Hosted “virtual” phone system or own your own?

March 14th, 2012

We are often asked for an opinion on the subject of what is better solution: a hosted “virtual” PBX or owning your own phone system?    Lets take a look a quick look at both solutions and see if anything stands out as making one solution more obvious than another.  First, let me lay out some quick assumptions!  We have to make some assumption about the size and scalability requirements for your phone system.  If you are a one or two man shop, don’t waste anymore time reading this blog, call Vonage or get a Magic Jack and be done with it!  If you are a start-up, and your hosting company is willing to provide all the equipment you need at no cost to you,  you can stop reading here also.   We assume that you are a viable business,  with some scale or plan to scale and  10+ desktops and “who can provided the cheapest “dial tone” is not your only criteria!

We have given the “your VoIP deployment is only as good as the computer network it is built on” so often, we will omit it here other than to say; crappy computer network, crappy phone service!  However, one of the biggest misunderstandings about “hosted” anything, is the issue of equipment.  Regardless of which solution you run with, you are going to need equipment at your place of business.  The equipment list includes:

  • a high speed connection to the Internet;
  • a Router;
  • SIP savvy Firewall;
  • Quality CAT5 or better Cabling!
  • a Power Over Ethernet Switch;
  • and the actual telephone handsets!

Much the way you would still need a desktop display and keyboard if you have a “hosted Microsoft Office”,  you are still going to need a handset and all the cable and connector stuff.  So then, from an equipment standpoint what is the difference?   Well someone has to provide the “box” that does all the Unified Communications Magic everyone wants in today’s business world!   All that Voice to Email, Digital Receptionists, Mobile connectivity and web based call control.  That box has to live somewhere and it is either in the hosted “cloud” or down the hall with the rest of your stuff!.  My guess is that you will not save much money on equipment by going “virtual”  phone or computer.    (Read Return on Investment.  At sometime you will own the box).

Lets take a look at that Internet requirement.   If quality means anything to you and your business, you are not going to be running a business of any size on a DSL connection to the internet if you are hosting your voice services in the cloud!   In fact the more of your voice that you move into the cloud, the more bandwidth you are going to need.  You don’t have to be a VoIP engineer to understand that when Bob picks up his phone to call Sue down the hall, the box has to connect them.  If the “box” lives in the cloud the we are going to use two times the band with for a simple office to office phone call.   If every phone call in or out of your place of business needs to go over that Internet connection, your own ramp is going to need to be very broad!   Generally, a dedicated T1 service will be required!  (Read increase variable monthly cost).

Quality will always be an issue for VoIP, again, regardless of where the “box” is located.   If every phone call is over the Internet then we need to understand that, unless the service is provided by the Internet provider you get your phone service from, you will have a quality issue.   What is this mean?   When we send anything over the Internet, we can not guarantee the quality of service unless we have a “private” path through the pubic Internet and an SLA (service level agreement) with our carrier.  Generally, if you are getting your hosted VoIP service from Cox, for example, and your Internet connection is provided by Cox you will have a more predictable experience.    If you are getting your VoIP  service from the “The Big Box in the Sky VoIP Company” and it is delivered over a COX circuit, you will not have the same level of service.  That is a fact.

Business continuity and disaster recover?   Clearly, if you lose Internet connectivity, you lose everything.   Hopefully your VoIP service provider continues to handle phone calls and allows you to re-route your phone calls to your cell phone! (Read, feature check list addition).   Actually, this is one area in which I prefer to design with a “hybrid” approach.  Regardless which solution you go with, I would argue that you need both Internet and Local Telephone lines.  If the Internet goes down, you have your local telephone lines to fall back on.   Like wise, if your local lines go down, you have your VoIP dial tone to make use of.  The bigger issue is this:  In a hosted or “virtual” solution where would you connect some local telephone lines for back up?  Remember the “box” lives in the cloud!

The “hosted” world, both computer and phone, boast that virtualization will enable you to free yourself from maintenance, backup and some electricity!   Not sure if I can buy into this, as we still have all that equipment onsite we have already outlined!  Someone still has to take care of that equipment.   Have you called your favorite credit card company lately?  How was the customer service?   So now that we have killed off our onsite tech support, we are going to bet that the hosted provider has a customer service organization that is more responsive to your business than your credit card company?

Application Integration?   If you have unique applications, your “hosted” provider may not be able to accommodate you.  Many can integrate with Salesforce.com but if you are using a proprietary Medical, Dealer Management, IVR, Predictive dialer or if you have extensive call center needs, this may be an area that will be a key determinant in your decision to host or own.  This seems to apply to hosting your computer system as well.  The more you move outside the basic Microsoft Desktop Office Suite, the more difficult it gets for “hosted” providers to accommodate you.   You may also need to evaluate any regulatory “compliance” issues as they may also dictate what you can do in a hosted environment.

At the end of the day, VoIP over IP “dial tone” has some real value in either solution.   You are able to get DID numbers form any geography around the country or around the world!   You do not have to have a “hosted” phone system to get this functionality, however.  We can bring VoIP DID lines into any telephone system, so that is not a determining issue.  What then is the determining issue?  If you think like we do, you want the best of both worlds!  A hybrid solution!  VoIP lines or SIP trunks, remote access for my mobile workers/branch office and back up telephone lines on the back end!  I think the CFO needs to get involved here as there is no way that renting forever, can compete with the ROI of a equipment purchase!

4 responses to “Hosted “virtual” phone system or own your own?”

  1. FlyNumber says:

    One vote for Hosted here…. the trend is moving towards the cloud. The average user doesn’t want to manage servers..

  2. This will be a great web site, might you be interested in doing an interview regarding just how you designed it? If so e-mail me!

  3. suvo says:

    Large and effect post about voip. I have a call center and i use call center voip to make calls from my dialer. I have 80 agents dialing and the sound is always clear.

  4. Of course, hosted PBX system is best. When we started using hosted VoIP, it was primarily so that we could make calls easier to handle between two of our locations. The fact that we were able to add this ability and save money at the same time was a bonus

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