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Advantages & Disadvantages of Cloud PBX vs On-Premises PBX Systems

Updated: Nov 6, 2022

Telephone headset

Upgrading a company's phone system is one of the most important decisions a business leader can make. You might be utilising an on-premises PBX, but you've lately learned it can't handle the demands of a remote staff.

When IT professionals consider their alternatives, they frequently consider a cloud-based telephony solution for their businesses. There are other advantages and disadvantages to consider in addition to the increased flexibility and reliability.

Is a cloud PBX a straight substitute for a traditional phone system?

It is inevitable that old phone networks be phased out. According to a study on business telephone, more than 60% of organisations have decided to convert to VoIP when their landline contracts expire.

Let's take a closer look at the advantages and disadvantages of a cloud PBX solution.

What is a Cloud PBX?

A hosted PBX, often known as a cloud PBX, is a company phone technology that connects over the internet. You don't need to install PBX equipment in your office because a VoIP provider will do it for you.

A cloud PBX, in general, provides all of the features required in an office phone system, including voicemail, call forwarding, and, of course, calling. You can use a VoIP service for your company's communications rather than setting up a server that you would have to operate.

When your employees answer or place calls, VoIP handsets convert sound into data packets. These packets are sent over the internet to the hosted PBX provider. Between the two parties, the provider establishes a direct line of contact. When necessary, transfer to the Public Switched Telephone Network (PSTN).

The business phone system turns data packets back to sound once they arrive at their destination. It accomplishes all of this in milliseconds and without any additional configuration.

To use a cloud-based PBX, all you need is a stable broadband connection. All kinds of IP phones, including desk phones, cellphones, and conference phones, are supported by the underlying technology.

Before you acquire a free quote, you should be acquainted with some important business benefits.

Advantages of a Cloud PBX

What makes a hosted phone system the best option for organisations, aside from using electricity on the internet to communicate with others?

Everything is analogue with an on-premises PBX, and each handset requires its own phone connection. It also implies that you have a telecom professional on staff who can handle maintenance and upgrades.

Here are six benefits of cloud communication solutions for enterprises.

1) Enhance your workflows with powerful features.

A hosted PBX phone system has many more built-in VoIP functions than an on-premises PBX phone system. Stakeholders are especially interested in these advanced features.

They'll most likely appear on a VoIP needs list:

  • Mobile device support (mobile apps)

  • Voicemail to email transcription

  • Auto attendants (call flows)

  • Automatic call recording

  • Intelligent call forwarding

  • Built-in video conferencing

  • Inbound call queuing

The fact that there are dozens of VoIP functions available that don't require any technical setup will be appreciated by company leaders. Other important technologies, such as your company's CRM, can be integrated with your phone system.

With these new capabilities, you'll be able to get more work done faster.

2) Adaptability to all environments and seasons

A flexible phone system is one that can accommodate to changing workplace situations. Rather than being limited by an antiquated PBX, you may design your phone system to meet your specific business needs.

As an IT manager, nothing is more aggravating than unanticipated business changes. When the manager asks if it's possible, you can respond yes without having to come in on Saturday.

Small businesses have complete control over their phone systems. Adding and assigning business phone numbers to your team is simple. It's even easier to provide phone service to your remote workers.

Employees may stay connected with a sophisticated VoIP softphone software in the age of remote work. You might also have them bring their office phone home with them.

When demand increases, such as around the holidays, a hosted PBX allows you to expand your call capacity. You can also add hold music and comfort messages in a matter of minutes. You may improve call quality and client happiness this way.

3) Reliability and uptime without worry

How much does downtime cost your company? You can't afford downtime since they damage brand trust and cause revenue and sales losses.

Thankfully, a cloud PBX keeps you accessible at all times. A reliable service provider will guarantee 99.999 percent uptime, which is the industry norm. Check out what people are saying about them on social media sites like Twitter. You'll get a sense of how reliable the cloud PBX supplier is.

The redundant network of eight independent data centres allows for this greater reliability. Even if there is a power outage, VoIP can function. Within seconds, you can route calls to other destinations, including mobile phones. A regular phone system, on the other hand, can collapse due to weather, power outages, and other disasters.

4) No upkeep necessary

Cloud PBX solutions have a huge advantage in terms of maintenance. The hosted provider is in charge of system updates, network routing, and VoIP codec modifications.

Throughout the week, IT leaders and CIOs deal with several fires. (We hear you!) You can give certain persons internet access to make changes to your phone service. Because today's VoIP phones are so easy to use, there are less helpdesk tickets.

The issue with on-premise PBX systems is that maintenance does not end when full-time assistance is hired. It's fantastic to have a technician on call at all times, but you'll need to set out $74K every year.

Today's businesses must do more with less. That is why migrating to a cloud-based system is a sensible investment. Prepare to wave goodbye to a cumbersome on-premises communications system and expensive VoIP maintenance contracts.

5) Exceptional security

In comparison to traditional PBX, cloud PBX phone solutions provide more security. When you have a physical landline, it is your responsibility to keep it secure. Many PBX systems are vulnerable to external attacks, and the audio signals they transmit are far more easily intercepted.

Some hosted PBX options provide call encryption and server monitoring around the clock. Third-party validation is performed on VoIP providers on a regular basis to ensure compliance. VoIP security also means that certifications like as ISO/IEC 20071, PCI compliance, and HIPAA compliance are available.

Because of the redundancies in IPv4 routing, voice over IP is both reliable and secure. TLS and SRTP technologies are used to encrypt speech packets and communication.

6) Economical for all companies

When you switch to VoIP, you'll save a lot of money. Premium features are either incorporated or accessible at a cheap cost when compared to a typical PBX.

Rackspace researchers looked into the total cost of ownership of cloud-based solutions. Companies may anticipate to pay $2 for maintaining and maintaining their network for every $1 spent on hardware upgrades.

This figure should be concerning. On-premise speech equipment can be twice as expensive as you anticipate. Consider the additional, indirect expenditures in addition to the list price.

Here are some of the ways a hosted PBX might save you money:

Workforce: You'll need specialised IT workers or at the very least on-call IT help unless you're an expert in SIP trunking.

Equipment: Make use of existing equipment, such as softphones. For a smaller initial investment, you can rent VoIP phones.

Maintenance costs: Software, security patches, and firmware updates will not be passed on to consumers.

Adding phone lines: New employees and departments are not required to wait for their phones to answer.

Calling costs: Enjoy the convenience of unlimited domestic calling and low-cost international calling. You can also block international calls.

Disadvantages of Cloud PBX Systems

Despite the numerous advantages of shifting your PBX to the cloud, there are a few drawbacks to be aware of.

1) A high-speed internet connection is in high demand.

Every call with a cloud PBX phone system has superior sound quality. This necessitates the use of data from your current internet connection. We recommend setting aside 100 Kbps per phone line for upload and download speeds.

Your phone system's bandwidth is determined by the VoIP codec and the amount of calls you make.

Let's put this into perspective. The average download speed in the United States is 96 Mbps, while the upload speed is 32 Mbps. With commercial broadband and even a home office arrangement, your company might manage hundreds of calls at once.

2) Incorporating network configuration changes.

For cloud telephony, IT professionals may need to tweak network routers. This frequently necessitates trial and error, and it can be unexpected in some VoIP deployments.

Consider the following technical specifications:

Before connecting your phones, make sure you don't have two routers in succession (double NAT).

Quality of Service is used to prioritise SIP-based voice traffic (VoIP QoS).

If you want to use Power over Ethernet, you may need to upgrade your network switch (PoE).

To prevent issues, deactivate SIP ALG (Application Layer Gateway).

Your cloud PBX supplier will take you through these simple and inexpensive changes. Request an in-depth network check from your VoIP phone service provider to simulate these conditions on your network to avoid unforeseen complications.

3) Users may require additional support.

It's difficult to implement a new phone system since it disrupts long-standing habits and workflows. Changing them is difficult.

The most major difference when transitioning from an on-premise PBX to a cloud PBX will most likely be the new world of sophisticated calling options. You probably won't be able to guide every employee through every step, but you also don't want to leave them in the dark.

Making calls using VoIP is the same as using a regular phone. Spend some time giving users with particular guidance to the most often asked questions, such as voicemail, call forwarding, conference calls, and call transferring. Better yet, get the helpful hints from your cloud VoIP supplier, who will almost certainly have them ready to go.

Top Business Benefits of a Cloud PBX

When you move to a cloud-based phone system, your company will see significant productivity and efficiency improvements. It's not simply pretty on paper. It enables employees to work more productively and boost the company's bottom line.

Let's look at how businesses can benefit from cloud-hosted VoIP over on-premises VoIP.

1) Increased team collaboration

Effective communication among virtual teams is no longer a luxury. When you consider that one-third of businesses lose clients due to poor communication, it's clear that it's something worth working on across the board.

This is a benefit where cloud PBX excels. Here are a few ways it improves team communication:

Virtual phone extensions – Assign distinct phone extensions to each team member so they may be reached easily through a shared directory.

Team chat – Collaborate with coworkers using a single app that includes one-on-one and group chats.

Video conferencing – Start a video conversation and easily share your screen.

2) Improved client service

Using the contemporary features of a cloud PBX, make your customers feel seen, heard, and understood. Nobody likes to wait an hour on hold or have to call several times.

Because of bad customer service, up to 56% of consumers throughout the world have discontinued doing business with a company. You are successful if you can efficiently resolve a customer's problem.

A cloud PBX should have the following features:

Auto attendant – Incoming callers should be provided with a menu from which they can select the person or department they wish to contact.

Voicemail to email – You can rapidly respond to customers by receiving voicemail messages in your mailbox.

Call queuing – With an effective call routing system, you can avoid busy signals and sending callers to voicemail.

3) Make your organisation resilient by future-proofing it.

This year, business leaders have expedited their preparations to adopt remote working. You must accept this shift from a perk to a necessity.

Companies all throughout the world have been through the ringer. The phone system at your workplace should not prevent you from working the next shift.

Companies that already used hosted PBX might quickly transition to working from home. All you need is a broadband internet connection to use a cloud PBX system. Natural catastrophes are not a problem with cloud PBX systems because they ensure uptime and reliability. When everyone returns to the office, unified communications works well there as well.

Your phone system should make it easier for your team to deal with whatever situation arises. Even if you need to hire more employees after becoming remote, a cloud phone system allows for even greater expansion and growth.

4) Improve the efficiency of your team

How might a cloud PBX help everyone be more productive? You can assess performance throughout your entire firm with a full-featured commercial phone system, even if you can't be there.

For example, you can:

Keep track of real-time statistics so you may compare them to measurements from the previous day or week.

Analyze call recordings to ensure that your call centre agents continue to improve.

Reward exceptional performance, such as increased first-contact resolution (FCR).

Predict and plan for increased call volume.

In other words, you can improve the efficiency of your staff, which will improve customer happiness and your bottom line.

5) Amazing call quality and reliability

High-quality phone calls are included with a good VoIP system. The sound quality of a typical phone system pales in comparison to the crystal-clear, lifelike sound of a cloud PBX.

HD voice codecs provide twice the bandwidth, allowing everyone in the call to hear a wider variety of sound. Customers won't have to repeat themselves, and every call will be a pleasant experience for them.

Because cloud-based PBXs are hosted in the cloud, they can take advantage of several data centres' proven reliability. Last year, Nextiva's network handled over one billion calls, and it can manage yours as well.

Cloud PBX systems are there for you.

When assessing the benefits and drawbacks of a Cloud PBX, consider your current and future demands. You must consider where you want to be in the coming year or two.

If you've decided that cloud PBX is the best option for you, you can rest easy knowing that migrating your phone system to the cloud is simple. You don't have to go it alone with this update.

We'll walk you through everything here at Simplyfree, including free porting of your existing business phone numbers. We'll assist you in choosing the best VoIP desk phones for your budget and daily business demands.

You can't keep trudging along with a legacy PBX in the age of remote work. Your old phone system is costing you more money than it is saving you.

Benefit from unlimited calling throughout New Zealand, HD audio and video meetings, and the ability to work from anywhere. Everything is included at an affordable fee.

You can concentrate on serving your customers rather than figuring out your phone system with a cloud PBX. You can trust Simplyfree with the rest.

If you need help to migrate to VoIP PABX, call Simplyfree.

Simplyfree is based in Wellington, New Zealand and provides smart business phone solutions such as Fibre, Broadband, Toll-Free, 0800 numbers, Unified Communications, Conference Calls, Call waiting, Call queuing, Voicemail to email, call recording, video team meetings and more!

Discover Simplyfree today.

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