Monday, April 25, 2011

Benefits Of Hosted PBX Systems

A Hosted PBX generally involves installing some sort of remotely attachable handsets (usually VoIP based, in today's world, but "Centrex" service does this well in the analog world, too) at a site, then putting the 'brain' of the PBX, along with it's primary PSTN connections, into a different site, usually controlled by a vendor.

There are several pros and several cons involved, but a lot of the answer comes with your level of comfort with the vendor, and your level of cost involvement.

In the end, the golden rule of telephony development is this .... "Do Not Mess With Dial Tone". Users depend on it, every day- and businesses live and breathe by their phones. If you find a reliable, cost-effective solution, then that makes a good fit- any chance of unreliability, and you are risking the business.

In a hosted PBX, there is one extra moving part- the link between your site and the provider- that you *must* ensure. If that should fail, all your phones will be down (unless you have some sort of backup line arrangement and local PBX hardware to fall back on).

Specifically, here are some pro's and con's of hosted PBX's:

Pros .....

1. Generally, a hosted PBX is less expensive to the end user. Most hosted PBX vendors work out some sort of 'pay per minute' or 'pay per handset' plan, and, since they put many different customers on their enterprise-grade PBX at a central site, are able to pass on savings. For a small site, it's very hard to beat a hosted provider's cost model, unless you've got a large number of handsets, or specific application needs that drive up the price.

2. Maintenance is built in. Hosted PBXs today generally use VoIP hardware- so handset Move,Add,Change work is done by the end user with no more difficulty than moving a PC. The wiring at your site is your LAN, and LANs have a generally high reliability factor. Most changes, therefore, are done at the PBX level- and the vendor can again leverage economy of scale- the changes are generally simple and done via web browser, so they can include the 'maintenance' for free, and get some high-level support on every problem.

3. High reliability of trunk lines, and generally lower cost per minute. Again, through economy of scale, the provider can almost always get a better per-minute rate than a small office can negotiate with the local telco, and can easily afford to have redundant call and network/PSTN paths by sharing them with multiple customers. Having a trunk failure from a hosted PBX center would be horrific, affecting potentially thousands of customers- the vendor simply won't let that happen. (or shouldn't).

Con's .....

1. Loss of flexibility. The hosted PBX company makes their money by providing a fixed package of services and devices to it's customers. If you want telephony applications that aren't on the 'menu', the answer may very well be 'no'. Don't like your handsets- you can't change them (beyond a range). Need to change your long distance provider? Forget it- you won't have one to select. In some cases, the vendor will own your number, making it difficult to change vendors without changing your business telephone number.

2. Reliability. As I mentioned above, you're now dependant upon your local LAN and the WAN connection between your site and the vendor. If you've got a small office on a tight budget, failures of either one may take a few hours- or days- to resolve, as you won't have the local resources to apply to them. On top of this, the cheapest WAN method is seen as the Internet- and the Internet itself may not be reliable. Call quality may suffer if your office is doing a lot of Internet traffic, or your Internet provider is having problems.

3. Business reliability. The best rates for hosted PBX companies come from startups. This has it's ups and downs- sometimes, that can be great, providing personal service at a decent price. But, a lot of startups fail- and when they do, your phones go with them. Check your contracts carefully.

For help in deciding if a hosted PBX system is right for your situation or not .... I suggest taking advantage of the free assisitance available here:

Business VoIP Solution

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Blogger Sam said...

I don't think I agree with the author on the subject of flexibility of the hosted PBX service. I can only speak for my company, DLS but I am sure we are not the only ones that offer a broad range of handsets to choose from (probably broader than most traditional systems) or a rather exotic option to use an analog handset of customers choice with an analog telephone adapter.

Another example had to do with a choice of long distance provider. Hosted PBX service allows you to route calls through an IVR tree to any long distance carrier. In fact, you can use any long distance carrier for international calls or opt to use prefix-based dialing.

Some Hosted PBX services offer a broad range of options including software integration capabilities, predictive dialing, soft phones, voice and video calling, conferencing and much more... I think that flexibility is one of the major advantages of the Hosted PBX services.

Sam Rozenfeld

6:17 PM  
Blogger Joel Maloff said...

I appreciate the points that you make in your blog regarding the pros and cons of hosted PBX or cloud-based voice services. Although I agree with your pros, I take issue with the cons that you described.

You mentioned Loss of Flexibility as a con. I certainly agree that each Internet Telephony Service Provider (ITSP) has their own suite of services. Business people have the ability to shop around via the many comparison sites or directly to find ITSPs that offer the functionality required. It is well-understood that most people use a fraction of the functions available from either a premises-based PBX or hosted PBX service. Given the advantages that you described, this seems a small price to pay.

Your second con was Reliability and pointed out that VoIP services may traverse the Internet connection. When that is out or impaired, "failures of either one may take a few hours- or days- to resolve, as you won't have the local resources to apply to them." That is somewhat inaccurate. True, the Internet connection may be out, but a viable ITSP provides call handling and management functionality that should include forwarding all calls to alternate numbers, such as cell phones, offices in other cities, soft phone clients on computers, or traditional land lines (if still available). Yes, the local Internet service can go out but I used to lose my home phone service too now and then (when I had a land line ages ago!). Reliability, if configured correctly, should not be an issue and is even stronger than with traditional phone service.

Lastly, you mentioned Business Reliability. On this one, we agree. However, there are a number of ITSPs offering these services that have been in business for four or more years and continue to show solid growth with low customer churn. I remember very well when SunRocket imploded leaving customers high and dry. As with any service, asking the right questions, checking references, and even trying the service are important decision points. I would also ask at what point does a company cease being a start-up? I would think that after four years or more, there is enough information for an educated business person to decide if this is for them.

For start-up businesses, entrepreneurs, or even companies with less than 20 employees, hosted PBX systems offer tremendous advantages with relatively minimal risk. The industry is maturing rapidly and deserves to be judged on its merits today rather than the vestiges of the past.

5:38 AM  
Blogger IP Telephone Systems said...

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7:33 AM  
Anonymous Huw Rees said...

I am surprised at the comment regarding the ownership of the TN. Unless your business is in a very rural, remote area you should really have no problem porting the numbers from one provider to another. Are there really some hosted PBX providers in the market that don’t allow this? Does anybody have any examples?

5:25 PM  
Anonymous Anonymous said...

Hmmm, have to disagree with some of the items listed in the CONS section. With the type of digital technology we have now, downtime will rarely occur. If it does occur, troubleshooting will take as long as indicated on the post. For more info on recent trends and improvement on hosted PBX systems, visit

12:34 AM  

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