Cloud vs On-premises Phone Systems

Making the right call for your business.

Modern businesses have more options than ever before when it comes to choosing the right technology for a new phone system. Advancements in internet technology mean VoIP (Voice over Internet Protocol) phone systems are as reliable and produce as high call quality as traditional systems. A VoIP system performs in exactly the same way as a traditional phone system, but the calls you make and receive are done so via the internet rather than the traditional wired network.

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However, even when you’ve decided on a VoIP system, you will still need to decide between a cloud-based or on-premises solution. Your decision will come down to the key needs of your business and the budget you can allocate to it. Here we compare the two options to give you a starting point in your decision process.

What is a Cloud-Based Phone System?

A cloud-based phone system is internet hosted and managed offsite. To install a cloud-based system all you need are VoIP phones and a strong internet connection. In most instances, your system is set up, managed and maintained by an external supplier for a monthly fee.


Low Installation Cost
With a cloud based system you don’t need to invest lots of hardware, costly servers or pay labour charges for a complex installation. You simply need to purchase the phones themselves and then budget for the monthly service fee.

Simple Installation & Maintenance
Your provider will not only handle the initial setup of the system but also the ongoing maintenance including any hardware upgrades or software updates so you won’t need to hire or train staff to maintain the system.

Flexible Arrangements
Contracts tend to be flexible with cloud-based phone systems so you avoid the need to commit to long term agreements. In the event of an emergency, disaster or relocation you can simply move to new premises, plug the phones in and continue as normal.

Professional Expertise & Consultancy
Your cloud service provider will be able to recommend the best system for your business’ requirements and can provide ongoing support and advice as your business grows.

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Easy Management
Businesses manage their phone system from web-based portals or dashboards to access reports or recordings. If a business operates from multiple sites they can integrate all their phone systems and manage them from the same location.

Simple Scalability
As your business grows and employees come and go it’s really easy to scale up your system with a cloud service. Costs will increase or decrease on a per user basis.


Higher Long Term Cost
While you avoid big upfront installation costs associated with on-premises systems, the ongoing monthly fees will add up over time and often prove more expensive than buying a system in one go.
Limited Features
The functionality you have access to will vary depending on which provider you choose and you may have to sacrifice some features to get the price you want. An on-premises system can be customised to your exact requirements.

Outsourced Control
Your provider will be responsible for your system but this also means you are at their mercy when it comes to any changes you want made.

Dependant on Internet
The quality of the calls and reliability of the system is only as good as the strength of your internet connection. If it should fail altogether, you could be without phones until it is fixed.

What is an On-Premises Phone System?

An on-premises phone system, as the name suggests, is installed on your premises including a physical Private Branch Exchange which connects all your telephones together. These systems are maintained in-house and all software and hardware will need to purchased.


Cheaper Cost Overall
Once the initial setup is over, there are no more monthly outgoings to budget for as there are with a cloud based system.

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Greater Control
By installing an on-premises system you maintain control over the setup, changes and updates needed. This means you can make changes when you like, provided you have the in-house expertise to do so.

You can create the bespoke system that your business needs without having to compromise based on what the provider can offer.

No Internet Connection
As it doesn’t require the internet, an on-premises system isn’t tied to the quality of your connection which can result in better reliability.


Higher Installation Cost
You will need to purchase the hardware and software and pay for it to be professionally installed. This can be a significant expense all in one go.

Ongoing Maintenance Costs
The system will need maintaining and updating which could be both time consuming and will either mean hiring someone to do so or training existing staff.

No Backup
An on-premises system becomes part of the fixtures and fittings. If you need to move premises temporarily the system won’t be able to move with you. And, should your equipment be damaged, you will need to replace it.

No Support
By taking on an on-premises model you are are also assuming responsibility for procuring, installing, maintaining and updating it.

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