Hosted and on-premise PBX – What’s the difference? What’re the benefits? And what’s right for you?
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Hosted and on-premise PBX – What’s the difference? What’re the benefits? And what’s right for you?

24th January 2018
By Candice Choo

There are two ways to implement a PBX VoIP phone system in your business: on-premises or hosted. The question is, what’s the difference between the two? And how do you choose the best solution for your business?

Worry no longer as here are the answers to all the questions you might have before implementing a new phone system for your business.

How does each system work?

A hosted voice system is stored in the cloud, where your provider will be in charge of the data centre and the maintenance of the system. However, with on-premise PBX the hardware will be located on-site, usually in a computer room and the maintenance and support will be your own responsibility.

Both solutions offer similar telephony features. However, hosted voice is often cheaper as many of the features are easy to enable from your account and are often already included within bundled packages. With on-premise PBX, you usually need to select the features that you need upfront when you purchase the solution, after which point it is then harder to add them. You will also need to purchase a physical box and hardware for setting up the system in your office. Each new feature added will increase the complexity of your system.

What are the costs?

Hosted PBX is classed as an Opex payment as it doesn’t require any initial investment; you only pay for what you need and the maintenance is included in your monthly licence fee. This means that payments are spread throughout the year, although there could be some monthly variance depending on usage.

On-premise solutions will come with a far higher set-up cost. You will also have to consider the long-term maintenance and support of the equipment and whether you outsource this or keep it in-house. However after this, your monthly licence fee should be fairly regular.

How do I set-up a new system?

The implementation of a hosted voice solution is quick and easy: because your system is stored in the Cloud, it won’t require any on-site set up. You will be able to manage all features and users directly via the online portal or from the mobile app. As your supplier is in charge of the data centre and its maintenance, overall there is minimal dependency on your own IT resources.

However, although an on-premise PBX system will require longer development time, because of this you may know your system capabilities better as it will take a lot of on-site investment. The installation and connection of the hardware will require the involvement of your own IT resources but if you have this available then it does guarantee you full control over developing a bespoke solution. Software maintenance and support are your responsibility, to be handled either internally or outsourced.

In both instances, end-user training will be needed, which is often more technical for an on-premise solution and not always offered as standard by your provider.

How can PBX evolve with my business?

Hosted PBX can easily grow with your business. If you require more users you can easily increase the number of licenses through your portal with only a few clicks; similarly you can remove licenses if necessary. This way you only pay for what you actually use and all changes are effective immediately.

User management for an on-premise PBX is far more complicated as each extension and add-on feature will increase the complexity of your system. However, it will allow you to build your own system that is fully adapted to your needs. This means that it can be set up with only the features essential to you, and then mix and match between providers for the different equipment needed.

Which solution is right for my business?

A hosted voice solution is ideal for any size of business that is looking for easy set-up, self-management of users and features, and simple monthly payments. It’s particularly beneficial for small businesses or start-ups as it requires minimal IT resource to set-up and maintain and doesn’t need any physical space to store the equipment. However larger businesses also benefit from the easy way that the technology can scale alongside their business needs.

An on-premise solution can be good for larger companies that have a dedicated IT operational team. There are also often backup power supplies that can safeguard against potential power cuts. Although if this were to happen with a hosted solution, disaster recovery technology means that your data will always be protected and safely stored in the cloud.
To find out even more benefits of hosted voice, you can read more here.