Premise vs Hosted IP PBX – Which One is Right for You?
So, you’ve decided to move to IP-based communications! Congratulations on having made that decision. The next fork in the road involves choosing between a premise-based or hosted IP PBX. Read on. We’ll help you make your decision by providing some considerations that you won’t see elsewhere on the web.
Let’s first outline the areas we need to consider. Then, we’ll examine each one in greater detail. The areas of focus include: CAPEX and OPEX costs, usability, and survivability.
CAPEX and OPEX Costs
The two options diverge significantly in this decision space. The premise-based PBX option requires purchase of the PBX, a router, as well as a sufficient number of telephone instruments to meet your business’ needs.
If you choose the hosted option, your only CAPEX expense is the cost of the telephones, and a router. There is no other on-premise equipment required. (At CompuVoIP, most customer are eligible for a rebate on their phones..so the net cost for their telephones is zero!)
For a 75-seat solution, a typical premise-based PBX solution would cost $75,000 contrasted with the much lower $22,500 required for a hosted PBX system.
The numbers tell an interesting story on the OPEX side of the spreadsheet. The premise-based PBX demands care and feeding. Software upgrades and patches, feature upgrades all require the expertise of a trained PBX administrator. Adds, moves, deletes also need to be processed by the PBX administrator. While this may not require a full time position, these OPEX costs are directly attributable to the premise-based PBX.
The premise-based PBX would incur an additional cost associated with a maintenance agreement with the manufacturer to protect against hardware malfunctions. No such maintenance agreement would be relevant in the hosted-PBX scenario.
When it comes to monthly recurring charges, the premise-based PBX has a definite edge on usage charges. Let’s look at two scenarios:
This enterprise requires 20 telephones. 6 of those telephones are used actively each day. The other 14 are courtesy/convenience phones.
Using typical pricing, a hosted PBX user would be charged 20 x $8 per extension and 6 x $30 for the active extensions for a total of $340 per month.
The monthly recurring charges for the premise-based PBX would be 6 x $30 or $180 per month – a net difference of $160 per month, or $1920.00 per year.
This small enterprise has 6 active phones.
Using typical pricing, a hosted PBX user would be charged and 6 x $8 for each extension and 6 x $30 for the active extensions for a total of $228 per month.
The monthly recurring charges for the premise-based PBX would be 6 x $30 or $180 per month – a net difference of $48 per month, or $576.00 per year.
Usability is a mixed bag when comparing hosted and premise-based PBX systems. For the most part, the two system types support an equivalent set of the most sought-after business features.
Where the two system types diverge is in their ability to support line appearance buttons. Here’s the scenario:
A company has 4 lines. A call comes in for John on line 2. After speaking with the customer, John wants his colleague, Sam, to pick up the call to continue the conversation.
In the premise-based PBX world, John can merely call out to Sam saying “Sam! Pick up line 2, please!”. Sam has a button for each of the four company lines on his phone. To pick up the conversation, Sam merely needs to depress the button for line 2 and begin talking.
In the hosted PBX environment, it is not that simple. To enable Sam to continue the conversation with the call, John would need to use the Call Park button to put the call on ‘public hold’. Sam can then access the call by depressing the Call Pickup key on his phone. It’s not a big deal. It’s just a different way of operating. For new enterprises not coming from the premise-based PBX world and are not accustomed to the ‘squared’ systems it won’t really matter. For customers that are transitioning from a premise-based PBX, it is something that will change.
Both system types typically support softphone applications for Windows, IoS, and Android operating systems.
In the event of a physical disaster that makes it impossible to operate the enterprise from its regular location or to reach that location, both system types support the ability to take one’s desk phone to any location where there is internet service, plug the phone in, and continue to operate as though one was at their desk at work.
However, if the location where the premise-based PBX is located suffers physical damage that impacts the electrical system, and/or the communications infrastructure, the entire phone system will be offline. Off premise phones plugged into the internet will not operate at all. With the hosted system, the PBX “in the cloud” generally has a hot spare redundant system typically located in a geographically distinct area that virtually eliminates the possibility of switching system failure.
With a bit of stretch, let’s include the subject of feature enhancements. The hosted PBX solution will generally install feature enhancements and software patches during its regularly scheduled maintenance window. With the hot spare system taking over during that time, there is no impact to system users. This is especially important to enterprises with locations across multiple time zones or continents. Premise-based systems would need to schedule the upgrade at time that would cause the least amount of disruption to its users.
PUTTING IT ALL TOGETHER
Compu-Phone and CompuVoIP offer a comprehensive selection of premise-based and hosted VoIP solutions. We’d be delighted to talk to you about creating a future-proof solution for your business. Give us a call at (718) 230-9292 or visit us on the web at www.compu-phone .net.