The process of choosing a business phone system requires you to answer a couple of questions. First, what type of phone connection do you want – landline, VoIP or virtual? Second, how do you want to host the system – on your business premises or in the cloud?
All business phone systems today, regardless of type, are PBX systems. The PBX equipment is what allows these systems to provide all of their features and tools, such as multiple extensions, voicemail, and call recording. However, the type of system you choose affects where that PBX equipment is physically located.
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Your IT staff needs to install and maintain PBX equipment with on-premises systems. 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, your IT team can focus more on managing the system’s features than the infrastructure.
Read a breakdown of each type of phone system.
Traditionally, businesses used analog landline telephone systems. These systems were connected to the public switched telephone network and ran on the telephone company’s copper wiring.
While these multi-line phone systems were extremely reliable, they required expensive equipment to install and maintain. Besides the copper wiring that had to run through the business facilities, landline systems required costly PBX equipment. The PBX is what’s used to switch calls between the business and the telephone network. It’s also necessary for various calling features, such as voicemail, conference calling and automated attendants. All of this PBX equipment (and the other hardware necessary to run the phone system) would be housed onsite at the business, typically in a server room or closet.
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Today, analog multi-line landline phone systems are becoming obsolete. Telephone companies are no longer developing new analog systems or providing updates to the systems they used to offer. Finding IT professionals with the skills to keep these systems running is increasingly difficult. Telephone companies have largely shifted their attention to VoIP technology.
Some landline systems now use a mix of landline and VoIP technology. There might be a traditional landline connection to a business, but instead of traditional wiring throughout the building, the business uses an internet connection to tap into that outside landline.
Very few new businesses are choosing landline phone service. Because support for these systems is diminishing, they are best suited for a business with an in-house IT team that is skilled in this technology and can handle all the maintenance and upgrades. However, landline systems are the only option for businesses in communities with no 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 you make a phone call with VoIP, your voice is instantly converted to a data packet that moves through the internet like an email or shared image would. Tapping into an existing data connection saves you the trouble and expense of installing and maintaining phone lines throughout your offices or stores.
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VoIP systems also work in conjunction with cheaper and less bulky PBX equipment. This allows small businesses to access phone features they previously couldn’t afford, like auto-attendants, conference calling and call recording. 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.
VoIP systems easily integrate with computers, which lets employees make calls from their own devices and have voicemails sent directly to their email, among other things. It can also be beneficial for businesses using CRM programs because you can use the systems in tandem.
Ease of use and scalability are big benefits of VoIP phone systems. Most VoIP systems can be managed from an online portal. By logging in to the system, administrators can assign phone numbers or extensions and turn various features on and off.
VoIP providers make it easy to add new users. Administrators can quickly log in to the portal to add new lines. This simplifies the process of setting up new employees with their own phone lines.
When VoIP was first introduced, call quality was a concern. Many people felt calls sounded staticky; others had problems with calls dropping off. As the technology has improved, so has the call quality. In fact, the difference between VoIP and landline call quality is now so insignificant that most landline callers have no idea when they are speaking to someone using VoIP.
Soon, nearly all U.S. phone users will use VoIP. 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.
How you want the PBX equipment hosted is a huge factor in choosing a phone system for your business. The choice is generally between cloud and on-premises hosting, though some phone providers offer a hybrid option.
With an on-premises system, 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 your phone system on your business premises lets you keep several traditional landlines working alongside SIP-trunked VoIP lines.
Like landline systems, on-premises VoIP systems have all the equipment installed and housed onsite at the client business. The hardware is typically stored in the business’s server closet.
With this option, you have total control of your system. You aren’t relying on anyone else to ensure it’s running, and you can configure it to your exact specifications. However, this also means your own IT staff has to handle all repairs and upgrades.
On-premises systems must be professionally installed, and you will need SIP trunking or PRI circuits to connect a dial tone to the system.
One benefit of this hosting method is tighter security. On-premises systems don’t have the same security concerns as cloud-hosted solutions, since all your data is stored within your business. You can configure your firewalls exactly how you want to protect your phone system from any type of intrusion. This makes on-premises hosting the best option for businesses with highly sensitive phone data that can’t entrust it to cloud-based phone providers.
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 extensively.
Cloud-hosted phone systems are increasingly popular among small businesses. With this type of system, the equipment is housed in the cloud by your service provider, which handles all maintenance and upgrades. The only equipment you need is the phones themselves.
Most cloud systems are essentially plug-and-play. Once you activate your service and receive your phones, you can plug them into any Ethernet port, then make and receive calls with them.
The downside to cloud-based solutions is that you’re at the provider’s mercy to keep your service up and running. Most of the top vendors build several redundancies into their systems to ensure this. For instance, they have multiple data centers so that if one goes down, the data can be transferred seamlessly to another center to ensure the continuation of your business’s communications service.
One important consideration in a cloud-hosted system is bandwidth. Consult your business’s internet service provider about the bandwidth required to support a new phone service. Most of the cloud providers we considered require just short of 100 Kbps per phone call for the best quality. You’ll also want to estimate your internet needs for other equipment, such as computers, servers and Wi-Fi-connected devices.
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Cloud-based VoIP systems are ideal for small businesses: They have few upfront costs, the consistent monthly charges fit easily into a budget, and they don’t require trained IT experts to keep them running. You can add new users and features through a convenient online portal, and cloud-based options also easily support multiple locations.
Nearly all of the providers we examined have an uptime of at least 99.99%. That means their systems are down for just a few minutes each year. It’s still best to install backup equipment that can reroute your business calls during power or internet outages.
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 to a phone inside your office. Instead, they call a virtual phone number that routes calls to you (or your employees) wherever you are.
Virtual phone systems are essentially extensive call-forwarding systems. Your business has a main number, with each employee receiving their own extension. Instead of transferring customers to an employee’s office phone, the virtual system transfers calls to their mobile and home phones. Employees control the numbers their business calls go to and the order in which those numbers ring. Virtual PBX systems also offer other valuable features, including automated attendants, voicemail, voicemail-to-email, music on hold, call forwarding and online faxing.
These systems are ideal for businesses that don’t need a full-fledged phone system. This could include solopreneurs who work out of their homes and don’t want to give out their personal phone numbers to clients, and small businesses with a remote workforce. This service allows them to present a professional image at a fraction of the cost of complete phone systems.
Once you decide which type of phone system you want, you need to choose the actual phones. (This doesn’t apply to virtual systems, of course.)
Most business phone services are compatible with various IP phones and offer adapters so analog phones can connect to their systems. You can likely continue using any phones your company already owns.
IP phones come in various styles. There are cordless phones and conference room phones as well as traditional corded options. The phones can cost anywhere from $50 to $1,000 each. The per-phone analog adapter can cost up to $60, and a traditional fax-machine adapter costs $100 to $150. If you don’t want to buy the phones outright, some providers let you rent phones for a monthly fee.
The benefit of buying IP phones from your phone system provider is that they come completely configured and ready to use once you plug them in. If you buy phones from a third party, your IT team will need to configure them to work with the system you use.
If you can afford it, it makes sense to upgrade your phones. If you can’t afford new phones, carefully consider how much the workaround will cost your company in the long term.