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When is it smart for a small business to consider an On-premise Vs. Hosted VoIP solution?
For a small business with 20-25 phones in multiple locations looking for the standard features is it better to go with a hosted provider or purchase the hardware and host it on-site? What are the main variables to consider?
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3 Answers
You've got some good answers already, Melina. Based on the limited information provided, I'd say hosted is your best bet. I can't see you justifying an IP PBX here. If you're mainly focused on telephony - as opposed to a more integrated communications solution, it's not that complicated.
In that case, you can buy SIP phones pretty cheaply (maybe $100 each - or less), and if you go with a SIP trunking provider, you can bring down your connectivity spend - plus future-proof yourself for the cool stuff, like HD voice, videoconferencing, Unified Communications, etc. So, the main thing I'd be looking for is a provider who is comfortable servicing a company of your size, and is not trying to oversell you on a Caddie, when you just need a Chevy.
20-25 phones in total? It's tricky, because it may be that with such low scale the choice of SPs available and willing would be limited. Assuming an SP is selling what you need hosted, then that would be my preference. A small business simply doesn't need the hassle of maintaining an on-prem solution, even a small and cheap one. And for 20-25 users you could go really cheap - you could download Asterisk, buy a few cheap SIP phones, find a moderately-equipped PC and you're in business. But you'd need to put the PC somewhere, and consider backup equipment, a data backup routine, but most importantly you'd need to figure out how to provide service across all sites at all times.
You also need to be able to call to the PSTN, which means PSTN gateways either on each site or centrally. Plus resilience.
If you have 5 sites, 5 phones per site, then you'll either need 5 Asterisk servers or else use a single server on one site and run the risk of losing service to phones on other sites in the event of network failure at either that primary site or the served site.
If you go for a hosted solution, the SP will have dealt with the issues of backup and resilience of software, servers and gateways, and will certainly have resilient WAN links to their sites. They will also grow their service over time, adding new functionality, probably without any cost impact to you.
The only real downside is that you get what is offered - if the SP doesn't support a feature, all you can do is request it and hope (difficult with a small user base).
Melina
Without information about the type of business or its community of interest and traffic patterns, it is tough question to answer, definitively.
As a rule of thumb, I would suggest that it is hardly ever smart for a small business with 20 to 25 phones to consider on-premise versus hosted VoIP solutions. Unless you are paid by the hour for making apple and orange comparisons, don’t spend a lot of time trying to find a situation where voice hosting only would make sense to a small business.
I would suggest you should generally look for a hosted pipe network provider that will give you an IP-PBX in their rates and consider them versus buy your own IP-PBX and rent some phone lines and a couple of data pipes. Why would you want the hosted service? Save money? $30 phone lines versus $1000 T1 voice only backhaul line? Numbers don't work. If Long distance voice makes it look econcomical to host voice, it will typically look better with a PBX aggregating voice lines to SIP Trunks.
There certainly could be unique business configurations where these simple rules of thumb and the voice backhaul cost issues do not apply. For example, if the voice line services isn't critical to the business (the salespeople are using their cell phones, then use magicjack, Skype or Voanage, if you have idle PCs on every desktop with every idle phone).
Is your question of 20 to 25 phones in some type of retail chain? A Relator/Insurance sales office of independent agents?
I can say the multiple 20 to 25 line sites in a local area is generally an uncommon configuration, for a small business, with a Line of Business (LOB. A LOB site with 20 to 25 phones is typically out of business, when the phone lines are not working. Order entry, part selection, shipping resolution, card sales and even cash registers can stop until the lines are up. Opening a second location in a small business doubles fixed site cost, not sales. I have seen cost curves that suggest that doubling fixed costs requires tripling sales to earn the same profits per square foot.
Small Business people with a LOB quickly see this curve when looking to open a remote office in the same town. Pay employees to drive to the customer unless you looking for walk in traffic. If you looking for walk in, you probably don’t have 20 to 25 phones (I don't know for sure but a Super Wal-Mart probably doesn't have 25 phones). If its just a bunch of agents, use magic jack – the agent is on their IPhone or Blackberry.
Hope this helps get a feel for the problem.
Howard Gunn
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