Crosstalk with Select Telecom (Spring 2014)
If you haven’t updated your phone system in the past 7-10 years (or maybe even if you have!), you might be surprised to learn how many options are available these days for communications systems. Digital PBX systems are quickly being replaced by modern VoIP solutions in a variety of configurations, including premise-based or hosted VoIP systems, and also hybrid systems which offer the ability to integrate some VoIP features with your existing traditional digital PBX. But all these options beg the question: which configuration is right for you?
Premise-Based vs. Hosted VoIP
With both premise-based and hosted VoIP phone systems, all of the analog and digital phone handsets in your office would be replaced with state-of-the-art VoIP phone units. These phones are connected back to the main system server with category 5 or 6 data cable through a PoE (Power-over-Ethernet) switch in your office data room. In both cases, you gain the ability to leverage a rich VoIP feature set that supercharges the end-user experience, enabling built-in “mobility” functionality that will forward calls from your desk to your mobile device, online “presence” and seamless integration with Outlook and CRM, easy scalability and automatic remote upgrading, and simple DIY programming for cost-effective moves, adds, and changes.
Where these systems differ, however, is in where the main system server is located. In a premise-based system such as the standard ShoreTel solution, the voice appliance – a very robust server with no moving parts except a fan – is housed on-site in your phone/data room. Typically, your company owns (or leases-to-own) the hardware, which requires an upfront capital investment but offers the lowest total cost of ownership (TCO) over time.
In a hosted system (for example, ShoreTel Sky), there is no voice switch or appliance on-site. Instead of connecting to a T1/PRI or phone or cable line, calls are converted to a data stream which then connects out over the internet to the hosted provider’s equipment (located off-site in a central location which provides communication services to multiple customers at once). This solution is effectively outsourcing your phone system to the Cloud, replacing that upfront capital investment with a low monthly cost which can be categorized as an operating expense instead of a capital expense.
What’s Right for You?
The benefits of a VoIP system, whether premise-based or hosted, are much the same, and there are very few disadvantages to either option. So for most companies, the decision comes down to finances: do you have the capital to invest in a premise-based system, or would the low upfront cost of a hosted system work better for your business?
In most cases, when all factors are considered over a 7-10 year period, the premise-based option generally offers the lowest total cost of ownership. Very low costs to maintain and administer the system, coupled with minimal energy consumption, limited rack space needs, and the ability to manage your own moves, adds, and changes, mean that your premise-based system will require very little investment over time beyond the initial capital expenditure. And for many companies, that upfront capital expenditure can be written off of the company’s taxes under Section 179 and depreciated over time. So if you are planning to utilize your system for at least seven years, Select Telecom usually recommends a premise-based VoIP system as the most cost effective communications solution.
That being said, there are certain circumstances under which a hosted solution like ShoreTel Sky may offer advantages to your company. If you know your organization’s usage needs (number of phones, local/long-distance minutes, etc.) are not going to change much over time, and limiting cash outlay is a priority, then a hosted system may present the optimal package, particularly as a stopgap solution for improving your communications now while saving up to invest in a premise-based system later. The important thing to remember, however, is that the monthly operating cost associated with your hosted system will continue forever. For many companies, once you approach year 6, 7, or 8, the total cost of the hosted system will begin to balance out with (and then quickly surpass) a premise-based system.
A Third Option: Hybrid PBX
If you’re not quite ready to take the leap into a premise-based VoIP system but aren’t sure if the economics of a hosted system will work in your favor, another option to consider is the Hybrid PBX. Examples of this solution include the NEC SV8100 or Avaya IP Office 500.
Hybrid systems are generally made available by longstanding phone system manufacturers who want to offer a way to incorporate VoIP into their existing digital platforms. Hybrid systems can give you the best of both worlds, allowing you to integrate both digital and VoIP phones into the same system to work with an on-premise voice appliance and, depending on your phone selections, potentially even your existing category 3 cable.
The hybrid option is usually best suited to smaller companies who don’t have a dedicated IT staff, are not spread across multiple office locations, and don’t have a network which is equipped to handle added voice traffic. If your company is mostly happy with a traditional digital system but wants some of the added features of VoIP while keeping your costs down, you may be a good fit for some form of hybrid design. While you won’t get all of the functionality that makes VoIP communication shine, you’ll be able to leverage some great new features while avoiding the expense of adding PoE switches (or compounding long-term operating costs).
The Right Choice
In the end, every company – and the requirement list of every communications system – is unique. That’s why it’s important to research and understand your options, and to work closely with a communications partner you trust to give you an expert recommendation. Select Telecom is proud to have decades of expertise at our disposal to assist our customers in identifying the absolute best configuration for their business. Whether premise-based, hosted, or hybrid PBX, you can count on Select Telecom’s expert team to build you the custom solution that’s right for you.