The Pros and Cons of Hosted Phone Systems

Gone are the days of allocating capital expenditure for private branch exchange (PBX) systems. The virtual system can do everything a physical system can do, more efficiently, more cost-effectively, and with 24/7 support. The options in hosted phone systems include both traditional PBX and Voice Over Internet Protocol (VoIP), which uses the Internet to transmit calls.

Small businesses can enjoy significant potential cost savings by switching to a virtual system. Firstly, it's not necessary for you to purchase any physical equipment. This is ideal for smaller companies for whom the installation of a PBX onsite may not be affordable, according to PCWorld. In addition, the fixed monthly cost for telephony services helps you to budget efficiently. There are no set-up costs for additional users or administrative and maintenance fees. Repairs are typically covered by the service agreement. You no longer need to pay for costly office premises to present a professional image to clients, because hosted systems can be utilized remotely from locations such as home offices, giving the impression of a larger organization.

The disadvantages of a hosted system include poor call quality caused by signal interference and a time lag when calls are transferred to mobile phones. VoIP hosted phone systems need Internet access to operate, so if there are any outages you may experience a disruption of your service that is beyond the control of the service provider.

Once you enter into an agreement with a service provider you could be locked in for an initial contract period. While some service providers waive this requirement, you typically get better pricing if you sign up for a fixed term. Having a set monthly cost is beneficial in the short term, but over time the total cost of ownership increases because you never acquire full possession of the system. While you can argue that this is offset by the automatic upgrades, lack of capital expenditure, and the ongoing support, it is a factor that you need to take into account.

Monthly rental costs are fixed regardless of the number of users, but usage charges can still mount up in the same way that they do with a regular, on-premise phone system. With a VoIP system, long-distance calls cost the same as local calls, but with a virtual PBX these charges differ and can add up. Unless you've budgeted accurately for monthly usage charges, you could still have unexpectedly high costs.

With an almost equal number of pros and cons for choosing hosted phone systems, you'll need to evaluate your circumstances carefully to determine whether this type of telephone service is right for your business.

Disclaimer

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