for your business, contact us for a free consultation. We would be happy to help!

 

Image credit: scottchan / Freedigitalphotos.net

Alan Burdine

Alan Burdine

President, COO at CRI
Alan has been a member of the CRI family for more than 22 years. He became president of the company in 2010. Alan has worked in the business communication industry for more than 26 years, serving as a telephone technician before joining the CRI team. In his spare time, Alan enjoys being with his family and friends.
Alan Burdine

Speak Your Mind

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