Whether you call it a hosted phone system, virtual phone system, or cloud-based telephony, getting rid of that “thing on the wall” in the phone closet may be just what the doctor ordered if you are a small business.  Not only will you get all the benefits of a modern day phone system, but you will have removed another technology asset from the balance sheet and turned an essential business function into a true operating expense.

So how did we get here? Here’s a short history of the business telephone system that won’t make your eyes glaze over.  When Ma Bell first offered telephone service to businesses, every person in your office received a physical phone and a 7-digit number. All calls were routed through a central office in town that was connected to many other central offices all over the state and eventually the country.  This was called a Centrex system and offered many of the features of a PBX (Private Branch Exchange, or phone system) system that you would buy for your office. It was essentially renting a piece of a giant phone system located in the center of town.

As this service became more expensive and the price of a PBX was driven down by overseas competition, business moved toward owning your own system to drive down costs and give you more control of your telephones. 

With the penetration of high-speed Internet and the maturation of VoIP (Voice over IP), the business model is now turning back to buying your phone system as a service – just like it was in the beginning.  Back then, the only hardware you had was the phone you rented from the phone company. Just as the computing tide is turning back to centralization of the “brains” through cloud computing, the same is happening in the telephone world.

Unlike buying a new hardware-based phone system that happens to support VoIP, with a hosted system, you are not incurring a capital expense or buying hardware that requires a maintenance contract.  The best hosted  phone system deals usually come with very low installation fees and a monthly service fee that includes all of your local and long distance minutes. More importantly, it becomes part of your operating budget and rolls into your Internet and voice calling services (local and long distance) operating expense.  In most cases you can say goodbye to your current phone and Internet service bills, as the provider of the hosted system can configure your service to carry both your voice and data services. 

Look for hosted phone system services that are offered by large, reputable voice and data carriers who provide you with a dedicated connection from the hosted phone system to your office. That means, the connection to the brains of your system is direct and not through the Internet.  At the very least, make sure the provider of your hosted service is delivering it to your door via some private network like MPLS (Multiprotocol Label Switching) – not just straight through the Internet.  There are service deals that will provide you with a hosted system that only require you to have an Internet connection.  These should be avoided for now, as there is no control over the quality of service, and the cloud provider will not take any responsibility for the quality of the calls.

Hosted phone systems are highly desireable solutions for the right business requirements, and they can save you substantial amount of money while reducing headaches.  Yet they are not right for everyone.You should speak with an independent telecom advisor before making such an important decision that will affect the day-to-day performance of your business. Factors such as the number of phones, specific features and functionality, number and geography of locations, and availability of T1 services need to be considered.

Due to the underlying complexity, there are unfortunately no formulas and no rules of thumb that fit all cases. Only an objective advisor with encyclopedic and up-to-date knowledge of the rapidly changing small business telecom landscape can help you decide whether and which hosted phone system may be right for you.