Voice over IP - deciding what is right for your business use case

On-premise, cloud or hybrid they can make or break your business

On-Prem vs. hosted vs. Hybrid – Choosing the right VOIP System for your business

Email, web, and social media have become standard business tools, smartphones and business office phones are still as important as ever.  Long gone are the days of having to carry expensive analog phone lines, and behemoth PBX systems;  as Voice over Internet Protocol (VoIP) providers can now provide you a seamless service that installs in minutes and provides you the flexibility of a complete phone system. 

For businesses, choosing how to keep those office phones in place in the most economical way can be very challenging and confusing.  There are three primary ways to go about phone service in a business.

On-Premise -

The first being on premise (on-prem): meaning all the necessary equipment to run your phone and voicemail system is located at your business or at least in a data center you maintain. The phone service or “dial tone” is handled by a third party carrier through the Public Switched Telephone Network (PSTN).  The PSTN consists of operating companies like AT&T, Verizon, and as the past several years’ Time Warner and Comcast to name a few.

The on-prem solution tends have the most upfront cost associated with it.  Large capital investments require a commitment to a certain brand or style of service.  Most vendors offer ongoing warranty and maintenance to protect your initial investment.  For some environments, having on-prem solutions means having someone or a team in-house to manage the phone system.  While there can be significant cost, the on-prem model provides the customer with peace of mind, knowing the system will be up and functioning in the event of an Internet outage.  Assuming of course your PSTN service is from a traditional provider and not an Internet based provider.


Perhaps one of the fastest growing choices around phone systems has been the adoption of hosted or cloud based phone systems.  Terms like IP PBX (Private Branch Exchange) or VoIP and SIP (Session Initiation Protocol) are tossed around quiet often.  The hosted solution involves a provider to “host” a virtual phone system in the cloud (which is really another way of saying data center).  The client is charged a monthly fee for the service usually on a per device basis. “Dial Tone” or access to the PSTN is generally supplied by the hosted provider.

The hosted model can be great for an office of 10-25 phones that does not have in-house IT resources.  There is little to no capital investment, most solutions have a small setup or initiation fee.  Cost saving is best found in committing to one to three year terms.  Generally, the longer the term you sign up for the cheaper per month the solution will be.  The one drawback to hosted solution is its dependence on your current Internet Service Provider (ISP).  Hosted solutions generally offer the ability to rent or lease the phones for small monthly fee.  This fee usually includes the ability to replace the physical phone should ever have the need.


The third type involves a hybrid approach to both solutions, involving some services coming from local resources and equipment and others coming from cloud based solutions.  The adoption of this approach is often ideal for those businesses with concerns about Internet outages affecting phone service but yet want the flexibility that a hosted solution provides. In a hybrid solution, “dial tone” is supplied in a mix from the hosted provider and also from third party carriers at the local level.

The hybrid approach can often be the costliest solution due to the capital investment and the ongoing hosted charges. That being said, the high-availability of the design gives the business a comfort level not reached by the two approaches separately.