4 Reasons Why Hosted PBX Solutions Make Sense

A lot of companies have started to take a hard look at hosted PBX solutions and for good reason. The basic idea of a hosted PBX solution is that your phone system features are provided to you from a service provider over your IP network. Most of the time the provider will supply you with IP phones and probably some switch equipment for your offices. However the service provider is now hosting, managing, and maintaining all of your functions and features from a cloud environment or essentially their data center. Typically the cost of the physical phone and supplied equipment with the managed solution and features are provided to customers at a monthly cost. This eliminates the need to purchase a phone system and have to manage it in-house yourself. Here are some key reasons why this type of solution can make sense for a company:

1. No Upfront Capital Cost

When moving from the old model of buying a new phone system to utilizing a hosted PBX you remove the large capital cost expenditure needed when having to purchase very expensive phone equipment. The technology in telecommunications moves very fast and typically a new phone system has lost 50% if not nearly all of its value within the first 12-18 months of ownership. When utilizing hosted PBX solutions you don't need to purchase equipment as it is usually provided in your monthly cost. Due to the current economic climate it has been hard for some companies to justify a large capital expense. Hosted solutions offer a way to become more productive and gain access to new technology without the need for a large IT budget.

2. Avoids Technology Obsolescence

As stated previously, technology moves very fast in IP Communications. When a company purchases a hosted PBX solution they typically have new technology, features, and updates made available to them as those new features are released in the industry. This prevents the need for costly upgrades or new equipment when managing a phone system in-house. Since a hosted environment lends itself to making features available over the network, most users can access new features themselves simply through web portals or administrative tools making the deployment of new technologies or features much easier. This avoids the cost of having service technicians come out on site to make changes to premise based PBX equipment. As technology changes so does the hosted solution thus always keeping users up to date with the latest tools the market has available and making scalability in an organization much easier to handle.

3. Reduces IT Overhead and Burden

In many companies the management of a phone system or PBX will ultimately reside with their IT staff. This might be further augmented by the use of PBX or 3rd party phone vendor who would help support and manage a phone system. With many IT departments being downsized, overburdened, and focused largely on application or internal IT support, the burden of having to manage a phone system becomes time consuming and costly. When companies move into hosted PBX solutions they reduce a large amount of this burden from an IT staff and also avoid the service/maintenance costs of using third party phone vendors. Since most hosted solutions offer on-going support and management, a company's IT staff can focus on more profit-centered issues. When your current carrier can offer a hosted PBX solution you eliminate any finger pointing when there are phone issues as to whether the issue is network based or equipment based. Now there is only one contact to call who is accountable for everything.

4. Offers Greater Flexibility

Another reason that hosted solutions make so much sense is the greater flexibility they offer companies when dealing with change. In this economic climate I find that many companies are subject to market changes that can greatly affect their staffing, size of network, or even where they need to work. When companies utilize a hosted PBX solution their voice network can essential move with them meaning it allows people to work remotely with greater ease because they can simply take their IP phone with them. They will still get all of their same features over the Internet much like they would in their office. It also means that changes to the system can happen immediately like changing hunt groups, adding or deleting users, or changing auto attendants or messaging. In the past these changes would have to be programmed into existing equipment and would take time or may involve additional cost. When using a hosted solution, a company's staff can be more mobile, features and functionality can change on a dime, and usually these changes can be made by less technical staff through on-line administration tools. It moves a company's voice network into a more outsourced model which allows them greater flexibility than having to manage physical assets. The ownership for their system is now an operational expense rather than an physical asset needing to be managed. This becomes a benefit to companies experiencing or anticipating changes to their operations.

New Year....New Goals

It has been a while since the King of Telecom has written a post. So as it is a new year I am setting a goal of writing at least one new post (article) per month. For many companies the new year means planning their own goals and reviewing the services they have in place. Your goal as it relates to telecommunications should be to try and improve your overall environment in this new year.

One easy way for companies to audit their network services is to gather their current bills and do a simple inventory of what they have in place. For instance, a company might have one vendor for voice, one for data, and lastly a maintenance contract for their phone equipment. It is a good idea to collect these bills at the end or beginning of each year and perform a simple audit.

First, get an idea of all the services you have in place and create an inventory of your network assets. It's not a bad idea to create a network map if you don't already have one. Include on your inventory a breakdown of monthly fixed costs as well as the variable usage costs for the services with associated rates. Also, list any taxes or fees associated with your services. A simple example might look like this:

3MB Dynamic T1 Circuit - $750.00/month
23B + D channels (PRI) - included
Unlimited local calling - included
3MB of dynamic bandwidth - included
100 DIDs - $10.00
1 Toll Free Number - $5.00
Router - included
10,000 minutes of LD per month with $0.025 overage - $250.00/month
Conference Calling - $0.22/minute - current billing $22.00
Cable Modem (for back-up internet) - $90.00
PBX Maintenance (broken down by monthly cost) - $200.00

Taxes: $80.00/month

Total Monthly Costs: $1,407.00

In this example you can see that the company is paying a little over $1400/month for their voice and data services. Maybe the company is looking to increase bandwidth but wants to reduce overall costs by %20. We can clearly see that one way to do this is to take advantage of the cable modem for more bandwidth by making it a primary source of Internet and maybe reducing our T1s to 1.5 MB (essentially a single T1) from 3.0 MB (essentially two T1s). This way the T1 would only be used for voice and the cable modem would be used for primary Internet. Also if the T1 was dynamic it could be used for back-up Internet as we would only need a minimum source of Internet bandwidth for back-up or redundant purposes. This would probably reduce our current costs by $300 or 21%.

Clearly, by taking a simple inventory of what we had in place and by reviewing our current costs we can easily determine where to focus cost containment activities or where we might need to improve services. Keep in mind that taking a simple audit of your network assets also allows you to identify wasteful spending and to consolidate vendors where possible. With this information we could also have other companies or consultants quickly review our environment and quote alternate solutions that could offer benefits.

Lastly, it can be a good idea to review this information with your current vendors and see if they can offer any ideas or solutions on how to improve your current cost structure or services.

I wish everyone a happy and successful new year. Use these exercises to help improve your bottom-line.

Regards,

Harris Von Essen
"King of Telecom"