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Cloud PBX vs On-Premise PBX Systems: Which is Right for Your Business?

hosted IP PBX system
hosted IP PBX system

PBX has always been a significant part of business communication within the organization. Cloud seems to be the way forward as more businesses are shifting from on-premise PBX to cloud PBX systems. Owing to the advanced features, the global cloud PBX market is expected to grow at a stunning rate of 14.17% CAGR between 2021 and 2028.

While hosted IPPBX systems have a growing adoption rate, some businesses still hold on to on-premise PBX systems. In this blog, we will unveil the perks and downsides of on-premise PBX systems as well as cloud PBX systems to help you make an informed decision in light of the dynamic business landscape.

What is an On-premise PBX System?

On-premise PBX systems often referred to as traditional PBX systems utilize the voice communication system set up within the office premises. It involves the installation of PBX infrastructure within the office premises. Therefore, it also requires full-time maintenance through a dedicated in-house IT team. 

On-premise PBX systems can be in form of landline PBX as well as an onsite IP PBX system.

What is a Cloud PBX System?

A cloud PBX system is also known as hosted IP PBX system as it facilitates communication through the internet connection. IP PBX systems utilize cutting-edge technology, i.e, VoIP technology. In the case of hosted IP PBX system, the data gathered through business communication is collected and stored in the cloud. Leveraging cloud technology,  the employees can retrieve, update and modify data from anywhere.

Cloud PBX system comes in the form of hosted IP PBX software that can be easily installed and configured in any Android, iOS, or Windows OS device.  It eliminates the need for extra hardware installation. Moreover, it is the latest PBX technology that supports remote and hybrid work models.

Perks of Cloud PBX Systems

1. More cost savings:  As hosted IP PBX software is configurable in all types of devices, it eliminates the cost of installing expensive hardware. Additionally, the service providers give technical support thereby cutting down maintenance costs. 

2. Scalability: A business can easily scale up or down its hosted IP PBX system by intimating the service provider.

3. Enhanced functionality: Cloud PBX systems bring in a wide array of advanced features such as call recording, auto attendant, IVR system etc. thereby enhancing the functionality.

4. Greater revenue generation: With improvement in customer service, your business can utilize cloud PBX systems to generate more revenue.

5. More security: End-to-end encryption, security compliances and other security measures keeps customer information and sensitive business data safe and secured.

6. Data-driven decisions: Data analytics and reporting provide actionable insights to optimize your business operations and empower you to make well-informed decisions based on data.

7. Independence from location restriction: It gives your employees the freedom to work from anywhere. Cloud PBX systems eliminate the need for employees to be within the office premises for daily communication.

Downsides of Cloud PBX Systems

1. Dependence on internet connection: The uptime of hosted IPPBX system depends on internet speed and bandwidth. Therefore, unstable internet connectivity may lead to communication disruption.

2. Limited control: The choice of network and cloud infrastructure lies in the hands of your service provider. Therefore, you may have limited control over some of the primary components of your cloud PBX system

3. Adoption issues:  With the new features of cloud PBX systems, your employees may need some guidance to learn and execute them. Some adoption issues may arise when shifting from traditional PBX to hosted IP PBX systems.

Perks of  On-premise PBX Systems

1. Greater control: On-premise PBX system ensures greater control over server limiting downtime.

2. More customization options: On-premise PBX system offers a broader range of customization. It is not just limited to features but also options for integrating with SIP trunking.

3. Lower running cost: Even though the hardware installation and maintenance cost is huge at the initial stage, the overall running cost is lower compared to hosted IP PBX in the long run.

Downsides of On-premise PBX Systems

1. Location restriction: Your employees must be present within the office premises to use the onsite PBX system.

2. Higher setup and maintenance costs: Expensive hardware and in-house IT teams contribute to the expense of choosing an on-premise PBX system.

3. Lack of data-driven insights: On-premise PBX systems may not offer analytics and reporting features. Therefore, it drags your business one step backward in the data-driven business landscape.

5 Factors to consider while choosing the right PBX System.

Businesses usually choose a communication solution that is suitable to their business requirements. Here are some of the key points that you must think over before deciding on on-premise vs. cloud PBX systems.

1. Work model now and in the next 5 years:  Are your employees working remotely? Will your work model shift to a hybrid model anytime soon? Do your business have seasonal spikes in call volume?  If any of the answers are yes, it’s best to choose a cloud PBX system owing to its flexibility.

2. Business size and growth plans: For large enterprises, an on-premise PBX system serves as a suitable option. However, small to mid-size businesses with tight budgets should opt for cloud PBX systems. The ease of scalability and cost-effectiveness make it a perfect option for growing SMEs. Large enterprises that require more advanced communication and collaboration features may also choose a cloud PBX system.

3. Employee experience: If the employees have to deal with too much guesswork due to poor communication solutions, it can greatly affect business productivity. While an on-premise PBX system can serve the purpose of communication, it fails to provide collaboration aids. Improving employee experience with advanced features of cloud PBX systems results in greater retention and better customer service.

4. Agility: On-premises PBX systems are reliable but fail to provide agility. In the present dynamic business environment, a cloud PBX system provides a business with options to quickly adapt to organizational changes and navigate through a volatile business-customer atmosphere.

5. Customer Experience: CX is of great significance for business success. Evaluate both PBX system options to determine which system can improve the customer experience at best.

Read more:- Webcast

Making the right decision

Through this blog, we have drawn a clear line of distinction between on-premise vs a cloud PBX system. We’ve also recognized the common areas of strength between these two systems and shared all the essential aspects for you to make a well-informed decision. HoduSoft is a leading name in the unified communication market and HoduPBX has become one of the most recognized PBX systems used globally. Be it an on-premise or cloud PBX system, HoduPBX caters to all your business needs. Check out more about the PBX software on its website.

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