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Business Phone Systems

If you are a small business looking for the right telephone solution, the choices can be quite daunting. The first step is to choose if a Hosted Phone System or an On-Premise Business Phone Systems is the best fit for your business. Every day, we talk to Business Phone Systems owners about their needs and make recommendations on choosing the right phone system that will provide that perfect balance of cost and functionality. Here is an overview to help you make the right choice before evaluating brands, vendors, features, etc:

Hosted Phone System

A hosted phone system is a pure VoIP solution. VoIP means that the lines are delivered through the Internet. A hosted phone system means you no longer need physical phone lines since the lines are bundled with the service. This is an excellent option when you have a small number of users, fairly straightforward requirements, and would like to keep the purchase cost and ongoing support costs down. In this solution, you just purchase the phones and everything is else is provided in the service.

On-Premise Phone System

On-Premise phone systems generally provide more features, control, flexibility and scalability. Most systems can connect with both land lines and VoIP lines. This obviously means you need to buy your lines separately. This is a great option for businesses with more users, complex feature requirements, line redundancy and scalability. With a premise base Business Phone Systems, in addition to the purchase price, there are ongoing maintenance and line costs.

Comparison Chart: Hosted vs. On-Premise Phone System

Item Hosted Premises-based
Features Good Excellent
Self-serve User Management Yes Yes
Installation & configuration Simple Complex
Extension Mobility Yes Yes
Remote branches and teleworkers Yes Yes
Disaster Resilience Easy Complex
System Upgrades Free Extra
Maintenance Free Extra
VoIP Provider Flexibility None Yes
Telco Land Line Support None Yes
Application Integration (CRM, etc) Limited Flexible
Upfront Cost Lower Higher
Monthly Cost Higher Lower


When considering both solutions, Business Phone Systems should consider feature requirements, customization needs, scalability, redundancy, support, and total cost of ownership. To learn more about Hosted and On-Premise Business Phone Systems , please check out our detailed comparison post.

Kashan Chaudhry is a senior telecom consultant and partner at VoIP Superstore and RingOffice. He is based in Toronto, Ontario and enjoys helping business improve customer service, close more sales and save telecom costs. If you need help determining which solution would be the best fit for you, contact us for a free consultation.

2 Responses so far.

  1. We are a community bank looking to have an on premise VOIP system.

    If you provide services for purchasing and setting up on premise VOIP systems, please contact me.

    Thank you.

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