If you find yourself in that rare, and therefore, not well practiced position of having to choose between a PBX phone system or considering a VoIP system, there are a few things to consider. It is not a choice that is made very often, so it can be overwhelming even just understanding what the fundamental differences are between these two choices, but there are three fundamental considerations that can help make the decision significantly easier to make.

First, let’s start with your budget. If you are considering an on-premise PBX, you will more likely than not be required to make a considerable upfront investment for the hardware, or long-term lease payments. Either way, it is a considerable commitment, one that may require a large capital expenditure. This may be the right choice for you if you have a rather larger number of users but only use a small amount of phone service like a call center. Otherwise, a hosted solution resulting in smaller monthly costs works better for businesses interested in freeing up operational costs. Hosted VoIP fees are for the service only and the phones can be either be purchased out right or lease, whichever better fits your budget.

The second thing to consider is the growth you are projecting. Chances are if you are considering a new phone system it is because you may have grown out of your current system. With an on-premise PBX, any further growth could result in a required upgrade of the PBX hardware or expansion of the phone lines. The “add ons” will add up. In terms of growth, hosted VoIP offers greater scalability. Adding more users just requires the purchase of more phones, a requirement in both cases, some quick administration on the back end, and voila. Plug the phone into the network and they are ready to roll. It’s just as easy to add remote users as well. And the call volume can increase to the amount the internet connection will support. Again, hosted VoIP offers a lot of flexibility and scalability.

Lastly, what is your down time tolerance? If you decide to go with an on-premise PBX, you will have to consider that it will be the single point of failure. If a piece of hardware were to fail, as they will sometimes do, there will be no outgoing or incoming calls until the issue is resolved, or the replacement piece is ordered and installed. If your business cannot tolerate a minimum of a few days of no phone service, then hosted VoIP may be the better choice. Any reputable hosted VoIP company will have redundancies in place that protect the customer from any downtime. More often than not, when an issue does occur, the client is none the wiser as even the call quality is maintained.

There have been some innovations since Bell first uttered the inaugural phrase “Mr. Watson--come here--I want to see you.” But so far, the one to make the biggest impact on businesses has been the innovation of hosted VoIP. Do you have funds ready for any upfront capital expenses? What is your projected growth for the next 3 to 5 years? How much down time can your organization tolerate from your phone system? Will you clients even notice or will cause serious harm to your relationship? Answering these questions can help you make the best choice for your needs.