Cloud Based VOIP vs. On Premise PBX - Which Business Phone System is Best?

Choosing the right business phone system is a critical decision that can impact your company’s communication efficiency and overall productivity. Two popular options are Cloud Based VOIP systems and on-premise PBX systems, each offering distinct benefits.

Cloud-based VoIP provides flexibility, scalability, and lower upfront costs, while on-premise PBX offers more control and potentially lower long-term expenses. In this article, we’ll compare the two to help you determine which solution best fits your business needs, factoring in cost, features, maintenance, and scalability.

Cloud Based VOIP vs. On-Premise PBX – Which Business Phone System is Best?

Explore the differences between cloud-based VoIP and on-premise PBX systems. Learn which business phone system is best for your company’s needs, offering flexibility, cost savings, and advanced features.

1. Total Cost of Ownership

Total Cost of Ownership determines the real cost of a technology, and depending on the technology, costs can be considerably high. With the On-Premise PBX, pretty much the whole system is your responsibility, so costs come from the initial equipment costs (phones, switches, etc.), deployment costs, as well as any training, maintenance, and support expenses.

A cloud-based VOIP phone system, on the other hand, alleviates most of these worries. Since its platform and features are hosted at the location of the service provider (the end user connects to the provider via IP), the buyer is alleviated from much of the burden that goes along with VoIP systems, including software, licensing, deployment, maintenance, and software/equipment support. Here are Key Factors to consider when thinking about an On-Premise PBX purchasing decision:

💻 Initial equipment costs of the hardware and software, including the PBX, phones, switches, cabling, and routers/firewalls
🚀 Deployment costs (i.e., expenses related to and/or other outside personnel)
🌍 Local, long-distance, toll-free/inbound, and international usage
🔑 Licensing fees and feature-related expenses
🎓 Implementation and training
🛠️ Maintenance costs anticipated over the lifetime of the system
⏳ Anticipated downtime costs
📞 Support

2. Limited Spend Upfront

Traditional PBXs require a large capital spend while a Cloud Based PBX can have very low if minimal upfront spend to get into the service.

3. Latest and Greatest Technology / No Maintenance

With a Cloud Based Voice-over-IP system, you always have the latest technology. Every feature upgrade, software upgrade is automatically available to you. You can use a Cloud Based service for 20 years and never once have to worry about buying new equipment or upgrading software to have the latest and greatest features.

Also with a Cloud Based PBX , your telephone system is managed by IT specialists in world-class data centers that have power protection, survivability and disaster recovery resources far beyond what a business could provide. You don’t have to worry about powering, maintaining or updating the On Premise Equipment. Vonage Business Solutions takes care of all that in the cloud.

4. Software application features are the biggest advantage over traditional PBX systems

Simply put, there are a whole lot of features VoIP solutions can provide to a business which simply aren’t available with legacy phone services. With call routing, virtual receptionists, find me/follow me, caller ID, conference calling, call forwarding and more, many business owners are quickly learning a Cloud Based PBX is much better equipped to face complex communication management than traditional PBX’s.

5. Disaster Recovery

By having your PBX in the cloud, you are no longer susceptible to disaster that can wreak havoc with onsite PBX equipment. With a Vonage Business phone system solution “Call Continuity” feature, if something was to go wrong at your location, you will continue to receive your calls and be able to make calls no matter where you are.

6. Scalability

If you envision your business growing, you will need to consider how this will impact your purchase. If going with a premises-based solution, you will likely want to purchase a larger appliance than is initially needed to accommodate growth. With a Cloud Based PBX, new users can be added to the phone system as needed. The Vonage Business Solution’s User Interface is easy to use to add or delete extensions as needed. Opening up a new location in a neighboring town can be easily done by adding extensions to the existing account and shipping phones to the new location.

7. Mobility

Traditional PBXs do not provide the functionality to integrate with the Smart Phones that are prevalent today. With a Cloud Based PBX, you can be out of the office and make and received phone calls as if you are in the office. You can also manage your Cloud Based PBX with the mobility APPs.