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Your On-Premises Phone System: What it Really Costs

Your On-Premises Phone System: What it Really Costs

Even though cloud communication tools are everywhere, some organizations are still clinging to on-premises phone systems for a variety of reasons. Perhaps your organization hasn’t made the switch to Unified Communications as a Service (UCaaS) yet, either.

Reasons not to adopt modern technology vary, and some make more sense than others. Some of the most common include:

  1. Trying to realize returns on the high, upfront investment of on-premises phones
  2. Employees are used to the on-premises phones and find adopting new technology difficult
  3. Insufficient bandwidth due to low quality Internet connectivity or a lack of access to fiber-optic Internet connectivity options

While organizations may feel the need to “pay off” their five-year-old TDM Private Branch Exchange before they adopt voice-over-IP (VoIP), the decision not to switch can often end up costing more than the switch itself.

How Much Does Your On-Premises Phone System Cost?

The hard costs of premise-based phone systems typically range from $3,000 to $5,000 for the average small business with 5 to 10 lines. As we'll show you below, cloud-based phone systems can deliver significant savings by comparison.

For some organizations, there’s a massive opportunity cost associated with clinging to premises-based phone systems.

  • How much benefit are you unable to gain if your organization really needs cloud-based Unified Communication tools?
  • Is the higher monthly cost of your on-premises phone system worth the price you’re saving on not having to train your employees on new handsets?

Cloud-based communication tools aren’t for everyone; that’s true.

There are some businesses that should stay on-premises. But, if your organization needs to adopt modern technology, the decision to delay adoption could actually be hurting your business, making you less competitve in the marketplace.

Read on to learn whether your organization’s needs are being served by on-premises phone systems, or whether you’re being held back by your approach to business communications.

Realizing a 75% Savings By Ditching a Premises-Based Avaya TDM PBX

Gene Marks owns a small technology consulting firm with ten employees. Back in 2004, his organization paid $1,000 per month to lease an on-premises phone system from now-bankrupt Avaya. The cost of their TDM Private Branch Exchange (PBX) was half as much as their $2,000 monthly bill for office rent!

“I started to wonder why,” Marks wrote in Forbes.

Why was Marks spending half of his rent bill on phones that offered minimal features and didn't serve his business, especially since his tech-savvy staff wanted to be able to work from home?

Mark's company made the switch to VoIP phones delivered as cloud communication tools, which represented a 75 percent monthly cost savings for his organization at the time of the change. Marks loves his new hardware-free phone system and admits he’s never going back to the costlier on-premises solution he used before.

What Are You Getting vs. Paying For?

Even when you’re not taking business opportunity and collaboration benefits into account, you may be paying more than you think for your on-premises phone system due to the following factors:

  • Confusing monthly billing statements, causing your organization to pay for features and lines you don’t need.
  • Time-consuming, costly monthly maintenance and routine system updates to your on-premises PBX
  • Uncertainty around future system support due to phone provider bankruptcy
  • Requirement for on-site fixes, sometimes requiring technician visits

Do You Need More Features and Functionality?

On-premises phone systems are exactly what they sound like--tools for making and receiving voice calls. Making the switch to a cloud-based phone system can allow your organization to unlock Unified Communications as a Service, a single-platform approach to integrating multi-channel communication tools into a single platform.

Leading UCaaS platforms like Broadsoft’s UC-One offer a wide array of features including:

  • Integrated phone service
  • Instant messaging
  • Presence
  • Audio and Video Conferencing
  • Screen sharing
  • File sharing
  • Virtual meeting rooms

There’s also extensive functionality and extensibility with UCaaS. Organizations gain the ability to integrate their UC platform with their document management software like Office 365 and CRM like Salesforce. Team members gain access to easy document sharing via rich, easy-to-use keyword search available on desktop or mobile.

Your on-premises phones may enable your employees to make calls. But are they supporting cross-channel communications, transparency, and easy access to information?

To learn more, check out 11 Valuable Business Benefits of Unified Communications as a Service.

Do You Need to Scale?

On-premises TDM phone systems aren’t very scalable since they’re based on physical equipment. It can be costly to order new line cards for premises-based PBX, and organizations may need to purchase a card that supports 23 new lines when they only need to add one.

Circuit installs are also a major financial commitment, and may require 30-45 days to wait for the right approvals and technician availability. In contrast, adding phone lines to a cloud-based phone system just requires a few clicks in the administrative portal and connecting a handset to your business data connection.

On-premises phone systems are also not scalable across multiple locations.

Multi-location businesses are forced to maintain separate phone systems for each branch, which can create confusion for employees who are collaborating across sites. In contrast, UCaaS allows organizations to unify their communication tools into a single system, regardless of how many global locations they have.

From Legacy PBX to UCaaS

Is an On-Premises Phone System Right for Me?

Does your business just need the basic ring and answer functionality, and maybe very occasional voicemails?

Is there little reason to anticipate your communication needs evolving significantly in the months or years to come?

For some smaller companies with a single location, paying off a previous investment in an on-premises phone system can make sense.

Businesses that fit this model could have some of the following characteristics:

  • One location (versus multi-location)
  • No remote employees
  • Minimal need for mobility
  • Minimal growth goals or staffing fluctuations
  • Primarily in-person/walk-in business and communication needs
  • Don’t offer technology-based product or services

Cloud-based phones aren’t the right choice for everyone. While there are always disaster recovery disadvantages to on-premises phones compared to UCaaS, some organizations don’t need the functionality and features of cloud communication tools.

The key takeaway? On-premises solutions tend to be very static.

If your business's need for communication tools and phone lines are almost definitely not going to change for the lifetime of your on-premises phone system, you may have a business case to stay with what you have.

Is a Cloud-Based Phone System Right For Me?

Is the cost of remaining with on-premises phones higher than making the switch to cloud-based solutions?

Many organizations find the opportunities for process improvement and transparency associated with Unified Communication tools beat out their reasons to stay premise-based. If you’re still not sure whether you’re a better candidate for cloud phone service or an on-premises deployment, consider how your organization stacks up against the following questions:

  1. Do I need features that support employee productivity, mobility, and collaboration?
  2. Is there a need or desire to integrate our phones with email, instant messaging, and software applications?
  3. Does your organization require multi-site communication tools or flexibility for remote workers?
  4. Is there reason to believe you’ll need to add phone lines or scale service down over the lifetime of your premise-based phone system?
  5. Does your organization stand to lose out on revenue or damage customer relationships if your on-premises phone system suffers extended downtime?
  6. Are your monthly billing statements confusing or hard-to-decipher?
  7. Do you need simpler maintenance and management of your communication tools?
  8. Are you hoping to deliver an improved customer experience, including seamless multi-channel communications?

Ditch Your On-Premises Phone System: When Change is the Best Choice

Change is never easy. But, when you’re forced to pick between a clunky on-premises phone system that’s difficult to scale and doesn’t offer the features you need, it’s important to understand what you could be missing out on.

Your legacy PBX may have several years left before the equipment fully depreciates (at least, according to your accountant), but what’s the opportunity cost of a communication platform that doesn’t help your employees collaborate and access the information they need from any device?

If you’re not sure whether your organization is best served by on-premises or cloud-based phones or where a UCaaS switch fits into your technology roadmap, ask an expert. Atlantech’s expert representatives can provide unbiased insight into how much you could save (and the benefits you can gain) by switching to UCaaS. Click here to start a conversation today. 

10 questions to ask before you buy UCaaS

Tom Collins
Post by Tom Collins
November 2, 2017
Tom is the Director of Enterprise Sales & Marketing for Atlantech Online. He has over 20 years of professional experience in the Internet Service Provider industry and is known for translating technology into positive results for business. A native of Washington, DC, a graduate from University of Maryland (degrees in Government & Politics and Secondary Education), Tom is also a five-time Ironman finisher.