Market musings

How to Know When PBX vs. VOIP is the Wrong Question

by Nina Quasebarth
August 11, 2017

Business communications strategies have changed as email, the web, texting, and social media take an increasingly important role in staff and customer communications. However, the telephone is still an essential business tool.

Nothing is more efficient or more compelling than the one-to-one conversation, and the telephone is the most efficient tool to exchange information. A telephone call provides faster and more versatile communication than other digital media, and a single phone call can resolve an issue in a fraction of the time it takes for a lengthy email exchange. For small to medium-sized businesses (SMBs), the challenge is finding the most versatile, cost-effective telephone system, which usually comes down to a discussion of PBX versus VoIP.

Given the evolution of new mobile and unified communications technologies, perhaps considering PBX versus VoIP is the wrong question.

Understanding PBX vs. VoIP

PBX, or Private Branch Exchange, has been the dominant business telephone system for decades. PBX is designed to share telephone lines and route incoming calls, automating the old-fashioned manual switchboard. PBX formed the foundation of the public telephone system for more than a century and as technology evolved, so did PBX telephony. The latest innovation is the use of IP-based PBX using internet protocols. By 2008, more than 80 percent of new PBX installations were based on IP technology.

For business users, installing PBX systems has traditionally made sense. A PBX system is installed as a proprietary phone system in which the organization owns the switching system, the wire, and the handsets. In the early days, this was less expensive than leasing from the telephone company but with the coming of IP PBX, the rules have changed. By converting to IP technology, IP PBX calls now become part of the company’s data network. Digital calls are routed between users within the company and external phone lines using digital data exchange. IP PBX also makes it possible to mix traditional PBX phones with newer voice over IP (VoIP) communications lines, making it an ideal way to transition to VoIP.

The Attraction of VoIP

VoIP is growing in popularity for business users because it offers lower cost and greater flexibility. VoIP allows you to combine voice, video, and data over a single enterprise network so you don’t have to operate a separate telephone system. With VoIP, you can integrate telephone services with video conferencing, chat, email, file transfer, and other services.

In terms of cost, PBX typically requires from $800 to $1,000 per employee to install. In comparison, you can install a VoIP system for as little as $2,000 for five employees. Both IP PBX and VoIP can be offered as hosted services from cloud providers, which offers some savings, but you still need to pay for handsets and the network infrastructure.

Many SMBs are adopting VoIP in order to get what they consider free telephone services. Because VoIP uses the internet protocol, calls can be placed anywhere in the world over the internet. Software and services such as Skype thrive on the notion of free internet calling, although as with all things, you get what you pay for. With “free” internet telephony you have no technical support and no guarantee of quality of service. For business users, the notion of using VoIP for free telephone service may look appealing, but the risks clearly outweigh any cost benefits, which is why businesses are willing to pay for a VoIP service provider.

However, assessing PBX versus VoIP as the best phone strategy for your business may be asking the wrong question.

You can get the same functionality for a fraction of the cost of a dedicated IP-based phone system, with the added value of mobility, if you take advantage of smartphones.

The Argument for Mobile Telephony for Business

More businesses are going mobile, especially as more employees are spending more time out of the office. Industry analysts estimate that telecommuting has increased 159 percent since 2000. In 2016, 43 percent of workers spent some time out of the office. And the number of days working outside the office has increased as well. In 2012, 34 percent reported spending less than one day a week telecommuting, but by 2016 only 25 percent spent less than a day a week working remotely.

There are a number of advantages to SMBs to support remote employees. You can hire more qualified employees if you are not limited by geography, and valuable employees are willing to stay longer and work for lower wages if they can have benefits such as working part time from home. However, the remote worker also presents new communications challenges to SMBs. This is where the question of PBX versus VoIP really becomes more one of landline versus mobile telephony.

One of the primary advantages of VoIP is follow me/find me services that reroute digital calls to any device or handset capable of handling VoIP, including smartphones—and people love their smartphones. An estimated 50 percent of smartphone users check their phones when they wake up, and the average consumer checks his or her phone 46 times each day. That’s why 60 percent of businesses have a bring-your-own-device (BYOD) policy, and 14 percent are planning to implement a BYOD policy.

More businesses are opting to bypass VoIP and adopt smartphones for business, because employees always carry their phones so they are always in touch.

Of course, using smartphones to connect individual employees is only part of the strategy. You also need to tie those employee smartphones into a single business phone system. That’s where services like Spoke come in.

Spoke offers the same features as PBX and VoIP, including follow me/find me, call forwarding, smart directories, conference calls, group calls, voicemail, auto attendant, presence, and more. Spoke also includes features such as call priority, context and importance, and integrated calendaring and rescheduling. Because employees are using their smartphones, they also have access to features such as email, text, social media, the web, and other digital collaboration tools. It’s like putting a unified phone system in your pocket for pennies per user.

So, if you are looking at PBX versus VoIP as your business phone options, stop to ask yourself if that is the right question. Would you get more benefit from integrating your team’s smartphones into a centralized business phone system? Of course, your business may still need a dedicated office system, but you can save money, improve access and collaboration, and support remote workers if you make sure that smartphones are part of the telephony infrastructure.

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