By: Brad Kessler, CTO – LiteCloud
The cloud has quickly become a technology trend and industry buzz word. Social networks are talking about it, articles are popping up everywhere, IT decision makers are thinking about it, and no matter what your standpoint is in regards to pros or cons, you have at least considered it to solve a computing need. But is the cloud limited to “Computing”? The cloud offers IT benefits of lower capital expenditures, ability to scale on demand, enterprise-class performance and reliability, and reduced lifecycle expense, which would lend themselves perfectly to other expensive complex services such as voice and video communications.
The days of the traditional PBX are now at our back and we are now sitting comfortably in the VoIP age. VoIP definitely has shown us benefits such as a single network to operate, advanced calling features, and reduced costs of transport trunks by using the WAN but this does not come without an expense. The initial investment of a VoIP platform from a large vendor such as Cisco, Nortel, or Avaya and even smaller vendors such as Mitel or Shoretel are significant and the lifecycle of a VoIP system is more in line with a computer system (5-7 years) versus a traditional PBX (15+ years).
The cost of VoIP doesn’t end with the initial investment. Large expenses such as the VoIP PBX, phones, and the annual vendor hardware/software maintenance is a necessity in order to protect your investment. Unfortunately, the spending does not stop after the one-time or yearly expenses (Yes…there is more). The fact that the phone system now works over the IP network does not mean that you can stop paying the Local Exchange Carriers (Verizon, AT&T, CenturyLink, Etc.). PRI or IP-based SIP trunks are still required to make calls to the Public Switched Telephone Network (PSTN) and those often carry monthly line as well as per-minute usage costs. And as an added bonus…Your average IT tech is not likely to be voice savvy so most businesses can compound the systems costs with bills for voice experts to perform the installation, sustainment, and daily operations of the VoIP platform. This is an investment that most small and medium businesses cannot and many larger businesses are wisely choosing not to make.
The answer to controlling or avoiding these costs may just be up in the cloud (literally). The rise of Hosted or Cloud-Based Phone or Unified Communications (VoIP, Video, Chat) has made it possible for budget-conscious organizations to attain the features and capabilities of a VoIP platform without the large upfront expense or Total Cost of Ownership (TCO) expenses such as maintenance and lifecycle. Cloud-based telephony is delivered “as a service” where the provider assumes the burden of the upfront investment, annual hardware/software support, PRI or SIP delivery to the PSTN, and labor required to install and operate the system. Cloud-based VoIP allows small and medium-sized businesses as well as larger more distributed (retail, hospitality, banking, call centers) customers to have a sophisticated telephone system with many of the bells and whistles found in the expensive on-premise VoIP systems for a relatively low monthly cost per handset.
Cloud-based phone systems offer operational and security benefits as well. A move from premise to the cloud offers a built-in business continuity so that phones may be quickly relocated or soft phones can be used in the event of a disaster or power failure. Many hosted and cloud VoIP provides offer Service Level Agreements (SLA) that place redundant call platforms and outbound PSTN trunks distributed across data centers as well as carrier-class security gateways to ensure that the system is protected from hackers.
Hosted VoIP Offers:
- Lower initial setup costs
- Faster setup time
- Increased reliability
- No lifecycle requirements
- A monthly service fee for the cloud-based PBX
- Additional monthly service fees if adding more handsets
- Additional monthly service fees to upgrade the feature set
On-premise VoIP Offers:
- Higher initial purchase and setup costs
- Higher maintenance costs
- Slower setup time
- No monthly PBX fees
- No additional monthly recurring costs to add more handsets
Which solution is better? For many small to medium organizations it would be hard to argue against a hosted system, it simply makes more sense. There is a relatively small up-front investment, less headaches, and reasonable monthly fees. However, for many larger organizations, a business case would have to be made. The per-seat monthly charges could easily get to a point where the investment for an in-house system may be more beneficial in the long term.