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While a cloud-based (hosted) PBX might make sense for most companies, others will benefit from an on-site solution.
A major deciding factor is the level of control you need or want over administrative functions like configuration and upgrades - but in such cases there's a trade-off - the high costs associated with the responsibility of managing premise equipment.
If cost outweighs control, an outsourced solution may work better for you.
Weigh it up
The pros and cons of cost vs control are best assessed at various points throughout the solution life cycle:
Installation Configuration and configuration management Maintenance and Custom application development
At installation stage, cloud solutions win the cost battle hands-down, even though customers sacrifice control. There is one caveat, however...
In a cloud solution, initial capital expenditures are lower because the amount of customer-premise equipment is reduced. Indeed, the overall installation costs for cloud solutions are almost always lower than that of premise-based solutions. However, cloud solutions have recurring fees, so you should evaluate TCO over many years to determine if this creates an actual net saving over the planned operational life of the system. (Keep in mind a premise-based PBX needs replacing every 3 to 5 years while the hardware of a cloud solution is constantly kept up-to-date in the background.
Cloud solutions are also less likely to incur post-installation costs for two reasons: Firstly, pre-installation site reviews can be done by experts, while corporate self-appraisal is riskier, as they typically lack experience. Cloud solutions further require fewer on-site components, and less complexity makes for less risk.
Because there is less need for customer participation in a cloud solution, cloud providers can provide a reasonably accurate project time-frame. This allows planned migration that suits enterprise schedules. With similar effect, cloud services can be grown on a line-by-line basis while coexisting with on-premise equipment. This flexibility is unthinkable when transitioning to another premise-based PBX - a much more disruptive and hence costly proposition.
During maintenance, the benefits of cloud are just as tangible - predictable costs, reduced downtime and streamlined fees. However, there's something to be said for control over the process, which speeds matters up...
With a cloud solution, operational expenditures are more predictable, which in turn aids cash flow planning. With premise-based solutions, operational expenditures are usually lower, but can spike unpredictably when issues occur.
With a cloud solution, downtime is reduced because the centralised architecture expedites break-fixes. Premise-based solutions often require an on-site visit with considerable delay - unless a higher-response (and therefore more expensive) service level agreement is signed, or a set of expert technicians is maintained on-site at prohibitive cost.
Most maintenance contracts for cloud solutions are based around per-seat licences, and only charge for seats in use. Premise-based solutions, on the other hand, often charge "per-active-port" fees - which translates to charging for everything the customer could use.
Hardware and software upgrades can be managed more easily via a cloud solution than a premise-based solution.
Configuration management is much easier and less risk-prone with cloud solutions, unless administrative control is mission-critical for your business...
Most network configuration problems are caused by human error during changes. In the cloud environment, the likelihood of problems arising due to change is less if the vendor is experienced and makes use of well-scripted change management procedures.
However, if administrative functions of control are mission-critical to the success of your business, configuration management is one areas in which a premise-based solution can make more sense for a business.
Moreover, with cloud, customers also don't have to worry about managing growth, because the service provider does that, without having to worry about unused capacity - it can simply be transferred to other deployments.
Custom application development
Here, too, cloud deployments are making strides...
In the past, one of the weakest areas for cloud solutions was their ability to support customised advanced applications. However, now with API interfaces into the cloud solution, the gap is narrowing.
About the author
George Golding is MD, Euphoria, which was founded in 2010 and provides VoIP (Voice over Internet Protocol) communication services for small and medium businesses in South Africa. For more information go to www.euphoria.co.za
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