When choosing a PBX (private branch exchange) system for your office or business, there are two choices: an on-premise phone system or a hosted phone system.

An on-premise phone system often means the hardware resides on-location, such as in your office in an equipment room, phone closet or server room. In this scenario, your company owns or leases to own the hardware, giving you greater control. Unfortunately, there is a very high upfront cost because you are going to purchase everything. Moreover, adding more phone lines means buying more phones, and if something goes wrong in your building, your phone system will lose power too. Given these traits, on-premise systems are usually geared toward larger companies who can afford a higher price tag (and have systems in place to avoid loss of power).

The other side of the coin is the hosted PBX system. There are fewer costs involved with a hosted solution, and introducing a new phone system to your business is not as frightening as implementing an in-house, hardware-based system. Hosted PBX systems ultimately make for less downtime and lower overall costs for your business, which is why more and more companies are switching to a cloud-based, hosted PBX system.

This article will dive into precisely what a hosted PBX system is and what the benefits of implementing this system into your business entail. Let’s get started.

What Is Hosted PBX?

A hosted PBX is a private branch exchange delivered as a hosted service. It is a telephone switching system that is accessible over an internet network and stored in the cloud. Since it is cloud-based, access to this telephony solution is entirely on the internet instead of in-house.

A hosted PBX is also known as a virtual PBX and offers many cost-cutting advantages such as eliminating installation, operation and maintenance costs of a traditional phone system.

With a hosted PBX, companies can still take advantage of their phone system’s features such as voicemail, faxing, conferencing and automated greetings in addition to everything being on the cloud and through the internet.

The three main ways a hosted PBX works are:

  1. Over the public switched telephone network (PSTN)
  2. Over the internet (PBX via Internet Telephony or Voice Over Internet Protocol, aka “VoIP”)
  3. A combination of the two

What Is IP-PBX?

IP-PBX stands for Internet Protocol Private Branch Exchange. It is a telecommunication device that provides voice connectivity to desk phones within a building and oversees the incoming and outgoing calls across its telephone network using the internet. Basically, an IP-PBX can make and receive phone calls over the internet while maintaining analog phones throughout the office.

What Are the Benefits of a Hosted PBX System?

By switching to a hosted PBX system, your company will be able to enjoy a multitude of benefits, including:

  • Cost Savings: With no significant initial investment and low maintenance costs, a hosted PBX will instantly save your business money. There is no need for an in-house worker to manage and maintain a cloud-based system as an on-premise phone system would need. Plus, since everything operates on the cloud, you will save a ton of money on office space, hardware and software expenses. Hosted PBX platforms are managed off-site, so your business has no expensive infrastructure and training fees for repair and upkeep personnel.
  • Ease of Use: There is no end-user management involved with a hosted PBX, which means it is much easier to manage than a traditional phone system. No additional training or special skills are required to use the hosted PBX system, so you can start using it right away.
  • Scalability: With a virtual phone system, you can easily add or remove lines as your business grows with little to no additional costs and minimal effort. Traditional systems would require purchasing new equipment.
  • Remote: Eliminate office boundaries with a virtual phone system. A hosted PBX would be ideal for mobile salespeople and work-from-home employees. Employees can work from anywhere; all they need is an internet connection.
  • Security: Hosted PBX offers more security and reliability than an in-house phone system, as new updates and functionality are implemented immediately. Calls are established securely over the same network your computers use. In addition, if the worst should happen and disaster strikes, recovery is quick and seamless since everything is stored and maintained off-site and in the cloud.
  • Collaboration: Keep in touch with everyone in the company through video conferencing, instant messaging and more with integrated mobile apps and softphones (a software application that allows users to make telephone calls over the internet via computer or smartphone).
  • Corporate Image: Small businesses can have the image of being a larger organization with a professional, scalable, cloud-based phone system.



How Does a Hosted PBX System Work?

A hosted PBX system shifts your phone and communication infrastructure to a trusted VoIP provider. So instead of having a bunch of individual phone line extensions, each phone is replaced with a VoIP phone, effectively eliminating the hardware in your office. With a traditional phone setup, there is an extra step of routing the calls through the in-house IP-PBX system.

When your business implements a hosted PBX system, you will be using your existing internet network for voice communications. One of the downsides to using a hosted PBX system is that it will use up some of your internet bandwidth, which is how the whole system operates. However, it is not a significant amount of bandwidth, and today’s business broadbands can easily support the online communications needs of the entire office — including PBX.

When using a hosted PBX system, the information travelling over the IP networks to the cloud PBX reaches scalable data centers to prevent system overloads. The servers in the data centers route calls to other VoIP providers, including the PSTN.

Handling how your calls are managed, including advanced call features, is as simple as accessing an online voice portal in your browser and adjusting the settings. Click “Save,” and the changes are instantly applied!


Hosted Versus Traditional PBX

There are a few significant differences between a hosted PBX and a traditional PBX system. Make sure you know them before choosing a VoIP phone system for your office. Here is a chart to quickly see the differences between an on-premise PBX system and a hosted PBX system:

On-Premise PBXHosted PBX
Low Cost per SeatNo Upfront Costs
Unexpected Maintenance CostsNo Maintenance
Basic Calling FeaturesBasic Calling Features
No Internet Bandwidth UseModest Use of Internet Bandwidth
You Manage EverythingCloud-based Outside Management

What’s Next for Hosted PBX Systems?

The world has changed a lot in the last few years, especially when it comes to cloud computing and remote workers. In terms of using cloud computing and providing remote work opportunities, traditional phone systems can’t keep up with hosted PBX systems.

The cloud and cloud-based technology are here, and it’s here to stay. Many companies globally are switching to cloud services to accommodate business needs and changing times.

The modern business will continue trending towards less hardware and more cloud-based systems like hosted PBX. Softphones will replace desk phones; call centers will become more remote and use the internet to connect their agents and customers; and many changes will happen to make in-office phones, hardware, and computers less rigid and stationary.

Final Thoughts

The future of PBX systems is headed more towards cloud hosting every day. Maybe it’s time your company took a look at hosted PBX systems and got itself ready for the future.

If you or your company is thinking about switching to a hosted PBX system, Fonex can make sure you are headed in the right direction. Click here to learn how we can help your business align with what the future will bring.

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