Do a Google search on ‘hosted vs premises PBX’ and you’ll find no end of advice favouring one or the other, and numerous comparisons that represent a fairly balanced view with roughly the same number of pros and cons associated with each.
Some of the arguments often cited against premises-based PBX are rather dubious. Generally they are along the lines that the purchaser has to wear the upfront cost and is responsible for keeping the system up to date and for ongoing maintenance costs. In contrast, a hosted system is charged on a monthly fee and the provider is responsible for keeping the software up to date.
However, it’s possible to get a PBX on a rental plan bundled with call costs and even maintenance, so the argument then shifts to the ongoing operating costs of the different options and other features.
Features and functions are really what it’s all about. If you go for a hosted option you’re pretty much limited to the features that particular hosted IP telephony offers, although you can shop around for the one with the package of features best suited to your needs.
With hosted telephony the software supporting the service is dedicated to each customer, it just runs in a data centre rather than on customer’s premises and can in fact be pretty much the same software, in which case the argument of hosted v premises shifts from features to the differences that the different locations introduce.
It’s also important to make the distinction between hosted PBX or hosted IP telephony and cloud-based IP PBX/IP telephony.In cloud IP telephony the one instance of the software supports the functionality of each customer organisation’s PBX. In hosted, each customer organisation gets a dedicated instance of the software.
To make life even more complicated, there are hybrid systems that split the functionality between on-premises hardware and a cloud or hosted environment.
When it comes to the crunch the decision often has little to do with features, functions or cost. Unless a comparison of the hosted versus premises options reveals some huge disparity or the availability/lack of particular features deemed to be essential, it’s often a philosophical decision. As one comparsion site observes: “The most critical [consideration] from the point of view of implementation and future growth is whether to have a PBX system physically on your organisation’s premises and under your control or whether to have a PBX hosted externally by a service provider. For a few organisations this decision will stem from a fundamental philosophy of the business – outsourcing all functions that are not directly germane to the core business.” (their emphasis)
Later on it suggests control is the “tricky issue” that is “at the heart of a decision between a hosted or on-premise solution.” It explains: “Some organisations prefer to keep control as much as possible internally, even at the risk of added cost, work and complexity,” while at the same time: "Other organisations want to outsource as much as possible to keep internal focus on core business – even if that decision ends up costing them more.”
The bottom line: if you’ve been charged with upgrading/replacing your ageing PBX, before you devote time to researching the pros, cons and costs of the hosted and premises options, make sure your organisation’s leaders are not philosophically wedded to one option or the other.
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