Why wouldn't a small to mid-size business always go with a hosted phone solution?

The selection of a communications system is critical for businesses of all sizes, but especially small to medium sized enterprises that use communications as their lifeline to the world. Any business considering a hosted solution must address the following, at a minimum: overall cost over a finite period of time (hosted solutions may spread the cost as opex rather than lump sum capex but may turn out to be more costly over the life of the system), required features and functionality, reliability of the hosted system (including real references), stability of the company (no one wants another SunRocket that suddenly shuts the doors), and flexibility to grow as your needs change. If the small to medium sized company has qualified technical personnel that can manage the system's moves and changes, that may be more timely than an off-site hosted provider.

In short, this is a business decision - not a technology choice. Identify all of the facts, do the math, consider the alternatives, and make an informed choice based on your needs.

The reason why a small business does not want to go with a hosted solution would be the fact that they are resistant to change because in actuality a hosted solution provides disaster recovery and business continuity that a small and medium business needs. I have worked in the telecom industry since 1989 and it does not matter if it's an ILEC or CLEC they have all have outages and downtime at one point or another. On the network side or because someone has come along with a backhoe and cut the lines on the last mile. So if a provider does have 5 9's in their SLA's there are still cases outside of the provider's control that can still cause the small/medium business owner's phones to go down. With a traditional premise based PBX the corporation has no communications and if it's for an extended period of time due to a hurricane or natural disaster it could mean death to a small or medium business. The hosted solution does have automatic failover and if they lines are down at the premise the customer will still receive calls from their clients.

As far as the upfront cost for Voice over IP it has been a objection to over come if you are doing a hosted or premise based system. My company does provide Polycom phones which are some of the top rated SIP/VOIP phones out there. There are entry level phones that start below $200 and if they don't want to make the purchase up front the business has an option of leasing them.

The other advantage is that we all know that technology changes all the time by the time you purchase something two years later it almost becomes obsolete. When you purchase a system in 5 years you are going to want to have newer features and benefits and you end up having to purchase a newer system or add on modules.

There are pros and cons on both sides of the spectrum. A hosted PBX system may not be the perfect solution for everyone. A premised based system is not for everyone. There are application where a customer may need to run a hybrid solution.

In this economy we also have equipment manufacturers that are going out of business. If you purchase a premised based system and the equipment manufacturer goes bankrupt you may not be able to get expansion modules or support needed for your system.

As consultants and always looking out for the best interest of the customer and if our solution does not fit in the customer's business model then we can refer the customer over to a hosted or premised based solution.

Interesting question... "Why WOULDN'T a business ALWAYS go with a hosted phone system?"

A properly run business will certainly look at all options when making decisions about the future of the company... Communications decisions (inclusive of not only PBX but also email, Unified Communication, Fax, etc) should not be any different. In fact I would argue that making the correct communications solutions decisions are critical for the success of your business. Think about it, your business RUNS and LIVES on it's communications capabilities. Without core communications capabilities you wouldn't have a business to run. You maintain and enhance your relationships with your Customers, Partners, and Vendors by communicating. The plain truth is that hosted or cloud based systems provide business with the greatest level of protection, redundancy, capabilities, and efficiencies of any solution on the market today.

1) Without a TREMENDOUS investment, you cannot implement a premise based PBX solution that has a primary PBX in one city and a secondary or backup PBX in another city, both with redundant carrier connections and dynamic routing to allow for inbound and outbound call failover between the two locations.

2) A common misconception about hosted or cloud based systems is that they do not have much in the way of customization capabilities. Premise based manufacturers have been promoting this point as a weakness in the armor of a cloud based system. It is is simply NOT TRUE... Hosted IPPBX's like Alteva's (http://www.altevatel.com) are built on widely accepted open API standards. With scripting capabilities like VoiceXML, CCXML, and very simple restful HTTP API interface, customers can easily integrate their CRM, Workflow, Document Management Systems, or any other business process with their telephony, mail, UC or any other communications component.

3) IN FACT, cloud based systems will get customers integrated much more quickly than a premise based solution will. When trying to integrate a premise based PBX, a customer starts from ground zero every time. The development effort starts from scratch every time, wasting both time and money. Choosing a seasoned cloud or hosted solution will give the customer access to a tremendous amount of development components that have already been done. These pre-developed components can be easily adapted to work with any business process to get businesses integrated and realizing efficiencies in a fraction of the time and expense of what a premise based solution cost. WHY RECREATE THE WHEEL WHEN SOMEONE ELSE WILL LET YOU DRIVE THIER FERRARI?

4) Cost savings... Premise based manufacturers often propagate misleading information about the cost of hosted solutions. The truth is that feature for feature, capability for capability, hosted solutions ALWAYS cost less. When buying a premise based solutions there are MANY different cost components... Installation, configuration, hardware, maintenance agreements, software upgrades, site visits, additional ports, voice circuits, data circuits, carrier fees... the list goes on. If you buy a premise based solution you will be getting invoices from all over the place. With a hosted solution is it ONE PROVIDER and ONE BILL. No one pointing fingers at the other if something does go wrong, only one company involved, so its a one company solution. Simple and more cost efficient. Not to mention a hosted solution will cost you 80% less upfront than a comparable premise based solution will cost. Why spend $50,000 to get into a non-redundant PBX solution with little integration capabilities (out of the box) that will take you months to get it where you need it to be when you can get all of the redundancy, flexibility, and integration capabilities for $10,000?

So the real question is:
Why would a small to mid-size businesses EVER go with a premise phone solution?

Just my 2 cents.

To address the question as posed "Why wouldn't a small to mid-size businesses always go with a hosted phone solution? What are the true reasons that a small to mid-size business would consider an on-premise solution?" I'd say there are several reasons.

The first reason is that Small and Medium business owners often see their needs as unique and special - they want something tailored or customized. SMBs are often run by CEOs that founded the business and those kinds of managers usually have a mindset that lends itself to a solution that can be more easily customized or tailored. Hosted VoIP is generally less flexible than a premise-based solution.

The second reason is that those kinds of managers are hesitant to let someone else 'control' such a vital piece of their business infrastructure. SMB owners/managers frequently want equipment that they own, in their office, that they manage. We can debate the validity of this, but that debate doesn’t matter – the customer wants what he wants.

The third reason is that many SMB owners perceive hosted voice as less reliable and more likely to have down-time. I've talked to many CEOs about this very issue - and in their minds, the traditional telephone company (Sprint, Embarq, Verizon - whoever), is much more reliable than an Internet provider. Almost all hosted voice depends on the Internet or a data circuit for dial-tone. SMB CEOs view data circuits and Internet links as less reliable than traditional phone lines.

The final reason is that many SMB CEOs have had bad experiences with consumer VoIP like Vonage - and they believe hosted VoIP is the same quality, and therefore unacceptable. SMB CEOs are generally entrepreneurs that have a keen sense of what their customers want – and almost all of them think that high-quality, reliable phones are an absolute necessity. Due to bad experiences, these CEOs aren’t willing to make the dive into hosted VoIP.

Now, from a technical perspective – I’ve seen some answers to this question that I believe miss the mark and are somewhat misleading. All technical professionals know that there is NO such thing as Quality of Service (QoS) over the Internet. We all know that Internet carriers must treat all packets equally – and therefore business-class voice gets lumped in with all other traffic, frequently causing issues. The only way to resolve this in a hosted VoIP world is to provide a data circuit that doesn’t traverse the Internet – that is the ONLY way to guarantee QoS. There are some hosted providers that do just this – and they have the quality voice customers demand. Many hosted providers that use the Internet mislead SMB owners by making it sound like they have QoS over the Internet, when they don’t – this only creates more problems when it comes to perceptions of quality and hosted VoIP.

Additionally, many hosted VoIP solutions can’t provide many of the features that SMBs require – like Busy Lamp Fields. Many SMBs like ‘key system’ type capabilities, like paging, Busy Lamp Fields, Camp On Call, Auto Call Back, and other features that many hosted solutions don’t provide. When SMB CEOs shop for phone systems, they often assume that all premise-based systems are essentiall equal in terms of features – which isn’t correct. When they shop for hosted VoIP, they usually set aside those assumptions and look deeper – and when they do that they often realize that the hosted platform doesn’t have the features the need, the reliability the demand and the intangibles they desire.

Where does one begin....

The questions does not clearly state a scenario. If the business already has an in house PBX system which is not more than 10 years old, there is no reason to reinvest the capital into hosted seats. It is much easier to just terminate the PRI or analog lines and use an IAD to provide SIP Trunks. By doing this you get a flexibility and features of VOIP without the cost and lack of flexibility in traditional telephony.

If this is a new rollout, the decision between Hosted Seats and IP-PBX should depend on a number of issues:

Support: Do you have in house technicians who will support the new IP-PBX?

Price: Althought the price is higher on initial diployment, IP-PBX tends to be cheaper on the MRC basis and therefore cover the initial NRC within the first year.

Redundancy: There are more way and much more less costly solutions available to provide IP-PBX failover in case the main connectivity link goes down.

The rest of the reasons are very controversial. These days, most of the features which are in the VoIP world are available in both flavors, IP-PBX and hosted. Providers can even merge there two technologies to link customers different locations and make it one flat network and hence give the customer the ability to do transfers and extension dialing between different locations with different equipment. QoS is not an issue in either case assuming your Provider is managing your connectivity and provides MPLS circuits. Even things like Paging systems and Door openers can now be addressed with both flavors.

In the end, in many sales, it comes down to what the customer is more comfortable with and what the sales person can sell better. There are cases where there is no clear line indicating the better solution for the customer however as long as they get rid of that old legacy PRI and that 10+ year old phone system, it is a win win either way.

Why wouldn't a small/mid sized business go with a hosted solution?

This is not a technology decision; it's a business decision. Hosted vs. Onsite was a raging debate for years in data network design and companies found that although both technologies may work, both may not work for them.

Here are some highlights of the downside of hosted VoIP solutions:

Total Cost of Ownership: Hosted VoIP solutions tout a lower TCO. This may be true in some situations, but definitely not all. If a company looks to either pay up front of finance a premise-based solution, the numbers typically match the hosted expense. With SMBs (small/mid-sized businesses) typically using a phone system for 7-10 years (and sometimes 15-20 years!), the ongoing fees associated with hosted solutions can translate into a higher price for communications.

Quality: This is very dependent on the provider. Many providers have good quality but for businesses that think they're comparing apples to apples just because both are hosted, they typically end up choosing based on price and then paying for that quality by losing customers and/or employee time dealing with issues. I've had several customers complain about lost business because of QoS issues with their provider.

Fax: If you can get a provider to tell you honestly about faxes over VoIP, you'll realize it's an issue. If a business does a lot of faxing or has multiple page faxes (over 4-5 pages), they need POTS lines. If you want to use SIP trunks, I would not recommend even attempting simple faxes.

911: This is something most people don't think about. If your employees call 911, you want to be assured that emergency responders show up at your front door, not the front door of the hosted VoIP provider's. Some carriers have solutions that are making this less of an issue, but it's still worthy of consideration. Typically providers will tell you that you can use a fax line for 911, but you should ask yourself, "in an emergency, will my employees remember to run to the fax and call 911?"

Applications and Updates: This is the biggest area of disappointment that I see with hosted customers. VoIP promises a lot of things: unified communications, SIP integration, mobility solutions, cell phone integration, etc. When customers want to do something as simple as call recording, they call their provider only to learn that the PBX doesn't do that (or it's provided for a large cost increase). This is even more evident with advanced applications such as call centers, cell phone integration, etc. Some of these issues are prevalent with some on-premise solutions as well. For instance, if you want a call center package, your PBX may only work with one or two packages. Businesses need to be careful in choosing solutions to make sure they are based on truly open standards with a strong developer community.

All this being said, I do think that hosted solutions have found a niche with very small businesses. I've heard of very large companies using a hosted solution, but I haven't spoken to any myself. Hosted providers may come of age and continue to increase their rate of innovation and quality to be a solid contender for the SMB market, but with less than 5% of the market, I think that day is a long way off; if they wait too long, they will be irrelevant anyways.

For many SMB customers a hosted solution is a perfect answer for their telephone needs but not always. The biggest reasons we have run into for a SMB customer not deploying a hosted solution are price and physical plant.

The easiest way to illustrate this is with an example. We have one customer that owns a gym which requires telephones to be placed in multiple locations through the facility and much of the voice traffic is between extensions not in/out-bound traffic. They also require an integrated Public Announcement system for emergency and paging staff / customers.

They have an existing Nortel system which provides most of the features they need but would benefit from having call menu’s, queuing, and call routing. All of which the Nortel can do but the interface (**5465465465, Feature 981, ** ###) is beyond the customers abilities to operate on a day-to-day basis.

Converting to a hosted solution would mean replacing their existing phones, installing network connectivity and power for the new phones at a cost of $400 per phone. In addition to the $6,000 in up front costs they would also lose their PA system.

Alternative’s would be to place the hosted solution in front of the current phone system, use a converter that allowed them to use existing phones with a host solution, using power over Ethernet. The draw back is that all these solutions add to the cost and complexity of the installation. The cost of adding a device to allow the existing Nortel phones to be used and power over Ethernet would be almost $4,000 dollars alone.

Other plant issues include Internet link quality, speed, and reliability. One of our customers does not have access to broadband Internet solutions so they would need to have a T1 installed at a cost of $339 dollars a month. Others with DSL service are at the distance limits which cause unreliable Internet connectivity and dropped phone calls.

There are several parameters to consider while picking one system over the other
a. Cost - there are two aspects to cost - upfront cost (capex) and ongoing cost (opex). Weigh the costs of both those solutions. Typically a on-premise solution would be involve greater capex than a hosted solution. Make sure to include the costs of hardware (boxes, servers, phones, fax adapters, switches, routers) and other costs (installation, wiring, training, staff required to maintain systems, etc.)
b. Business requirements - there are two categories of business requirements. The first being basic telephony capability and the second being applications.
i. Basic telephony requirements - what capabilities do you need (dial tone, call waiting, voicemail, fax, etc. etc.) and do the solutions offer them in a fashion you want. Do you have multiple locations and do they need to be on a single dial plan? Will you get the support you need when you need it?
ii. Applications: the question to ask is there any applications that are "integrated" or work in conjunction with your phone system and will those applications continue to function regardless of the choice you make. For example if you have a Call Center solution - does the platform you choose support that or have an alternative to the solution you are using?
c. Comfort level: Although this is not a selection criterion a lot of buyers claim they are just not "comfortable" with a particular type of system. One might argue that is not really a selection criteria but it plays a big part in the sales process and trying to get the customer "comfortable" with the solution being offered.

I have not answered the question - why one company would choose one versus the other because it really depends on the specific situation. As reliability, fax support, uptime, bandwidth availability have become smaller factors in the choice it really comes down to cost and business requirements that drive the choice.

There are many reasons why today's small to medium sized companies choose a premise based system over a hosted solution. Some of these reasons have merit while others are fear creations by companies selling a premises biased product. In my experience the pragmatic companies who are open to the best solution for their business make the decision to opt for a premise solution for the following reasons:

1. Contractual - it is very common that a company may have a different provider or at least separate contract cycles for their voice, data and long distance. Most Hosted providers find this to be a challenge, since they are usually a turn-key service. this issue can force a customer to choose a premise system for the sake of a timely solution.

2. Custom Feature or Integration Needs - Most hosted providers have spent a lot of time building a suite of features and services, but have not worked to create simple integration capabilities and do not have an army of certified technicians in the field to gather requirements and build to these hosted systems.

3. Service & Support - Most Hosted Solutions are made to be extremely simple for the lay person to configure and manage, but there are still network related, phone related and just plain solution consulting needs that a customer will require for their changing business. Hosted companies have done a poor job building these channels of knowledge and sales suffer for it.

4. On-site Sales - Some people just buy this way. People like to buy from people and most Hosted Phone service companies have a sales model, like their system, that is Internet centric. The people referred by their friends and who they run into at the Chamber of Commerce meeting or who cold call them are typically selling a premise solution.

5. Price - sometimes if the company is small with extremely predictable growth, minimal feature needs and typically keep a phone system for 7 to 10 years, then they could possibly save money with a premise-based solution. Remember a hosted solution model is designed for companies who need to change and scale. Most small companies can't tell you how big they will be next year let alone in 7 to 10 years. There are also many different rate options available to most business customers with a hosted system, something will fit.

There is really very few technical or financial reasons for a small or medium sized businesses not to deploy a hosted platform. Most of the reasons are comfort, convenience and timing, but these reason are some of the main strengths of a hosted solution.

I know there are a lot of pundits out there who will mention quality, stability and security as reasons to go towards a premise based solution, but those are tired reactions to a growing and evolving solution. Many of todays hosted providers have figured out these issues and have developed high quality, stable and secure products.

The reason small to medium size businesses would buy a premises based solution is the amount of misinformation propagated by the incumbent network of telecommunications equipment manufactures and resellers. The incumbents’ strategy is to persuade potential buyers not to make the unfamiliar choice. Their marketing machine is so persuasive that it often alters the attitudes, decisions, and behavior of even the most sophisticated buyers. The fact is that switch vendors are re-evaluating their roles, as some embrace a vertical application focus, and others move toward professional services. Partnerships have already been formed; with others on the horizon. The fact is that hosted solutions offer amazing features that are practically impossible to deploy on any premises based solution. And, feature for feature hosted communications solutions cost less then their premises-based counter parts. Please visit www.broadcore.com for more information on features and benefits of a hosted solution. Here are the hosted communications solution advantages executives of small and medium size businesses should consider:
1. Lower Initial Capital Investment: Hosted solution providers offer a service; not hardware or software. Clients do not invest in purchasing network and application hardware or software.
2. Flexibility: On demand, pay-as-you-use model allows organizations the flexibility to grow as fast as their business requires without investing in excessive capacity.
3. Lower Predictable TCO for SMBs: As is the case with any venture an organization may undertake, the larger the organization the lower goes the per-unit Total Cost of Ownership (TCO). A Unified Communications solution is no different. Hosted Unified Communications providers generally set their prices lower then premises-based solutions for Small and Medium Businesses (SMB) and still maintain acceptable profitable margins. Moreover, the cost of ownership is a predictable flat monthly fee that is based on the number of current users.
4. Reliability Backed by Service Level Agreement (SLA): Hosted service providers have a vested interest in their clients’ total satisfaction to improve the probability of their continued patronage. Conversely, the interest of equipment resellers of premise-based solutions in customer satisfaction diminishes as they take their money upfront. In fact, hosted service providers offer specific SLAs that establish objective tools and processes to measure and verify compliance along with appropriate incentives or penalties based on service performance and reliability.
5. Focus on Core Competencies: Hosted UC solution providers enable their clients to focus on their core business objectives instead of getting involved in the “business” of providing communications tools for their employees.
6. Shorter and More Successful Deployments: Hosted service providers regularly implement their solutions for a number of clients each month. Through repetition, they have established process-led, repeatable implementation workflows resulting in more successful as well as timely deployments.
7. Future-Proof Investment: Hosted providers’ product is a service; not hardware or software that may need to be upgraded or replaced to support new functionalities or features. Upgrading and adding new functionalities along with new features is all part of the service.
8. Hardware Agnostic: Hosted UC service providers use the Session Initiation Protocol (SIP) open standard to deliver their solution. Unlike premise-based solution providers, hosted providers are indifferent to use of network equipment, voice endpoints, desktop clients, and mobile devices.
9. Technical Resource Not Necessary: Hosted service providers relieve their clients from having to hire and retain highly technical staff with special skill sets just to maintain and manage resources to support and operate Customer Premises Equipment (CPE) and applications.
10. Geographical Independence: Hosted Unified Communications service is delivered over any private or public IP network without requiring Virtual Private Networks (VPN) or Multi Protocol Label Switching (MPLS) designs. Clients are able to easily maintain a distributed workforce with unified presence and receive the same user experience.
11. Reduced Energy Consumption: It is estimated that an individual premise-based IP telephony solution consumes about 20-30 amps. A hosted solution removes this consumption from the customer’s premise to the carrier’s and reduces the customer’s direct consumption due to telephony by over 50%.
12. Single-Vendor Accountability: The HUC providers are responsible for delivering the whole solution to their customers. There is no separation between providing access or UC components and there is no finger pointing. The one single vendor is ultimately responsible for ensuring uptime at all times.

At the beginning of 2009, Focus Research did two business phone system buyer surveys - one targeting small businesses and one targeting larger businesses .

Small Business Phone Systems Buyers - Premise vs. On-Premise
Survey respondents were fairly small companies - 80% had 10 employees or less. 50% of these companies surveyed considered premise-based systems but only 10% of the companies surveyed bought an on premise system. The primary reasons for buying the on-premise system included a) lower TCO over time and b) because the companies were IT companies where they considered phone systems core to their business.

Mid-Size and Large Business Phone System Buyers.
80% of the companies surveyed has more than 100 employees. Less than 5% of respondents purchased a hosted phone system (which we found interesting - we thought this % would have been higher). Unfotunately, we did not ask this group why they did not considered hosted phone systems. Perhaps, that should be the next discussion.

We found this conversation so interesting that we wrote about it on our blog at Broadband Ignite. I've cut and paste the post below. To access the links in the post and/or leave comments please visit Broadband Ignite at www.broadbandignite.com.

Hosted vs. Premises -- It's Not That Black and White
There’s been a lot of “Hosted vs. Premises” debate in the blogosphere in the last few weeks (see here, here, and here), and a particularly spirited debate over at focus.com (“Why wouldn’t a Small to Mid-Size Business Always Go With a Hosted Phone Solution?”), with some fantastic insights from friends-of-BroadSoft Alteva, Broadcore, and SimpleSignal on why their hosted business is booming.

But – sometimes these discussion threads tend to have diminishing returns. You see people digging in their heels on either the ‘pro-hosted’ or ‘pro-premises’ positions.

This kind of black-and-white mindset, I think, misses three interesting trends in our industry.

First, we’re seeing a convergence of hosted and premises solutions in the SIP Trunking space, where service providers complement premises systems with network-hosted applications. Service providers who offer only ‘plain connectivity’ trunking have a serious customer churn risk – with today’s ease of portability, voice-only SIP trunks are quickly becoming a commodity. But service providers that “UC-Enable” their SIP Trunks – CBeyond boasts an average of seven UC apps per customer, and an enviously low churn rate – are able to lock in and monetize their SIP trunking base.

Second, it’s telling that a lot of the historically premises-oriented vendors have been leading the charge into hosted UC. Whether it’s Cisco and Webex Connect, Microsoft’s Hosted Messaging & Collaboration, or Lotus Live – I think the rapid move towards hosted apps from these companies is a clarion call that the hosted UC space is absolutely the real thing.

But at the same time, these teams aren’t abandoning premises solutions either. Microsoft’s “Power of Choice” message has been particularly accurate here, I think. Customers are going to be able to consume apps from enterprise-hosted apps, service-provider hosted apps, or Microsoft-hosted apps – there’s not just one correct answer.

Third, we’re seeing a rise in “virtual overlay services”, where UC apps are provided “in the cloud” independent of the actual end user phones. Google Voice is probably the most famous of these, but certainly service providers around the world have been providing (and monetizing) “Virtual Front Office”-type apps with BroadWorks for years. These apps are demonstrating that there’s a business for hosted UC services that complement, not replace premises systems.

So – “Hosted vs. Premises” doesn’t represent the debate very well, and could actually lead to people missing out on some huge market opportunities.

I originally posted this as a response to another discussion, but I believe it fits this as well:
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To summarize; I believe that outsourcing your communications to a hosted provider is not a full solution. However, I do think it is a great addition to a reliable communications system.

I'll focus on the voice side of things, and I will stick with the small business focus. Certainly in the enterprise space there are more options and perhaps different questions we should be asking.

As a business, you need to determine the impact of not being able to communicate with your customers. What does it cost you to lose communications for an hour, a day, a few minutes?
Your business and industry will dictate what is acceptable, and what those costs are.

When you are dealing with hosted services; and by hosted I mean you are using the internet to connect with these services - you will have downtime. It's inevitable. There are just too many links between the service provider and the end user. You cannot possibly guarantee that every link between is going to function properly.

Traditional circuit based communications are reliable because the provider generally controls every aspect of that circuit from their office to yours. That's something that packet based services can't match.
There is also a long history of telecom companies working with each other to ensure that circuits are properly switched between carriers. That is something that packet based networks are just starting to sort out now - and the issue is far from resolved.

Unless your business never deals with incoming customer calls, you need some sort of on-premise communications system.

A reliable communications system that includes traditional services such as PRI/T1 will ensure your customers are always going to be able to contact you. These services usually come with some form of SLA from the carrier detailing what level of service you can expect, and what the mean time to repair will be in the event something goes wrong. Ask your VoIP provider for something like that, and they probably won't know what you're talking about.

So where does a hosted service fit in?

Hosted services are great for outbound calling. If the service fails, you simply switch to a "land line." But you don't affect your customer's ability to call you. (Or at least your "Head Office")

Any company with a distributed sales force will benefit from a hosted solution. Employees can generally be located anywhere in the world and still be able to connect to the hosted service. This is great when sales people work from home but you want to be able to show your company name and caller ID when they make sales calls.

It can also be a viable backup solution.
Bad weather keeping you home? Telecommute and use a hosted service.
Hurricane destroyed head office? Move the entire operation into a trailer somewhere and use a hosted service.
The list of possibilities is endless.

I do feel that hosted services have a role to play in small business and in most businesses - I just don't think it's the lead role they should be playing.
They are better suited to a supporting role.

Because Hosted is always more expensive, less reliable, harder to manage, less flexible, and more risky than the choice of CPE and carrier service managed by a single provider.

Leasing cars continue to rise in popularity because of the freedom of having new cars every few years without ever being responsible for the CapEX or headaches over the long run. On the other hand, there will always be those who buy cars for preference, individuality, modifications and control, all at a cost. Phone systems vs. hosted camps are no different.

Buying a phone system is something you do every 7 to 10 years, you maintain it, add to it, worry about it and hope it doesn't have any issues the day the warrantee runs out. You fear not adding, modifying, spending time building your business around it hoping you never have to move or work anywhere but the office. A phone system loses half its value the day you implement it but it is a tangible business expenses that majority of businesses assume is part of starting and running a business.

A hosted phone solution is like a lease on a phone system that continues to get better over time without additional annual costs or limit on scale.

The true way to compare the two offerings is Total Cost of Ownership (TCO).
1. How much to start including installation and equipment including and any additional networking needs?
2. How much every month including MACs, dial-tone, contracts, maintenance?
3. How much every year for 10 years including growth, mods, employee ads and dial tone contracts?
a. Premise folks will be looking for a replacement, additional parts or applications in 3 years and looking replacement system in 6 years. Always consider these things when calculating TCO!.

PanTerra Networks is the leading cloud-based Unified Communications Software-as-a-Service (SaaS) provider to small and medium size enterprises. PanTerra’s flagship solution, WorldSmart, is a complete unified communications SaaS solution which delivers digital business voice, digital fax, chat, email, instant messaging and presence through a single easy-to-use user experience.
Dave Immethun http://www.panterranetworks.com

I view Hosted VoIP as a perfect solution for multi-location companies with 50-6000 employees. The only reason why a customer would choose an ON-premise PBX over a reliable and experienced hosted VoIP Service Provider is the failure of the Hosted VoIP Sales Force Community. Hosted VoIP is the way!

A small business would not go with a hosted solution for several reasons. First, the broadband in its area may have limited bandwidth or not be reliable. Yes, calls can be routed automatically to cell phones if the system goes down, but you can't have that happening all the time. Further, hosted services tend to be commodities. They include the most widely used features but few of the specialized features that were included in some key systems. Occasionally, these features are critical for a business.
However, in the long run, I expect hosted services to take the bulk of the small-business market.

Hosted Phone solutions are for the business owner that wants NO hands on. However, the cost may reflect that.
Smaller systems that are out today are so affordable. To do an ROI on a small open source box vs hosted speaks volumes. However, cost is not the only thing a business owner is looking at. Some will pay the higher price to have little hardware on site.

This past year or so will go down in history as some of the most economically challenging times in the history of America. And… we are not yet out of it. To survive, businesses of all types are trying to reduce expenses and strive for profitability. The ones that survive will be lean and strong. They will have learned to do more with less. They will have sought out every available tool to increase sales and decrease costs. However, many of these tools are capital-intensive and capital is expensive and hard to come by.

A “cloud” or “hosted” telephone system offers affordable, trusted, reliable and flexible cloud based telephone systems that deliver dramatic leaps in productivity and profitability. What is the “cloud”? In computer network diagrams, a cloud graphic is used to depict the “web” or the “internet”. Our telephone system has it’s core in our secure data centers, not in your office and is connected over the web not telephone wires. This relieves your enterprise from the capital investment and the burdens and risk of running your own communications equipment. Businesses that have partnered with the SimpleSignal cloud now have a game-changing, VoIP communication features that create an opportunity to grow sales, cut their telephone bill, and improve their voice quality. Businesses of all sizes are finding our value proposition to be compelling as evidenced by our rapid success and growing subscriber base.

In the past, to have advanced unified communication features at work in your business it meant you’d need to make a big upfront investment. Not today. Not in times like these. A cloud based telephone system provides an easy, scalable, and reliable way to provide business enhancing features without needing to make big and risky upfront investments.

Explore the features to maximize your benefits

SimpleSignal's platform of products & services helps thousands of businesses achieve greater productivity every day—without requiring costly new phone equipment or changes to business processes. In the cloud, a full range of features is available to your business anytime, anywhere and from any phone. Software integration means that you can click to call right out of the programs you work out of all day.

Grow your business from anywhere on one platform

A cloud telephone system works with all your devices. You can be connected to your business network no matter if you or your co-workers are talking on an analog line, a cellular phone or an IP softphone or land line. Even if they are separated by oceans and time zones they are all on the same telephone system and have access to the same feature set.

Cut your costs

Many business have experienced cost savings greater than 50% when changing over to a cloud based service. In addition, there is far less capital outlay when there is no system to buy, no PBX equipment to install or maintain, no dedicated electrical circuits, no risk of obsolescence and no risk of out growing the system as your business recovers and grows.

Flexible pricing

A cloud based service is affordable with pay-as-you-go small monthly fees that can fit any budget. No long-term contracts required, and we give you a 30-Day Money Back Guarantee

Improve your voice quality

SimpleSignal’s Hosted telephone system is a HD voice, high capacity carrier-class computer platform.

So easy to use

Cloud based phones are shipped to you pre-configured. Plug them into the ethernet and in just minutes you’re talking on net. Our unique business communication solution allows you to update settings on the fly. Need help? We are always just a phone call away, ready to support you.

Bottom line? A telephone system that is controlled in the cloud can make your phone system do more.

Contact www.simplesignal.com (949-429-4758) and tell us about your business—chances are that our sales consultants have worked with someone in your industry in the past and we can help you use our technology to design a better business process using today’s communications technology.

A premise is an assumption.

A premises is a location.

Why is it that people in technology can't get this?

Hosted has two problems for small business that they cannot overcome -- reliability/redundancy and the fact it is no different then Centrex. I do not know of a single hosted provider that can gaurantee 5 9's reliability, most do not offer 99% uptime. If your circuit goes down you are dead in the water. The provider's in our area require you to purchase the phone and then charge a per user fee. Let's say it is $250 per IP phone, $50 per user and you have 10 users. That is $2,500 upfront for equipment, $500 per month plus the cost of the circuit (say $350 for full T1). You are paying $850 per month for the life of your company. You can lease to own an IP system for half of that and for only 5 years. Managed services means you do not need a staff to support it and you get 99.999% reliabilty and redundancy with land lines if your data circuit goes down.

One of the biggest misconceptions of on-prem is that everyone thinks of Cisco and huge $$$$ for small business when there are much better and less expensive options such as ShoreTel. We have installed ShoreTel systems as small as 5 phones for businesses who were shocked at how inexpensive it was.

Interesting question........ Perhaps if you were looking to heighten your electricity, or heating bills, to reach a certain tier discount, you would choose an in-house solution.... In the past, the negatives of an in-house PBX solution have been easier to highlight. I think if you were to search for in-house hosting you will find horror stories about internal hosting gone wrong!

Company's can take responsibility over their phone service, but given the threats and difficulty involved to deliver a reliable service, I would recommend running your PBX SaaS off-site with a powerful hosted PBX Server carrier.

There are key reasons that will lead all businesses (including enterprise) to a hosted solution. A few of these reasons are:

- new PBX Server updates and communication features.
- flexibility of service, ease of use and no on-site installation
- cheaper installation and simpler PBX management
- more reliable services with less threats of downtime.
- monthly cost savings over phone and email services.
- simplified VoIP networking which includes a global solution for your local calling

In my opinion, a hosted provider will always offer greater value than anything in-house. Save the headache and host your PBX Server with the experts at OctopusIP! Save $1000s each month, and have a service you can rely on. http://www.OctopusIP.com/octopusgivesyoumore

Please contact me for a quote on hosted PBX services. Octopus has great packages for start-ups, or, for vendors with 50000+ extension requirements.

You will not be disappointed when your company is running on Octopus IP PBX Server. Create extensions ranging from email to complete Unified Communications accounts.

Please contact me to request a quote Conor@OctopusIP.com