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September 18, 2017

Benefits Of A Hosted Phone System

Benefits of Hosted Phone Systems

Voice over IP (VoIP) communication has become a popular option for many modern organizations and businesses because of the huge service and advantages they offer. The modern competitive business environment has led to businesses looking for ways for lowering operational expenses, refocus information technology staff into other business units, enable employees to connect easily, and eliminate many vendors as well as communication services providers (Nicoletti, 2013). For instance, a survey conducted on the benefits of using modem phone systems such as Unified Communication solution indicated an increase of 49 percent in business productivity. To achieve the said benefits, many businesses are considering implementing hosted or cloud-based phone systems. A survey conducted by Infonetics Research showed that their many businesses are making plans to select hosted telephony systems instead of On-premise PBXs solutions.

Definition: Hosted PBX and On-premise PBX

According to Jamsa (2012), hosted PBX or cloud-based phone systems are whereby a provider has the responsibility of handling and housing the IP-PBX and its associated technology. The provider has an IP-PBX server for call routing and signaling. The provider hosting the IP-PBX systems charges a specified monthly fee that includes the package subscribed and the specific features offered. On the other hand, On-premise PBX or IP-PBX phone system resembles a traditional PBX system because it resides in a location commonly a telecommunication closet or a computer server room within a business premise. The IP phone is responsible for signaling to the IP-PBX server through the business LAN. Routing of calls from the organization is done by a traditional phone services company and VoIP through the use of SIP trunking.

Benefits of hosted or cloud-based phone systems versus On-premise phone systems.


A cloud-based phone system offers less initial capital expense (CapEx) as compared to buying and installing own dedicated phone system. On-premise phone systems require purchasing the required hardware, software, and other vendor associated licenses. On the other hand, a hosted phone system only involves the purchase of IP phones even though a network switch and router may be required to ensure the setup is complete. A hosted phone service involves only paying the monthly subscription fee. Therefore, the operational expense (OpEx) in a hosted phone system are less as compared to buying and installing an own dedicated phone system (Jamsa, 2012). In addition, this implies that the capital investment is also less. Payment for a hosted service is done as per the business needs instead of investing on equipment and devices that depreciate in value over time and will need replacement.

The lower operational expenses associated with hosted phone system enabled the business to lower IT costs associated with training the personnel to deploy and manage the On-premise system. An On-premise phone system requires training of employees on how to use the system and hiring someone to be managing and troubleshooting the phone setup (Crabbe, 2014). For a hosted phone system, certifications and training are 100 percent the responsibility of the service provider hence eliminating this associated costs from the organization expenses. Housing the PBX resources is in a remote and an offsite environment. This eliminates the business organization need to manage and expenses incurred maintaining the PBX facilities and space. With an On-premise phone system, the business should ensure that the PBX is equipped and adequate space set aside for housing the equipment. In addition, power and security should be supplied (Nicoletti, 2013). This is a continuous endeavor that requires a lot of expenses. Finally, the hosted phone system incurs lower costs since the service provider is responsible for upgrades and optimizing the infrastructure to achieve performance, reliability, and efficiency.


Time is a significant benefit offered by a hosted phone system. According to Nicoletti (2013), acquiring a hosted phone system is quick, easy, and cheap as compared to the time spent to design, deploy, and implement an On-premise phone system. Subscribing to a cloud-based phone system provider involves determining the right package as per the company needs and signing up for the service. Even though some hardware and software need to be deployed, they commonly take less time as compared to buying and installing the hardware and software required for an On-premise phone system.

Furthermore, significant time is saved since there is no need to train a dedicated IT personnel. Users only need to be trained on the basics of using the system (Crabbe, 2014). An On-premise phone solution requires time for training and at times, vendor certification for installing and managing the given phone system. In terms of time spent troubleshooting issues, a hosted phone system offers the ability to eliminate and reduce the time required to troubleshoot, carry out software upgrades and carrying out contingency planning since most of this tasks are done by the service provider.


Contemporary business professionals anticipate that their employers should be able to support them during some of their remote and mobile working activities. In that regard, hosted or cloud-based phone solutions enhance greater flexibility in workplaces by enabling an option for employees to connect with business partners, customers, and colleagues while they are on-the-go (Wrobel, 2009). When a need arises for adding or integrating new locations or making changes, the process is simple since it only requires contacting the service provider to implement the change easily and promptly. On the other hand, making changes in an On-premise phone system can be a complex challenge since it needs proper planning for deploying the new changes. Additional charges may also be incurred for the new hardware and software licensing.


The ability to scale the hosted phone system as the business grows or expands is one of the huge benefit offered by the cloud-based phone system. Unlike the case of an On-premise system that is commonly designed to accommodate a specified number of users, a hosted system enables the business to add or remove new users easily and seamlessly without requiring any added capital investment (Harte, 2005). Scaling is seamless and also requires fewer costs since it only involves paying for the used lines hence eliminating unnecessary costs. For the case of an On-premise, the business expansion will force a total overhaul of the phone system which consequently will incur a lot of costs.


A hosted phone system offers many benefits for the business as compared to buying and installing an On-premise phone system. A cloud-based or hosted phone system enables cost savings by eliminating the need to purchase and install hardware and software, hiring the personnel to manage the system, and the space required for the PBX equipment since all this are handled by the service provider. The hosted system also saves time regarding provisioning of new telephony and the time involved to deploy the system and also to train the personnel. A hosted system is also flexible and scalable by allowing changes to be made easily and fast.


Crabbe, R. (2014). The Portable Consultant. Dorrance Publishing

Harte, L. (2005). Introduction to Private Telephone Systems: Kts, Pbx, Hosted Pbx, Ip Centrex, Cti, Ipbx And Wpbx. Althos

Jamsa, K. (2012). Cloud Computing. Jones & Bartlett Publishers

Nicoletti, B. (2013). Cloud Computing in Financial Services. Springer

Wrobel, L. (2009). Disaster Recovery Planning for Communications and Critical Infrastructure. Artech House

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