ADVANTAGE OF VOIP FOR THE EMERGING GROWTH COMPANY
By Jim Ferguson, President, TierZero - communications service provider
Executive Summary
Hosted IP PBX systems have changed how small and medium businesses use their voice communications. They are the modern heirs to the historic Centrex (Centralized Exchange) systems that were the ultimate in business communications for the past thirty years. But hosted IP PBX systems are cheaper and far more capable than their predecessors.
Modern hosted IP PBX systems literally deliver multinational enterprise capabilities to even the smallest of businesses, often at a cost lower than the far more basic systems they are replacing. This Buyer's Guide explains the Hosted IP PBX market and tells you what to look for in a proposed system.
The bottom line with hosted IP PBX systems is that they provide an easy way for small to medium (and even some large) businesses to move to VoIP and get a wide range of new features and capabilities for their phone systems. If upgrading from a traditional phone system, the savings can be substantial and the new service will pay for itself immediately.
Hosted PBX Overview
A PBX (Private Branch Exchange) is essentially an automatic switchboard for telephone systems. It provides the same basic functions for any business or enterprise that the ranks of telephone operators with handfuls of wiring plugs did in old movies. Those essential features are to provide switching and connection between any two (or more) telephone users.
Any system that does this automatically for telephone calls within an organization is a PBX. The reason businesses move to PBXs is to avoid requiring that every employee have a direct line to the public telephone system, each of which incurs a connection and line charge. Instead, a smaller number of lines get shared by all the users and managed by the PBX. This saves money and is more efficient.
All IP PBX (Internet Protocol Private Branch Exchange) systems are basically exchange and extension managers for calls based on the Internet protocol - also known as VoIP and Internet telephony. The primary advantage they offer to small- to medium-sized businesses is the ability to add features previously only affordable or available to large businesses. VoIP is typically more cost effective when looking at long-term operating costs due to lower monthly fees and much lower costs to connect and complete calls.
Hosted vs. Premise PBX
There are two primary types of PBX solutions for business: hosted IP PBX and premise-based IP PBX. Hosted systems take most of the switching and intelligence of the system and move it offsite to a remote location where the service provider manages it. Equipment at an organization's site is limited to the phones themselves; some dedicated routing equipment and perhaps a switch to provide emergency access to the older traditional TDM (time-division multiplexing) telephone network.
As a result, hosted systems are usually quicker and cheaper to install and set up. They offer a standardized set of services. Because they are hosted remotely, there is less maintenance for a business and no need to perform upgrades.
In contrast, premise-based PBXs require servers and more switches to be located at the business site. The downside is a higher startup cost, continued costs to manage and maintain the system and more difficulty growing the system in the future.
You'll want to select a hosted IP PBX provider carefully. Some specialize in organizations of a particular size and can turn out to be unable to scale up beyond a certain number of users. On the other hand, others are unable to provide affordable service for a very small organization. Another important variable to consider is the type of network transport each vendor uses. Many, if not most service providers will allow the customer to use any broadband Internet access and utilize the public Internet as the transport medium. A select number of service providers will require the customer to purchase the broadband Internet access directly from them in order to effectively run the application over their private IP based network. This approach helps to guarantee a much higher level of reliability and quality than using the public Internet.
The typical scenario for a hosted provider is that there are no fixed setup costs, the customer only pays a monthly charge per user. In contrast, premise-based systems feature a larger initial cost that covers servers, software, switches and gateways. It is also easy to predict the cost of growth with a hosted IP PBX, whereas scalability and expansion can be much harder to predict with premise-based IP PBXs.
The bottom line: hosted PBXs are best for small and medium-sized businesses. They are also good for businesses with a lot of remote users or those that anticipate rapid changes in size. In addition, companies that are interested in extending rich features to their mobile users and deploying a business continuity strategy will be good candidates for hosted solutions. Premise systems are best for large, stable businesses with predictable volume that need custom features and have large IT staffs.
The hosted VoIP market is rapidly replacing traditional phone systems because they can take advantage of rapid technological advancements in IP networks and in the software and services that can run across IP networks. In particular, hosted IP PBX systems are easy to scale as the administrative functions are accessible with the click of a mouse. The ease in which user features can be modified simplifies the IT operations of companies.
Another area of interest to many customers is driving lower costs throughout their communications environment. When taking into consideration the Total Cost of Ownership, hosted solutions can be very attractive. The inherent advantage of completing all pure VoIP calls (both ends of the call are on a VoIP platform) for free means that basic phone service is bound to cost less using VoIP. Hosted VoIP systems can provide immediate cost savings and ROI (Return on Investment) when upgrading from a traditional phone system.
Other main reasons that small to medium businesses are adopting VoIP include access to features that are either not available or cost-prohibitive on older phone systems. Examples of these include integration with desktop and office software like Outlook, call routing features, and IVR (interactive voice response) features, all of which used to be extremely hard to set up and prohibitively expensive for small businesses.
The Benefits of Hosted IP PBX
The benefits of hosted IP PBX to any enterprise are similar to and different from the benefits of a VoIP system in general. Fundamentally, there can be significant savings from the lower basic cost of completing external calls. But IP PBX goes even further, bringing greater benefits to enterprises with increased manageability, upgradeablity, and enhanced feature sets.
The specific benefits of hosted IP PBX over traditional phone systems or PBXs include the following:
- A cleaner and simpler infrastructure.
- Lower operating costs.
- No upfront capital required
- Simplified equipment and maintenance.
- Unified communications... work from anywhere.
- Support for mobile users.
- Improved scalability and growth.
- Improved features for business operations.
- Business continuity options.
Hosted PBX solutions allow employees to do their job FASTER and BETTER, which creates a competitive advantage for the organization.
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