The pros, cons and costs of each telephony model

Person talking with headset
Should you opt for cloud or on-premise phone systems? Find out what you need to know about the pros, cons and costs of each before making a decision.

Choosing the right solutions for your firm’s telephony services is a vital decision. Voice calls are still an essential pillar of your communications strategy, whether this is keeping in touch with employees in the field or other offices, or managing a contact centre to provide customer service.

Having a reliable service with all the features you need to serve your customers and employees is therefore not to be underestimated. But when it comes to selecting a telephony service, there are a range of options to consider.

Before you go about choosing a specific provider, the first decision to be made is whether to opt for a traditional on-premise phone system or go for one that’s hosted in the cloud. Cloud telephony has been around for a while now, and it’s becoming a common option for many deployments. But does this necessarily mean it’s right for you?

Each technology has its own set of pros and cons, as well as its own cost structure, which you must factor into your decision making. So what should you be looking out for?

Hosted or Cloud Telephony

One of the key benefits of hosted cloud is its scalability. Because these services are typically offered on a subscription model, with you paying per-seat, it’s easy to add new connections as and when you need them, so you’re guaranteed a future-proofed system that can scale with your business, with all the necessary patches and updates included.

This comes down to the fact cloud is classed as an operating expense (OPEX). This means you’ll get everything you need for one simple cost, paid on a monthly basis. As well as being much more predictable, and therefore helpful when budgeting, this reduces the need for expensive upfront costs, which is usually the case with on-premise solutions. 

On the other hand, you do need to keep a close eye on the total cost of ownership (TCO). While you may not have to shell out anything upfront, in the long term, it could be the case that the coverall costs end up exceeding those of an upfront on-premise deployment. It could also be the case you encounter unexpected costs, such as if you have to upgrade internal legacy networking infrastructure to support the VoIP services. 

On-premise Telephony

On-premise solutions, which may be the more familiar option to many businesses, meanwhile use a capital expenditure (CAPEX) model, meaning they will usually require significant upfront investment at the deployment phase.

While there may be fewer monthly expenses, it does also mean that any future maintenance or upgrades will have to be budgeted for separately, so this is also something to think about when calculating TCO.

However, where on-premise tools can be hugely valuable is in the amount of control and customisation they can provide. If you have unusual or highly-specific requirements, this can offer a more tailored solution than the more ‘off-the-shelf’ offering typically provided by cloud telephony. It also provides peace of mind on issues such as security and reliability as, even though cloud services can provide strong guarantees as part of their service level agreements, for some firms, there is no substitute for keeping their solutions under their direct control.

Of course, there is nothing to say you have to opt completely for either on-premise or hosted cloud service. For some firms, a hybrid model that combines elements of both could be the best answer, though this will come with an additional layer of complexity.

Arrow is a Mitel Platinum Partner in the UK. Mitel offers both Cloud Voip through Scala and On-premise telephony solutions.

To learn more about the pros and cons of cloud and on-premise telephony systems, download our white paperOn-premise vs Cloud – Which PBX Phone is best?

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