Cloud Telephone Systems are not as vague as they might sound. Simply put, a Cloud Telephone System is a Voice over Internet Protocol (VoIP) software-based Business Telephone Systems, hosted on your provider’s server, which you access via internet connectivity.
On-premise business telephone systems are where the PBX (Private Branch Exchange) as they are more widely known, are the brains of the business telephone system. informing each office desk phone, when and how to ring and is physical hardware installed into the server room of your business.
What are the main differences between On-premise and Cloud Telephone Systems?
Hardware Requirements
Physical hardware is the difference between On-premise and Cloud Telephone Systems. On-premise, as it sounds, means the business telephone system is installed in your building.
Cloud Telephone Systems however require little to no hardware installed and the telephone system traffic is transmitted via VoIP, over your internet connectivity.
Security and Maintenance
All telephone systems require regular security and maintenance to ensure the operating software is up to date with all the relevant software patches.
PBX Maintenance is highly recommended however still an optional extra for On-premise telephone systems. But without maintenance, you are on your own if the PBX breaks.
With Cloud Telephone Systems, maintenance updates importantly are rolled out automatically and included in the monthly subscription.
Reliability
Hardware, like an On-premise PBX are vulnerable to natural disasters, general wear and tear, power outages.
Inevitability hardware will then be discontinued, via the manufacturer, they will no longer support it in favour of their next model.
The best Cloud Telephone Systems are housed in secure data centres with the addition of redundancies, making sure your system never goes down.
Importantly then it just comes down to the reliability of your internet connectivity.
Total Cost of Ownership
Hardware On-premise requires a significant upfront capital investment (CapEx), which can be compounded with ongoing maintenance and upgrades.
A Cloud PBX System converts CapEx to monthly operating expense (OpEx). removing most of the upfront costs.
The total cost of ownership is lower because the hardware is optional, office desk phones can be replaced with softphones.
However, unlike On-premise telephone systems that come with initial upfront costs, Cloud PBXs can come with higher monthly expenses.
In conclusion the decision can depend on your businesses position on CapEx or OpEx expenditure and the number of physical extensions you need.
Flexibility and Scalability
With On-premise PBX, adding new features or extensions can be expensive. It can require additional card or system licenses as well as chargeable engineer site visits to install.
But with a Cloud PBX, adding services can be a remote configuration done on your administration portal. (This may require a small monthly user license or additional feature license).
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