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On-Premise PBX vs. Cloud-Based PBX: What is the Best Answer?

Last updated: 31 Oct 2023
On-premis PBX phone

Telecommunications has evolved from a focus on voice to a solution for complex communications. Customers expect to engage with businesses through a variety of communications, from online chat to voice and mobile messaging. The way people communicate is continuously growing and morphing. Systems you put in place are quickly outdated. Your competition is running the same race and can move ahead by investing in new technology. The question for many is if moving to a cloud-based Private Branch Exchange (PBX) always delivers a competitive advantage, or is there still value in an on-premise PBX?

There seems to be an endless amount of information available on why companies should only consider the cloud and hosted Voice over IP (VoIP). At the same time, when you have already invested in an on-premise PBX that your IT manager says is delivering what you need and more, the catalyst for change can be difficult to find. Do you believe the latest marketing toss aside your investment and go against your in-house experts moving to a cloud-based unified communications service?

Maybe not. There is a solid argument in favor of on-premise solutions. Some companies will never move to the cloud, no matter how strong the argument in favor of migration. On-premise PBXs now offer many of the same capabilities that made hosted solutions so popular and other benefits that are only available from on-premise systems.

PBX: Understanding Cost

Marketing has complicated the cost-benefit argument. Each system can claim a cost advantage, depending on the view.

  • On-premise system: You own all the equipment, appliance servers, and phones. You typically have an initial capital expense when you first purchase the system, which will eventually be paid off and start depreciating. You have to buy more equipment when you need to grow, but ongoing monthly costs are limited.
  • Hosted: There is typically no capital expense. You pay monthly for the services you subscribe to and for the users on the system. Some organizations appreciate the shift to operating expenses for their systems.

PBX: Control Matters

The control element is a genuine consideration. Cloud vendors are quick to offer assurance that you won’t give up control by moving to the cloud, but that’s not entirely accurate.

  • On-premise: Your team has complete control over the system, including any moves, adds, changes, or updates. With the right engineers on your IT team, your in-house system can be anything you want.
  • Hosted: Businesses with limited or no in-house IT support often consider having someone to manage the phone system a positive. Cloud solutions can be customized, as long as the features you want are offered. It is important to remember that the provider is designing a solution for more than just your users, so the most popular feature requests win.

PBX: Flexibility

Flexibility is an area where hosted systems tend to have a clear advantage. On-premise solutions can typically complete all the same functions and deliver the same services, but it can be more complicated.

  • On-premise: Your onsite PBX can handle remote users and multiple offices, but it is often more complicated and expensive.
  • Hosted: This is the area where a cloud service has a clear benefit. A cloud-based PBX allows you to access a single phone system, rather than peering together multiple locations.

The bottom line is there are advantages and considerations to both on-premise and cloud-based systems. It can be tough to move your PBX to the cloud when you’re used to an on-premise PBX. It is true even if the cloud-based system operates with the same equipment you have in-house today. Processes still have to change, and unless there’s value beyond the risk or the benefits you’re giving up, it may not be worth the trouble.

Still not sure which direction makes sense for your environment? Contact BlackPoint IT Services. It’s our job to examine the details with you, so you know where your telecommunications investments make sense. Let’s start the conversation, so you enjoy the benefits sooner.