These days businesses have the option of opting for what’s called a cloud based or hosted telephone system. The ‘telephone system’ itself is cloud based, in other words on a large server somewhere far away from your premises and is linked via the internet and your broadband connection.
It is important to clarify terms like VOIP and SIP. These are often linked to hosted systems, as SIP is the protocol, or language used by the handsets to talk to the phone system in the cloud. People often associate these terms with reduced call costs and cost savings, which is true, as it generally costs less to route phone calls over the internet using VOIP. However this is not exclusive to hosted phone systems.
Costs
An on-site telephone system generally has a higher up-front cost, as you have to purchase the equipment. However, the costs can often be spread by leasing. This does have some advantages such as a lower initial capital outlay as there is no phone system to purchase although you will still have to initially pay for the cost of the IP handsets as well as an additional PoE network switch. Hosted systems attract a monthly rental cost per extension, so particularly with a higher number of users over a period of time, the costs may well pay for the cost of an on-site solution.
So be aware that within a relatively short period a hosted solution may not necessarily be good value for money. There is a monthly charge per extension to pay with additional costs levied for extra features such as auto-attendant, voicemail, call queuing, call transfer, ring groups and hunt groups, all of which are usually included in an on-premises system.
Reliability
On-site systems have a big advantage in terms of reliability. An on-site solution will usually connect to the public network using PSTN (analogue) or ISDN (digital) phone lines. These lines have a very high stability, high uptime, and faults on them are usually resolved rapidly. An ISDN line can come with a business grade care package and a Service Level Agreement to guarantee the uptime of the line.
Hosted systems connect to the public telephone network solely using SIP trunks over the internet. If that is the case, then the stability of the VOIP line is at the mercy of your internet connection. Whereas an on-site system can use SIP, a hosted solution is entirely dependent on VOIP. That’s why pure hosted systems are less reliable and less stable, as they rely completely on your internet connection in order to work. If your broadband is slow, a bit flaky or often drops the connection, then you would definitely do well to steer clear of relying on a Hosted system and/or SIP trunks.
Reliance
The final factor to bear in mind with hosted or cloud systems is your reliance on your provider, yes they will try and ensure that the service from their end doesn’t fail they will leave you to look after the hardware on your premises such as routers, PoE network switches and the structured cabling within your premises. If any of key components fail you will have no phones and no locally based engineer to get you up and running again quickly.