The process of choosing a business phone system first requires you to answer a couple of questions. First, what type of phone connection do you want – landline, VoIP or virtual? Second, how you want to host the system – on-premises or in the cloud?
With on-premises systems, your IT staff needs to install and maintain private branch exchange (PBX) equipment. Conversely, cloud-hosted solutions require very little IT resources since all of the PBX equipment is housed and maintained by the phone system provider. With the cloud-hosted option, IT teams focus more of their attention on managing the system's features, rather than the infrastructure.
Here is a breakdown of each type of phone system.
Until recently, all businesses used traditional analog landline telephone systems. These systems were connected to the Public Switched Telephone Network (PSTN) and ran on the telephone company's copper wiring.
While these multiline phone systems were extremely reliable, they required costly equipment that was expensive to install and maintain. Besides the copper wiring that had to be run through the business, landline systems also required a costly private branch exchange (PBX). The PBX is what is used to switch calls between the business and the telephone network. It's also what was needed to offer various calling features, such as voicemail, conference calling and automated attendants.
All of this PBX equipment and the other hardware needed to run the phone system are housed onsite in your businesses, typically in a server room or closet.
Today, analog, multiline landline systems are becoming obsolete. Telephone companies aren't developing new analog systems and are no longer providing updates to the systems they used to offer. Finding IT professionals with the skills to keep these systems up and running is also becoming increasingly difficult. Telephone companies have largely shifted their attention to VoIP technology.
Some landline systems are now using a mix of landline and VoIP technology. There might a traditional landline connection to a business, but instead of having traditional wiring throughout the building, organizations are using an internet connection to tap into that outside landline.
Very few new businesses are choosing landline phone service for their phone system needs. Knowing that support for these systems is diminishing, the organizations they are best served for are those with an in-house IT team that is skilled with these systems and can handle the maintenance and upgrades on their own.
In addition, landline systems are the only option for businesses in communities where there isn't any high-speed internet access.
Nearly all new business phone systems use VoIP. Instead of running on copper wiring like landline systems do, VoIP systems run on a high-speed internet connection. It's the same connection most businesses already use to get online. When making a call, the user's voice is instantly converted into a data packet that is moved throughout the internet like other pieces of data, such as emails and images. Tapping into an existing data connection saves you the trouble and expense of installing and maintaining phone lines throughout your offices or stores.
In addition, VoIP systems work in conjunction with cheaper and less bulky PBX equipment. This allows small businesses to access calling features they previously couldn't afford, like an auto attendant, conference calling and call recording.
VoIP systems easily integrate with computers, which lets employees make calls from their machines and have voicemails sent directly to their email, among other things. It can also be beneficial for businesses using customer relationship management (CRM) programs.
Similar to how a landline system works, the VoIP provider allows you to choose a phone number with a local area code, a toll-free number or both.
Ease of use and scalability are a big benefit to VoIP phone systems. Most VoIP systems can be totally managed from an online portal. By logging into the system, administrators can assign phone numbers and extensions, and turn various features on and off.
In addition, VoIP providers make it easy to add new users. Administrators can quickly log into the system to add new lines on their own within the system's online portal. This simplifies the process of setting up new employees with their own line.
When VoIP was first introduced, there was concern about call quality. Many felt calls sounded staticky; others had problems with calls dropping off. As technology has improved, so, too, has call quality. In fact, the connection quality difference between VoIP and landline is now so insignificant that most users have no idea when they are using VoIP and when they are on a landline connection.
VoIP is becoming a standard option for all businesses. Soon, nearly all U.S. phone users will use VoIP. Research shows that VoIP use among businesses has grown by more six times since 2010. Data from Statista revealed that there were 6.2 million VoIP business subscribers in 2010. In 2018, that number grew to more than 41 million.
Cost is a huge benefit of VoIP. Research has shown that moving to a VoIP system from a traditional landline system can save businesses up to 75 percent on their phone service costs.
The only businesses that can't take advantage of VoIP phone systems are those in communities without access to high-speed internet service or with unreliable internet service.
A huge factor when choosing a phone system for your business is deciding how you want the PBX equipment, which is what's needed to run the system, hosted. Some phone system providers offer on-premises or cloud-based systems, while others offer both options.
With on-premises systems, the PBX equipment is installed inside your business. Your IT team is responsible for securing it, keeping it up and running, and upgrading it when necessary. Hosting on-premises gives businesses the ability to keep a few traditional landlines working alongside SIP-trunked VoIP lines.
Similar to landline systems, on-premises VoIP systems have all the equipment installed and housed on-site inside each business. The hardware is typically stored in your company's server closet.
With this option, you are in total control of your system. You aren't relying on anyone else to make sure it is running, and you can configure it to your exact specifications. However, since it is located onsite, your IT staff handles all repairs and upgrades. On-premises systems need to be professionally installed.
If you have a VoIP on-premises system, you will also need SIP trunking or PRI circuits to connect a dial tone to the system.
Another difference is security. On-premises systems don't have the same security concerns as cloud-hosted solutions, since all the data is stored within your business.
Experts say businesses concerned with privacy are best served by on-premises systems. This option allows businesses to configure their firewalls exactly as desired to protect the phone system from any type of intrusion.
Other businesses well suited for on-premises phone systems are large corporations that can afford the upfront costs and businesses that want a system they can customize.
Cloud-hosted phone systems are becoming popular among small businesses. With this type of system, the equipment is housed and maintained in the cloud by your provider, which handles all maintenance and upgrades. The only equipment the business needs is the phones themselves.
Most cloud systems are essentially plug-and-play ready. Once you activate your service and receive your phones, they can be plugged into any Ethernet port, and calls are ready to be made and received.
The downside to cloud-based solutions is that businesses are at the mercy of the phone system provider to keep their service up and running. To ensure this happens, most of the top vendors have several redundancies built into their systems. This includes having multiple data centers so that if one goes down, the data can be transferred seamlessly to another to ensure the continuation of service.
One important factor to consider if choosing a cloud-hosted system is bandwidth. Consult your business's internet service about obtaining the bandwidth required to support a new phone service. The phones of most of the cloud-providers we considered required just short of 100Kbps per phone call for the best quality. You'll also want to estimate internet needs for other equipment, such as computers, servers and Wi-Fi-connected devices.
Cloud-based VoIP systems are ideal for small businesses because they have few upfront costs and consistent monthly charges that can fit easily into a budget, plus they don't require trained IT experts to keep them running.
Businesses using these systems are best served by installing backup equipment that can reroute calls during power or internet outages. With these systems, new users and features can be added via an online portal. Cloud-based options also easily support multiple locations.
Nearly all of the providers we examined had an uptime of at least 99.990 percent. That means their systems are down for just a handful of minutes each year.
Virtual Phone System
One type of phone system growing in popularity, especially for solo entrepreneurs and businesses with a large remote workforce, is a virtual phone system.
Virtual phone systems differ from regular office phone systems in that when someone calls your business phone line, they aren't necessarily calling a dedicated number inside your business. Instead, they are calling a virtual phone number that routes calls to you (or your employees) wherever you are located.
Virtual phone systems are essentially extensive call-forwarding systems. Businesses have a main number, with each employee receiving their own extension. However, instead of transferring customers to an employee's office phone, the virtual system transfers calls to mobile and home phones. Employees control the numbers they want their calls sent to and the order in which those numbers are rung.
In addition to automated attendants, virtual systems offer other valuable features, including voicemail, voicemail to email, music on hold, call forwarding and online faxing.
Hosted/virtual systems are ideal for businesses that don't have a need for a full-fledged phone system. This could include solopreneurs that work out of their home and don't want to give out their mobile or home numbers to clients, as well as small businesses with a large remote workforce. This type of service allows them to present a professional image at a fraction of the cost of more complete phone systems.
Once you decide the type of phone system you want, you then need to choose a phone. The only type of system this doesn't apply to are virtual systems.
Most business phone services are compatible with a variety of IP phones and offer adapters so analog phones can connect to their systems. It's likely that you can continue using the phones your company already owns.
IP phones come in a variety of styles. There are traditional corded options as well as cordless phones and conference room phones. The phones can range anywhere from $50 to $1,000 each. In addition to buying the phones outright, some providers let you rent phones for a monthly fee.
The per-phone analog adaptor can cost as much as $60, and a traditional fax-machine adaptor can cost $100 to $150.
The benefit of buying IP phones from your phone system provider is that they come completely configured and are immediately ready to be used once they are plugged in. If you buy phones from an outside source, your IT team will need to configure the phones on their own to work with the system you are using.
If you can afford it, it makes sense to upgrade your phones. If you cannot afford new phones, carefully consider how much the workaround will cost the company in the long term.