Difference between on-prem & hosted PBXs | Flowroute Blog

The difference between on-prem and hosted PBXs

Posted on March 27, 2015 by Andrea Mocherman

When upgrading your business phone system, you have a number of important decisions to make that will have significant impact on the success of your transition. The first choice you need to make is between housing your PBX on-prem and connecting to the PSTN via SIP trunking, or employing a hosted PBX that includes VoIP service. There are many factors that play into your decision, and in this post I’ll dig into the most important ones. The crux of the decision is a choice between convenience and control.

comparing on premise PBX vs Hosted PBX

Coming from a hosted PBX background:

Before coming to work at Flowroute, I was a Level 2 Network Technician at a hosted PBX provider for 4 years. In that time, I saw many different implementations of IP phone service and was able to build a strong comparison of the merits of both on-prem and hosted PBX options.

Comparing PBX options:

When deciding between an on-prem and hosted PBX, it’s important to understand your business requirements around convenience and control. To help you decide which side of that fence you sit on, find out where your organization falls within each of the categories below:

1. Features:

On-prem PBXes require that your IT department, or your outside vendor, have in-depth knowledge of your system. The benefit of this approach is that you can set up almost any feature, and you can implement them on your own timeframe.

With a hosted PBX you’re limited to the features the provider supports. In my experience, there will be features you need that are missing. For example, the hosted PBX product I used to support couldn’t put a call on hold and easily pick it up on another phone.

2. Technical Support:

If you go the on-prem route, you’ll either need to provide your own support or hire a qualified IT technician. That means you’re more in control of support timelines, and a live person can come to your location to troubleshoot and maintain your system.

Hosted PBX providers often use technicians in different countries to provide convenient 24/7 remote support. It can be difficult to get someone experienced enough to resolve your issue on your first call, and you usually will not be able to work with the same technician if you need to call back regarding your issue. Plus, hosted providers usually don’t have local ITs that can be dispatched to your location if you require a visit. You will need to be their arms and legs for onsite troubleshooting.

3. PBX Security:

On-premise PBXes are as secure as your local network. As long as you or your IT team keeps your PBX software updated with the latest security patches, and your is LAN secure, you can maintain a level of security that is stronger than with a hosted PBX.

Hosted PBX providers’ networks are much larger than most office networks. There are more access points a fraudster can compromise which will give them access to your account too.

4. Call Quality:

When you control your PBX, you also decide which voice service carrier you use. In that case, you can easily change carriers if your primary is having issues. If you’re using a hosted service, your call quality is at the mercy of the carriers your hosted PBX provider is using.

5. Cost:

On-prem PBXes can require more infrastructure investment up front, but they make it easy to share lines among as many phones as you want. For example, with Flowroute, you’re billed only for the DIDs and minutes you use.

The initial setup of a hosted system is usually less expensive and not as labor intensive, but the contract you typically need to sign to lock in prices often sacrifices flexibility. By charging per seat rather than by actual usage, hosted PBXes typically end up costing significantly more per month.

While most hosted providers advertise ‘unlimited’ minutes, usage is typically capped at or around 3000 minutes/month. An important calculation to perform is to divide your average monthly minutes per user into the cost of the ‘unlimited’ plan and see how that per minute rate stacks up against the rate you’ll get from a SIP trunking provider connected to your on-prem PBX.

It’s more convenient when you control your phone system

In four years of supporting a hosted PBX solution, I’ve heard it all. The good, the bad, and the unrepeatable. I supported businesses that were happy to leave control in my hands, and I felt users’ frustration as they struggled to fit the offering around their business needs.

Hosted solutions certainly work and can serve your needs very well. In fact, Flowroute provides service for very capable hosted PBX providers. But you need to be sure that the offering you select includes the features and functionality you will require for the length of your contract.

By implementing an on-prem PBX, you buy the assurance that whatever comes your way, you are in control of your business communications. And with control comes convenience, but if you’d rather not devote resources to maintaining your voice service, a hosted PBX might be the right choice for you.

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