Is a cloud hosted or on-premise IP PABX best for your business?


For most businesses their phone lines are their lifeblood – critical to winning new business and keeping existing customers happy, and essential for keeping staff in the loop, wherever they are. Choosing the right phone system is therefore a very important decision.

Increasingly, organisations of all sizes are opting for an IP-based phone system over a traditional PABX, in order to keep call costs to a minimum.

But which is the best option – a cloud hosted or an on-premise IP PABX?

An on-premise system offers the benefits of VoIP with the reassurance of having physical equipment on-site that you see and touch. Some owners and managers still find having a piece of equipment on site comforting – sometimes being able to see the lights blinking on the box can be reassuring.

A cloud hosted system on the other hand offers all the advantages of an “as-a-service” offering, with no need to invest in and maintain expensive hardware. This enables you to enjoy the flexibility and cost-effectiveness of a hosted service, without having to worry about all the work required to keep those lights flashing.

Here are some points to consider when deciding whether to choose a hosted or an on-premise IP PABX.


A hosted PABX offers a lower setup cost, as there is no hardware to install (apart from IP-capable handsets) and is charged for on monthly basis. There are also no maintenance costs as these are all taken care of by the provider. There is a risk of fee increases, but this can be mitigated by choosing provider that does not require long term contracts, so you’re free to leave whenever you want.

In reality, telecommunications and IT costs are reducing, and only a hosted service enables you to exploit those cost reductions. An on-premise PABX on the other hand often requires a large payment upfront and will require ongoing maintenance, racking up additional expenses over the lifetime of the hardware.

While some may argue that a large one-off investment trumps making ongoing monthly payments, there are many other factors to consider when calculating the total cost of ownership of a system. This includes maintenance and services costs, how soon the equipment becomes obsolete as technology advances and the flexibility of the solution.


Whether you choose a hosted or on-premise PABX, the first step is to evaluate the feature sets carefully to ensure you get a product that meets your needs. With an on-premise offering you do have the freedom to add some features to your system, but these will cost extra.

With a hosted PABX, as your provider rolls out more features or enhancements these are often deployed automatically as updates to the system. These updates are generally free of charge since the cost of ongoing development is spread across thousands of users. Also, a good provider will give customers the opportunity to provide feedback on the features and new functions they would like to see.


A hosted PABX can easily grow with your business. This means you’re not stuck with a phone system that hinders rather than enables your growth. With a hosted service you can also add or remove lines as needed allowing you to adapt rapidly to changes in your market or business faster than with a fixed, on-premise system.

While an on-premise IP PABX is still more flexible than a traditional PBX, as its easier to add or remove virtual than physical lines, you might still end up hitting the upper limits of the hardware you’ve chosen as your business expands. Conversely, you could also end up paying for more than you need in anticipation of future growth.

An argument in favour of an on-premise system is that since the equipment is yours, you can do with it what you want. However, this ignores the fact that this requires specialist technical skills. If you’re tech savvy or have an IT manager on the team this could be an option, but if not it’s best to leave it to the experts.

After all, your focus should be on running the business, not tinkering with technology you don’t fully understand.

Technical Support

As stated above, an on-premise IP-based PABX is more complex to maintain than a cloud-based offering. Looking after a telecommunications system is complicated – troubleshooting and fixing the wide range of potential issues requires specialist expertise. Unless you have those skills in your business, you will need to pay for someone to come on site with inevitable delays. It would make far more sense to use a cloud communications system. Because it is easier to change cloud providers since most don’t lock you into a fixed term contract, it is in their best interest to provide prompt and effective service and support.

Another risk with a hardware-based PABX is the lack of after-sales support. Often once the system is bought, the vendor loses interest as they’re distracted by the allure of the next sale. This could leave you without access to experts who know how your system is set up. With a hosted system, you’re buying a service, so there is always someone available to call who can help change your configuration and who is familiar with your business.

Weighing up these considerations, we believe a hosted phone system is the best for most businesses, whatever their size. That is why Conversant has developed our own cloud communications system.