Hosted PBX vs On Premise PBX | How to Choose The Right Solution

The key to successful business is excellent communication. If you have this ability, you can achieve success in a short period. Every business has its unique choices in selecting the communication systems. Some go for the traditional PBX systems, while some prefer modern hosted phone systems.

The new players entering the business industry are confused between traditional and hosted PBX solutions, as both the PBX solutions have different features. For businesses, it is a tough decision to choose between these telephony solutions.

Finding the right PBX system can become challenging; that’s why you need to understand the difference between both these services.

Here, we will explain the concept of both communication systems and their pros and cons. So, if you are confused about the system that best fits your business, read ahead: 

Hosted PBX

Hosted PBX is a cloud based communication solution that ensures all communication activities over the cloud. A third party service provider provides hosted phone services and is responsible for data security, system upgrades, uninterrupted communication, and server maintenance.

Traditional PBX

Traditional or on-premise PBX resides at a business location, and the communication is done with an IP phone using a LAN. In this, businesses maintain their servers and take care of the entire communication system. Also, it requires a dedicated IT team that can resolve issues that might appear during the communication process.

Difference Between Hosted PBX And Traditional PBX

There are numerous differences between hosted and on-premise PBX solutions. Understanding the difference between both will help you to determine the best solution for your business. 

Here is the quick comparison:

1. Cost Investment

When you opt for an on-premise system, you also need to purchase new hardware and compatible software. Also, it requires a vast infrastructure, IT, and installation cost. Initially, the traditional PBX system incurs a considerable loss to the business; that’s the reason it is not so much suitable for small and medium-sized companies. 

Whereas, hosted PBX system has lower initial equipment and set up cost as it is hosted over the cloud. Also, hosted PBX solutions ensure “pay as you go” plans. Due to these customizable plans and pricing, it becomes easy for businesses to opt for communication services. Most companies are switching from traditional PBX to hosted PBX solution for its flexible plans and pricing.

2. Business Scaling

Businesses need to scale up or down their telephone lines for various reasons like increase and decrease in the number of agents or heavy incoming/outgoing call volume.

In the traditional PBX system, you are not able to add or remove telephone lines instantly as you require hardware and dedicated IT staff to scale up and down the phone lines.

But on the other hand, hosted PBX solutions ensure easy scaling through which you can add or remove phone lines instantly.

3. Business Reliability

Business continuity and disaster recovery are both crucial factors for every business, as no one wants to lose data. Natural disasters like fires, floods, the earthquake can make your system fail to work. Also, breaks business continuity by making computer system completely inaccessible. That’s why it is highly recommended to ensure backup and recovery in your business. 

On-site, the PBX system can’t assure backup and recovery as data is available only in inhouse storage. But cloud PBX systems won’t take your business offline as all the data is available in the cloud that can be easily accessed and recovered any time.

4. Geographic Flexibility

Most businesses want geographic flexibility to target customers globally. On-premise and hosted PBX, both the systems ensure remote working. But in the case of an on-premise PBX system, you need to invest considerable costs to facilitate services in different locations. 

Alternatively, the hosted PBX system does not need any additional investment as you need to connect with the network & login to the PBX system to start communicating. Also, it removes redundancy from business operations as all agents have access to the same pages and data. Agents’ can retrieve or share necessary information whenever required.

5. Technical Support

The on-premise system requires dedicated IT staff to troubleshoot day to day problems of the PBX system. As on-premise PBX systems are hardware dependent, you need to hire a team of IT members that again increases the upfront business cost.

The virtual PBX solution ensures an easy to use platform where the supervisor or administrator can make changes to the system in just a few clicks. Also, any significant issue that occurs in the communication process is resolved by the service provider and does not need any attention from the business side. 

6. PBX Installation

The on-premise PBX system takes much time for installation, as it requires multiple hardware to start the process. 

Alternatively, the cloud PBX system does not require any expensive hardware to be installed to start business communication. Businesses can initiate conversations as soon as they log in to the system.

7. Customer Service

On-premise systems provide limited features that are not enough for ensuring excellent customer service. Whereas the virtual PBX system offers a list of advanced communication features that streamlines your business communication. Features like voicemail to email, auto attendants, call forwarding, queuing, and recording provide multiple opportunities to agents that help serve customers in a better way.

How To Choose The Right Solution?

A study by Markets and Markets says that The global hosted PBX market was valued at USD 4.19 Billion in 2017 and is expected to reach USD 9.50 Billion by 2023, at a Compound Annual Growth Rate (CAGR) of 14.9% during the forecast period.

Now that you know all about both these communication systems, it is an easy choice to make. Analyze all situations and select the right solution for your business.