Hosted vs On-Premises Phone System

Your business phone allows you to communicate with coworkers, partners, and customers alike. As a result, choosing the right device can have a big impact on your business. Currently, two of the most popular business phone solutions are hosted voice over internet protocol (VoIP) and on-premises private branch exchange (PBX).

Hosted vs On-Premises Phone Systems

The debate between hosted vs on-premises phone systems has been raging for years, but to get the most out of your phone service, it depends entirely on what phone solution will work with your business needs. Before making any decision, read on to learn what hosted voice services are and what an onsite phone system is:

Hosted: VoIP is a solution where your phone service relies on an internet connection. It works by turning your call into a digital packet that’s sent to the recipient’s device. When VoIP is hosted, the infrastructure is located offsite and housed by a third-party provider. From maintenance to updates, the vendor is responsible for managing your technology.
On-premises: This solution is the opposite of hosted VoIP. On-premises PBX involves installing all business phone equipment at your place of business. Also unlike hosted, you own all related hardware and software, which gives you greater control over your phone service. However, you’re also responsible for maintenance, updates, and more.

Hosted Phone System Benefits

Now that you know the difference between hosted vs on-premises phone systems, it’s time to dive into their pros and cons. Understanding the benefits and limitations can make it easier to determine the best option for your organization.

Hosted Pros and Cons

Costs: Hosted VoIP is more cost-effective than onsite infrastructure when you compare their upfront costs because a hosted solution allows you to skip purchasing your own hardware and having to maintain it. However, hosted VoIP works on a subscription basis.
Installation and maintenance: Installation and maintenance is all handled by the service provider. All you have to do is tell the provider what features you want enabled. The disadvantage is that you have less control over the kind of features you want compared to an on-premises solution.
Scalability: Hosted VoIP allows you to easily add more phones to accommodate growing businesses.
Ongoing Support: If your phone system goes down for any reason, your provider can diagnose the problem and fix it. This can help minimize downtime.

On-Premises Pros and Cons

You own the equipment: When you pay for the equipment, it’s yours. Owning your equipment means that you don’t have to pay monthly fees to keep using your phones. The disadvantage is you are responsible for installation, maintenance, upgrades, and replacements.
Control: If you own the equipment, that means you can select what features you want for your service. You’re not limited to what the provider offers. It also means changes can be made more quickly. However, if you run into any problems, you won’t have support services to help you fix the problem.