Hosted Or Premises Voip?

By Author: AVAD Technology
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By now, you have probably heard all of the hype about how Voice over IP can enhance your business, save you big money and solve the entire world’s problem. You may even have considered jumping in yourself.

Before you jump in and commit your company’s valuable resources, you need to have a clear understanding of how this technology works and even more importantly, how it can benefit your company.

Assuming you have decided hosted VoIP phone system is the right solution for your business, the next decision you will be faced with is; do you want to “Own” your VoIP phone system or do you want to “Rent” your VoIP phone system”?

The term used to describe “Owning” business pbx solutions is called “Premesis” VoIP or “Premesis Installation”. The term used to describe “Renting” a VoIP phone system is “Hosted VoIP”.

From a technology perspective, there is no difference in voice quality and reliability between a Premise Based VoIP service and a Hosted VoIP Service assuming these alternatives have comparable hardware, software and internet connections. In other words, an “Apples ...
... to Apples” comparison.

Hosted small business pbx versus Premesis VoIP Considerations

Generally, it does not make economic sense to own your small business hosted VoIP phone below a certain number of phone users in your organization. The cost of purchasing the VoIP hardware and voip service providers must be spread over a minimum number of users before it begins to make economic sense. A good rule of thumb is that you need 100 to 150 phone users before it becomes economicalyl justified. In addition, the cost of implementing a Premise based VoIP solution requires a significant commitment of ongoing resources (Dedicated IT personel) to maintain the system once it is up and running.

Another significant expense that should be taken into consideration is the expense of setting up and maintaining a “Redundant” facility. If your phone system is “Mission Critical”, then you must have a back up in the event your primary facility becomes inoperable. This means you will need to have 2 of everything (2 sets of servers, 2 broadband connections etc) in separate locations in case the primary location becomes inoperable.

The primary non-economic reason for choosing a Premises Based VoIP solution is if your company has specific applications, such as a CRM application, that requires customization and integration with your phone system. Generally, small business pbx phone system allows less customization than Premise Based VoIP solutions. Custom applications also require an additional commitment of staffing resources.

Business VoIP Phone Service and VoIP Allows You to Focus on Your “Core” Business

A Business VoIP Installation frees your company from the burden of managing the infrastructure and security of the locations that house your system. When you are free from managing these non-core activities, you have more time and energy to focus on your primary or “Core” activities.

The monthly cost of operating VoIP international calling plans is generally higher than the monthly cost to operate a Premesis VoIP system. The primary reason for this is that in a Hosted system, you pay per user per month where as in a Premesis solution after amortization costs of the software you pay only for actual usage. Most analysis’s we have seen favor the economics of a Premesis solution starting in year 5. A big reason for this is that after year 5 the hardware and software have been fully amortized.

Do what you do best and outsource the rest!

Conclusion: VoIP Solutions for small business or Premesis VoIP

If you haven’t noticed, we have not focused this article on money as primary criteria for choosing one solution over the other. The reason is simple, if you are like most companies, your telecommunications solution is a mission critical component of the success or failure of your company. It does not matter what the cost of a solution is, if that solution does not help your organization meet its objectives, the cost of a particular solution or the potential savings of that solution is irrelevant.

Only after you have determined that a particular solution satisfies your needs should cost come into play. Your phone system is central to the long run health of your organization and deserves careful analysis and planning.

With that said, the choice between a Hosted VoIP solution and a Premesis VoIP for businesses solutions should be based on the specific circumstances of your company. If your company requires customization and integration with applications such as a CRM, then a Premesis VoIP small business services is most likely going to be what is needed. If on the other hand, customization is not needed, then a Hosted VoIP solution is probably going to be the most appropriate solution.

Tell Us about Your Business VoIP Needs

Get started with AVAD today. To learn more about AVAD Technologies VoIP phone service provider please calls (800) 733-4136, or visits us on the web at AvadTechnologies.com

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