Phone system – Cloud or Premise

Many businesses are facing a difficult decision when they need to get a new phone system: what phone system - cloud or premise based is the best bet? Let’s discuss the pros and cons of a company looking into whether a cloud/hosted voice solution is the way to go or if purchasing or leasing a premise based voice solution(which can also optionally be in the cloud) is the best option.

Companies today are being pummeled by sales people.  In the old days telephone systems were sold by direct sales people specifically trained to sell a dozen or so manufacturers systems. Today there are still several phone system manufacturers plus Microsoft plus the onslaught of over 2000 hosted companies (all of which can install nationally without rolling a truck) vying for the voice market. This translates into hundreds of calls into each company and in turn no one wants to answer the phone any longer.

If Vatacom happen to squeeze in to discuss options with potential customers we lay out a couple of differences between cloud and owning a system to see what fits the customers short and long term plans.

The sales person pointing out the advantages of owning a system might say : "Owning a system eliminates the larger ongoing pay-forever hosted model cost"

Compare what your ongoing monthly SIP trunks will cost after the purchase or lease plus manufacturers extended warranty or software updates and decide based on the numbers.

Customers looking for a new business phone system or voice solution are sometimes worried about how fast the market changed since their last buying cycle. Vatacom states to our customers that we have great cloud and premise based solutions.  If you choose to go with owning vs cloud and have the right SIP standards based system there isn’t any need to worry about obsolescence.

If you think about phone systems, there wasn’t a voice standard for over 100 years and every system was proprietary.  SIP protocol(since about 2002) is the world-wide voice standard/protocol so it is not going away. Every carrier sends voice as SIP across their networks already and every software and hardware manufacturer that wants to apply a product to the voice market is manufacturing to accommodate SIP protocol.

A person selling hosted / cloud solution might come in with the following bullet points:

  • No equipment to deal with on site
  • Everything is handled for you
  • No more paying for software upgrades
  • You will have the redundancy of a data center (or data centers)
  • Operating Expense (Opp-X) vs Capital Expense (Cap-X)

The above sounds great and without steering a customer to cloud or premise I will also dig into the above bullet points a little deeper to point out the following.

No equipment to deal with on site

Yes, a customer possibly eliminates the phone system server(or multiple boxes) but you still need PoE switches, maybe handsets and possible a gateway or two so hosted doesn’t eliminate equipment.

Everything is handled for you

Cloud or premise, it is still a phone system and the customer has to deal with it. Moves, Adds and Changes(MAC’s) and support issues still arise and the customer has to either go to a portal or open a ticket and handle it either way.

No more paying for software upgrades

Yes, your service is typically on a multi-tenant soft switch platform in which case it makes sense for the provider to just build the hidden cost into the monthly rate and handle it by notifying customer when the upgrades will take place (Note: Vatacom’s two main hosted solutions are separate images for each customer)

You will have the redundancy of a data center (or data centers)

Yes, data centers have superior power and internet failover plans than most businesses yet most data centers have had occasional issues over the last several years. Note that with SIP trunk auto-failover services being so common now most customers are fine with voice calls auto-failing over to a cell phone or other phone number in the event of a power, Internet or system outage

Operating Expense (Opp-X) vs Capital Expense (Cap-X)

Writing off monthly hosted costs as just another operating expense is nice but keep in mind rent to own scenarios can eliminate that advantage

We state to our customers that we have great cloud and premise based solutions.  If you choose to go with owning vs cloud / hosted contracts and have the right SIP standards based system there isn’t any need to worry about obsolescence as when you think about phone systems there wasn’t a standard for over 100 years and now (since 2002) SIP is the world-wide voice standard/protocol so it is not going away.

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