Top 3 reasons for choosing Cloud vs Premise Based PBX


Last week I was interviewed, by my marketing manager, on the benefits of choosing a cloud based communications solutions over a premise based PBX.  If you would like to watch the video of the interview, you can access it here:


Q: I’ve been involved with our premise based solution, the Avaya IP Office, and I’ve noticed how our business has evolved into a cloud based service model. I was wondering if I can ask you a couple of questions with regards to the benefits of a cloud based versus premise based solution.  What are the benefits of deploying a cloud based solution? Why would a customer choose to deploy a cloud based solution rather than stick with the tried and true PBX?


A: That’s a great question, and I’m sure many people are wondering the same thing. There are many benefits to deploying a cloud based solution. Let’s talk about what I think are the top three:

  • Cost: with a premise based system, there is a large up-front cost that you have to pay. You have a down payment, then you have the monthly lease payment, and if you choose to not go with a lease, and pay for the system upfront, you end up tying up a lot of money into your phone system. Many businesses either don’t have the resources to do that, or prefer to make the monthly payments and preserve their cash flow. In addition to the upfront costs and monthly payments, you still have the monthly phone bill to pay. With a cloud based solution, the upfront costs are extremely minimal, and you only have a single, low, monthly payment for your service.
  • Ease of Deployment: With a premise based solution you have a lot of equipment to install, you have to program the system, upload firmware, connect the phones, and coordinate phone line installation with your carrier. With a cloud based solution, all you’re installing is a router. Then you take your phones, plug them in, and they just work! Just like that!
  • Vulnerability: When thinking about how your business needs to function, your phone service is a pretty important part of the picture. You just can’t tolerate your phone service going down for any length of time. In order to ensure availability, with a premise based PBX, you have to think about redundancy. What if the power goes out or the equipment fails? This all becomes your responsibility. Depending on the level of service you want, this also brings up the cost of your equipment. With a cloud based solution, your provider is responsible for redundancy and resilience. The net result is that you, the customer, enjoy all the benefits of a robust resilient service at a low monthly cost. You just cant beat this.

Q:  Wow, these are all great points! Now let’s focus on the cost benefit for a moment. You mentioned that it’s more cost effective to deploy cloud based telephony. What about the following scenario: suppose you lease a premise based solution for a five year period. However, you intend to keep this solution for ten years. While it’s true that with a premise based solution, your upfront costs and monthly lease payments are higher than a cloud based solution; however, after the 5 year lease is up, your payments drop down to zero.  Therefore, over the course of ten years, it is not true that the net cost ends up being lower for premised based, since with cloud based you would still be paying during the remaining five years?


A:  You bring up a very important point, which I’m sure many businesses are concerned about. I’d like to suggest that we consider the following: While it’s true that after your lease is over you’re no longer making those monthly payments, there is still a cost associated with keeping the PBX for that length of time. As with any equipment, after several years, things start to break down. At this point, you may want to think about getting a maintenance contract, which comes with a monthly cost, or wait until something breaks and then deal with the cost of repairs and the associated downtime. At the end of the day, you’re not really saving any money by holding onto an out dated system .


Talking about an out dated system, with a cloud based solution, you always have instant access to all the new features and benefits the moment they become available. Not so with a premise based system that becomes out dated and requires additional license fees to obtain new features.


A little bit about myself.  I am a telecommunications consultant and I am passionate about telephony.  I am focused on one thing, and one thing only.  Helping YOU get the most value out of your communications flow.  Not equipment, not infrastructure, but flow.  As a business owner, what matters the most to you is how your business is flowing.  I help customers like you optimize their communications environment so that communication is truly flowing.  To find out more about the services I offer, feel free to visit my website at




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