Business communication methods have evolved rapidly over the past few years, with social media and instant messaging services especially dominating the corporate landscape today. But despite this, telephones still form an integral part of the day-to-day operations of small, medium, and large businesses globally.
In fact, many businesses use private branch exchange telephone systems for communicating with stakeholders inside and outside the organization. PBX systems are a popular choice for business users because they offer a wide range of advanced features, such as a bigger number of handsets, extensions, call forwarding, call transferring, call recording, call monitoring, call queues, music on hold, international and local lines, and many other features.
While any PBX solution will offer enterprise-grade features you simply won’t find on ordinary landlines and mobile phones, there are different types of PBX systems available on the market. Two of the most popular are on-premises PBX systems and cloud-based PBX systems. But what are they, how do they differ, and which will best suit your business? Read on to find out.
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On-premises PBX: What is it?
Traditional private branch exchanges work on-premises. With one of these, you’ll need to buy and store physical handsets, phone lines, servers, networking equipment, and other crucial hardware at your business premises.
You’re not only responsible for installing and setting up all the different components of an on-premises PBX system, but also maintaining and updating the system over time. Because on-premises PBX systems typically require ample real-estate space and hands-on technical expertise, they’re predominantly used by enterprises with large offices and experienced IT departments.
How do on-premises PBX systems work? Well, they typically route calls via SIP trunking, the Public Switched Telephone Network (PSTN), the Integrated Services Digital Network (ISDN), the Global System for Mobile Communications (GSM), and other standard phone lines.
Like any PBX system, on-premises solutions provide lots of features that aren't available on traditional telephones and mobile phones. These include call forwarding, call transferring, call recording, call queuing, call holding, call routing, music on hold, information on hold, conference calling, business hours, and many others.
On-premises PBX: What are the pros and cons?
If you’re considering investing in an on-premises PBX system for your business, you might be wondering what benefits it’ll offer. Arguably, the biggest advantage of using an on-premises PBX system is the fact that it’ll provide greater control. This is because you'll own and have access to the handsets, servers, networking components, and other hardware that make up the PBX system.
As a result, you won’t need to worry about third parties being able to access the underlying hardware of your on-site PBX system and will benefit from increased security overall. What’s more, you’ll be able to make changes to your PBX system, configure different settings, and fix any issues without having to go through a third-party hosting company.
While you’ll need to spend substantial sums of money on acquiring all the hardware used in an on-site PBX system, you should experience cost savings in the long term. SIP trunking can often improve costs, and without relying on a third-party PBX hosting company, you won’t be hit by future price hikes.
Although on-premises PBX systems offer many different benefits, they also have a number of negatives. For starters, on-premises PBX systems carry more costs than cloud-based variants. You not only need to purchase the telephones, servers, and networking equipment upfront, but will also need to shell out more money over time in order to maintain and update your PBX system.
There’s also the issue of space. Using an on-premises PBX system, you’ll need to store this bulky telecoms equipment in your office or data center. At the same time, these systems can be complicated to set up, use, and maintain. Realistically, you’ll need an experienced IT team that can oversee the running of your on-site PBX system or outsource the work to third-party IT specialists. Due to these reasons, on-premises PBX systems are unfeasible for smaller businesses and organizations.
Cloud PBX: What is it?
For small and medium-sized businesses that need a business-grade phone system, cloud PBX solutions are an excellent choice. Unlike on-premises PBX systems, cloud-based services work over the internet and run on off-site servers overseen by a third-party hosting company.
With a cloud PBX system, you only need to pay for the business phones and the software. Things like servers, network equipment, licensing, and other components are handled by the cloud PBX provider, and therefore, you don’t have to buy any of these.
As well as handling the costs of the off-site PBX equipment, the provider will also be responsible for maintaining and updating it. This makes cloud PBX services easier to install and use.
When it comes to using a cloud-based PBX system, you’ll be able to perform and accept phone calls via the Voice over Internet Protocol (VoIP). You can also access cloud PBX systems via desktops, tablets, smartphones, VoIP phones, and other devices, which makes them perfect for dispersed and remote teams.
Cloud PBX: What are the pros and cons?
Should you be thinking of purchasing a cloud PBX, you’ll be happy to learn that these systems provide a wide variety of benefits. They’re cheap, quick and easy to set up; simple to use; extremely scalable and flexible; feature-packed; mobile-friendly; require very little office space; and provide many other advantages.
But despite being cheaper and less complicated than on-premises PBX solutions, cloud PBX systems aren’t perfect. Firstly, they’re internet-based systems, so you’ll need a solid connection for making and accepting VoIP phone calls. Without a decent internet connection, you’ll likely experience patchy or dropped phone calls.
Even though cloud PBX systems offer easy-to-use interfaces, they still work differently from traditional landlines and mobile phones. Because of this, you’ll still need to train your staff on how to use a PBX system. Furthermore, you’ll have less control over your business phone system as a cloud PBX user.
Which PBX system should you choose?
So, should you choose an on-premises or a cloud-based PBX system for your business? The answer to this question depends on your organization and needs. If you’re a large enterprise with plenty of money to spend, ample real-estate space, and an experienced IT department, then an on-premises system will be just fine. But for smaller and medium-sized businesses, cloud PBX systems are the best choice due to their affordability, ease of use, and scalability.
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