by March 14, 2014 0 comments

PBX systems, whether in-house or on cloud, manage business interactions with prospects, customers and vendors over phone in an effective & efficient way. Despite providing a few common benefits, these systems are quite different with respect to flexibility, ease of use, key benefits, scalability, payment terms & key functionalities. The decision to choose between in-house or cloud telephony PBX is triggered by many factors such as cost, control over data, flexibility of use, future expansion plans & key features/functionality needed for the business. These factors vary from organization to organization, industry to industry which means there cannot be any one size fit all solution to the problem. From the perspective of a business, incremental business productivity per unit cost within a designated time frame is often the deal maker. The decision criterion are going to vary among various organizations, therefore the decision outcome is a reflection of combination of what these systems provide clubbed with business requirements of individual organizations.

Key Considerations
For delivering maximum value, one needs to reduce costs & provide more benefits.

Key functionalities in context of business: A traditional in-house PBX system is quite limited in features and apart from call transferring provides limited functionality unless you buy an expensive upper end PBX system that most SMEs cannot afford. In cloud telephony one can get all the benefits of an expensive upper end PBX system apart from integrated mobile application, seamless integration with different SaaS systems, pop ups when someone calls and intelligent routing. The best part is that one can get all the upgraded versions automatically, so your virtual PBX system is always good as new compared to in-house PBX systems that cannot be updated without incurring additional cost. Tech upgrades in cloud telephony don’t depend upon the type of hardware installed on client’s premises. Traditional PBX systems don’t provide APIs to integrate them with business apps. Cloud based systems however, do provide this capability, such as posting of all call details and recording in CRM against details of specific customer or prospects in real time to provide personalized attention. In cloud telephony one can have the same business number forever even if the office address changes.

How They Fare on Flexibility?
The ease of use is quite high in cloud telephony PBX systems because one can change all the settings i.e. changing the phone numbers behind an extension or setting a rule for a particular set of numbers or setting departments or changing marketing pitch in real time, in seconds, from anywhere, which cannot be done easily in traditional PBX system. Some custom features in cloud telephony services may become a source of competitive advantage for the SMEs – for example, whenever somebody inquires on Just dial about a service provided by the SME, the cloud telephony system at the backend can instantly connect the prospect with the Sales Team of the SME. However, the Cloud service provider may not provide a particular feature for a single customer. Moreover, the maximum flexibility offered by in-house PBX systems is directly correlated to built-up hardware capabilities and one needs to be fully aware of such capabilities and the business relevance.

No Physical Wiring: The cloud telephony PBX provides ease of use because no physical wiring is needed. Also, one can attend calls on both mobile & landline phones with a further option of making automated customized interaction rules for different callers as all the callers are not same. The ease of use is not so great because of physical installation of the system and dependent on a particular set of hardware. One can upscale the services in case of cloud telephony such as after a full page advertisement in newspaper a company may chose to handle 100 parallel calls on same business number for a week, This can be done in minutes in cloud telephony but takes a lot of time in case of traditional PBX system.
Greater Mobility: The cloud telephony helps in universal mobility of the employees. In house PBX system, mobility is limited to employees working in a physical office only. This limits the use of in-house PBX system in the organizations where employees are moving frequently in & out of office.
Who Controls Your Data?: In in-house PBX system, the organization controls all the corporate and customer interaction data however in case of cloud PBX this data rests with third party. Although, this data may be downloaded by the organizations at any time, one needs to have a trust worthy cloud telephony provider to ensure confidentiality of the business data. Similarly, the cloud service provider should be expert in technology with 24×7 support service so that any obstruction in service can be easily handled by the service provider in minimum time. The service level agreement of the companies should be checked before taking the services.

What if the PBX Fails?: The data recovery system is more robust in case of cloud PBX service provider so recovery is a trivial matter even in case of disaster. Few of the cloud PBX are hosting its data in Amazon web services which follows stringent three continent data recovery options. However, in case of physical PBX service providers the data recovery options are governed by the hardware and integrated IT infrastructure, which may not be robust.

Future Expansion: As best management practices are evolving into a collaborative model, a lot also depends upon the company’s philosophy if one needs to manage things that are not the core competency of a business. If this can be outsourced to a reliable third party providing world class business telephony services, it would be in interest of the company because they can devote more time to what is core to their businesses. The business telephony in cloud score over the in-house PBX system in case of such plans.

In case of physical PBX system, a heavy upfront investment is needed in form of Capex but no such investment is needed for cloud telephony so the acceptability is quite high among SMEs as an immediate cost saving measure. Further, cloud telephony comes with pay as you go model at around INR1.5K per month so one can discontinue at any moment without spending much.

Moreover, the cost of implementation of in-house PBX system is quite high because of physical wiring and physical instrument required. These costs are not present in cloud telephony system.
Maintenance and Recurring Cost: The cost of maintenance of in-house PBX system is high because of hardware and battery requirement. The cost includes both monetary and manpower needed by the organization to keep its in-house system in working condition. However, no such maintenance resources are required in cloud telephony systems. The recurring pay as you go charges in cloud telephony services is nil for the in-house PBX system.

Pay Per Use
Most of the saving in the business cloud telephony comes from paying as per actual use, optimizing & reducing support staff, eliminating the costly PRI lines management and headaches associated with dealing two service providers- In-house PBX service providers and Telecom operator providing PRI lines. The evaluation criterion adopted by different businesses for these two models are different so the assessment of the benefits and costs associated with this model may vary for a particular type of PBX system from business to business. The overall value mentioned in above model should be viewed in line with the other factors such as capability of the customers to pay, time frame allocated to asses benefits and urgency of the business requirements. Computer literacy and awareness about cloud telephony services also play an important role as tech savvy people are keen of having cloud system while traditional business such as SMEs with owners having low internet literacy chose to get traditional PBX system unless somebody explains the benefits arising from cloud telephony systems.

The Case for In-House PBX System
If you want to keep a strict control over your data, have IT resources to maintain the system, need a heavy level of frequent customization, have high number of support staff (>100) and have the capacity for upfront payment with a long term view on investment you may go for in house system.

So Which One to Choose?
There’s no universal rule because It all depends upon feature requirements of the specific SMEs, mindset towards ownership of data, reliability of the existing cloud telephony players, and view towards installation- short term vs. long term & ability to pay. Different types of values- i.e. both tangible value and intangible value must be taken into account over period of time before making any decision. So ideally a small company finds cloud telephony solution quite useful over in house PBX and big companies go for in house PBX for control and high value of scalability, future plans, ability to pay and volume of calls.


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