January 2016 - HCS
New Business Phone System – Hosted or On-Premise? How can you be sure of selecting the right one?

New Business Phone System – Hosted or On-Premise? How can you be sure of selecting the right one?

Written by Dan Hegarty, Managed Telecommunications Expert, Director, HCS Business Solutions.

E: dhegarty@hcs.ie | Dan’s LinkedIn | Dan’s Twitter


Thinking about a new phone system for your business? I’ve been working with SME’s for the past 20 years and the last 10 years specifically working with new technologies that have surpassed the old telecoms systems of yesteryear which pretty much just made a basic telephone phone call!

In this article I’m discussing some of the new technologies available, the functions and features, as well as some of the issues, and options available to you. I’ll be looking at the pros and cons of “Hosted versus On-Premise” and suggesting that a hybrid approach might be the smart approach. Finally we’ll look at the factors you need to be considering when choosing your new business phone system.

For several years now, businesses have taken advantage of low cost calls via broadband connections. For old style PBXs this was possible using a “SIP gateway” to connect old PBXs to new SIP or VOIP servers. It was mostly about reducing call costs.

Nowadays more and more companies are upgrading their old phone systems to IP based phone systems because with the new SIP based systems there are lots of opportunities for integration with IT systems in areas such as;
• Unified Communications (Voice/Messaging/Video/Etc.) for internal and external staff
• Integration with CRM databases for improved customer service
• More integrated branch offices with “presence” and instant & video messaging.
• Call recording.

Hosted or On-Premise?
When selecting a new IP phone system there are two ways you can go, “on premise” or “hosted” phone systems. What’s the difference?

Much the same as the old style PBX, your phone system resides on your site and can connect to copper telephone lines, mobile SIMS as well as broadband for VOIP. Your telephone extensions connect to it. It;
• is supported by your IT Partner (remotely & onsite)
• Can utilise trusted copper lines, Mobile SIM gateways and VOIP SIP Trunks
• Has good failover options
• Has a choice of rate cards/service providers

Each of your handsets or computers connects directly to a hosted PBX service outside of your premises and network. It;
• Is supported by the hosting service provider (remotely e.g. post out replacement handset)
• Removes cost of an on premise IP-PBX (although may be countered by more reliable broadband costs)
• Has call rates only associated with the hosted PBX service provider
• Works well with reliable and consistent broadband although could divert to mobile if broadband is down.

Issues to consider?
“Hosted” or “On-Premise” business phone system? Here are some of the issues you need to consider!

Whether you choose Hosted or On -Premise for low cost IP based calls the broadband will have to work at a consistently high level to match the trusty PBX and copper lines that have served us so well for many years.

If like some, you still don’t have access to good broadband, then sending your calls out over broadband may not be for you.

What do we mean by good broadband?
• Consistent bandwidth – either “un-contended”, dedicated or so much bandwidth that it’s not an issue e.g. Virgin Media 150Mb.
• Good upload speed – 32Kb per concurrent call (“line”) ideally. A rough guide for number of lines would be 25% of users, depending on user roles.
• Prioritised voice traffic – A function of your firewall to dedicate a portion of your bandwidth to voice – e.g. 3Mb no matter what data is being uploaded or downloaded.
• Good Service Level Agreement or fix time in the event broadband fails – or the capability to switch to an alternative broadband line, or copper line(s). Both On-Premise and Hosted Systems should have this ideally.

Calls to Mobile
For some businesses, in terms of cost, it makes sense to send all mobile calls out via mobile SIM cards. These may cost €30 – €50 each per month and these can be attached to the telephone systems and used as “lines” for outbound calls. Here are some things to consider.

• You’ll need one SIM card per concurrent call (or “Line”).  E.g. if you have 2 SIMS, then you get 2 concurrent calls… a third concurrent call could go out via your landline or VOIP instead. How many SIMS you have depends on how many call minutes per month you are likely to make.
• If you have a main inbound landline, then you’ll want the mobile provider to “mask” the outbound number, so that missed calls will present the right number for the called party to call back your main number.
• Is the mobile signal good enough? These SIM card gateways would operate just like a mobile phone and be subject to the same variable quality. Will that be good enough? Ideally you’ll need 4+ consistent bars of signal wherever these SIM gateways will be placed.
• In cases where ALL outbound calls are made via SIM gateways, you could be reducing the quality of ALL of your calls to a mobile experience.

Weighing up all of the above, you may be better off negotiating a good rate for mobile calls over a SIP trunk instead.

What about your existing local network?
If you are considering upgrading your phone system to an IP phone system in order to take advantage of features within your IT system or features unique to IP, then here are some practical things you need to consider:
• IP Phones require data cabling, so do you have separate cabling or will I use the same cabling as the PCs? (PC uplinks to phone). If you choose the same as PCs, then you may want to have a handsets that allow for 1 GB uplink to PCs (usually a bit more expensive than 100Mbit handsets).
• Do I have a “Power over Ethernet” (PoE) network switch to power the handsets? Or will I power them with an adapter at each desk?  (PoE Switch is much neater)
• If using the same cabling as PCs, is it necessary to setup Virtual networks (vLANs) for voice and for data so that voice can be prioritised? Both On-Premise and Hosted Systems will need to consider this.

ITSP – Internet Telephone Service Provider
If you’re going to send your calls out over broadband, you need to know where your calls are terminating.  It’s not necessarily with the guy or company who is selling you the service. Here is what to look for;
• Are they a Tier 1 ITSP – with connections directly to Eir’s landline networks?
• Are they a reputable national ITSP?
• Is there transparent call billing?
• Do they have fraud protection – e.g. will your lines be suspended if there is unusual call activity/cost?
• What is their SLA?

These considerations apply to both On-Premise and Hosted Systems.  In the case of hosted, your ITSP is your phone system, so it’s even more important to select the right one.

An On Premise system is more flexible in terms of failover and control options and may not necessarily cost more than the hosted option when all costs are taken into consideration. When your Hosted telecoms provider is down then you may have limited failover options.

Making your choice
The days of sales people calling you and telling you how much they can save you on your monthly calls costs are all but gone. Now the sales call is more about features and benefits on offer and that means unified communications and computer telephony integration.

Choosing your phone system partner and phone system brand often go hand in hand as the company you choose will often only sell and support one main brand of telephone system.

Once you’re happy with your phone system partner company you will want to make sure that the phone system and handsets you select will not be “end of life” or become un-supported any time soon and will be around for the foreseeable future.  If you can avoid a 5 year refresh cycle (typical for IT systems e.g. a windows server based phone system) then that would be advisable too.

Somethings to consider before selecting a new phone system:
1. Is a hosted phone system (completely broadband dependant) or on premise system suitable for my requirements, location and quality of my broadband?

2. Will I use unified communications? E.g. headset on my PC for making receiving calls, or app for my mobile phone for making or receiving calls

3. Will I need to integrate the phones with computers? E.g. click on a contact within your business application to initiate a call, or have a contact’s account/details automatically pop up on your screen when they call.

4. What are the REAL costs?  Start a spreadsheet with current costs and proposed costs. Remove items that will become redundant, add items that will increase in costs e.g. better broadband. Try to decipher whether you would be better off with “bundled minutes” or a transparent rate card. What are the catches with bundled minutes? What are the rates if you exceed? Will you get an itemised bill?

5. These considerations apply to both On-Premise and Hosted Systems.  If you want to integrate your IT systems or customer databases with your phone system, then an on premise system will likely offer more flexibility.

Adopt a hybrid approach!
Effectively, an On Premise IP Phone System, utilising both copper lines and VOIP over broadband, is a hybrid approach.

A hybrid approach lets you retain the tried and tested traditional lines for inbound calls as well as the control over your in-house phone system but at the same time lets you take advantage of all that IP phone systems can offer by using your broadband line for outgoing calls using a SIP Trunk.  So you have the robustness and reliability of fixed line for incoming calls together with the low cost and flexibility of outgoing calls over broadband.

Unless you are paying for enterprise grade fibre broadband with a guaranteed SLA (many €100s per month), then a hybrid approach is the safest option. It is no less functional than a hosted phone system and as we discussed already has some key advantages over hosted.

So choose carefully and choose wisely and pick up the phone and call HCS to get some independent advice if you need it! 01-8734120 |051-595200.

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