As your phone system ages you will be facing a decision whether to replace it with a similar system or one based on other available architectures. Your choices are clear but which to choose is not. Is the rush to cloud-based telephone systems the best solution for you or just the best solution for those selling it? The terminology we need to use shifts a bit so let’s set some common terms.
Local PBX phone system. Chances are if you have had your phone system for a while, this is what you have. If you have “phone equipment” in the back room with a wire for each extension coming into it you likely have a local PBX phone system.
Internet Protocol (IP) phone system. “Phone equipment” still sits in the back room but if your phone plugs into a computer network jack or your computer plugs into your phone you likely have an IP telephone system.
Cloud phone system. If your phone plugs into a computer network jack or your computer plugs into your phone and you DON’T have phone equipment (you might have one very small box but it isn’t very substantial).
There are many angles to this topic but we’ll do it over a couple weeks. If you have questions or comments earlier, give me a shout and we’ll connect.
- Operating Cost. This is the recurring monthly cost to make and receive calls.
- Maintenance Cost. Cost to perform adds/moves/changes of people or locations
- Replacement Cost. Cost to replace what you have (hardware, software, and labor)
- Functionality. Salient characteristics that differentiate what they can do.
- Maintainability. Ease of keeping it running.
- Ease-of-Use. Friendliness of the architectures on the user.
The operating cost of the local and IP systems utilizing traditional carrier services will usually have lower recurring operating costs. Why?
The cloud solution includes the cost of the telephone service; life-cycle hardware and software cost; and technical maintenance expenses as a recurring cost. The Local PBX and IP solutions generally incur maintenance and upgrade expenses only as events arise and therefore have lower recurring operating costs.
The Local PBX and IP systems may enable you to avoid the cost of a high speed Internet connection. Cloud systems need greater bandwidth. For example, calls between extensions in the same room require both extensions to access the Internet. If your Internet costs are sunken as they relate to telephones then Cloud system recurring costs are reduced but normally not below Local PBX and IP systems operating costs. Local PBX and IP systems do not force you to purchase broadband Internet access.
Cloud solutions assess recurring operating charges per extension allowing you to manage recurring costs by ensuring you are operating only those extensions needed. Conversely, cost can rise quickly as you add more extensions. Cloud solutions often allow charges for an extension to be either “unlimited” or metered according to usage providing more management flexibility.
Our conclusion. The recurring operating costs are usually higher for Cloud telephone solutions.
Next time….Maintenance and Replacement Costs.