10 Hidden Costs of a Premises-Based (PBX) Phone System

Many premises-based phone system (PBX) manufacturers claim that the 5 year costs of their systems are lower than an equivalent Cloud PBX alternative. What the premises guys don’t tell you about is all the extra little hidden costs that come as a result of the limitations of the hardware and software in their systems. This guide will provide you with useful questions to ask your PBX manufacturer to discern if you are getting the full picture on the cost of their system and practical examples of the applications of a cloud based solution.

To help illustrate the true power of Cloud PBX vs. PBX we will be referring to this case study from the ExcelRedstone Managed Services website throughout.

1. Flexibility
How can PBX systems cope with peaks and troughs in demand? They can’t. You have to buy capacity for the peak utilisation which may only occur for a couple of weeks a year but is so critical to your business that you have to pay extra. With hosted you can just pay for the peaks as and when they occur.
Question to ask: Have you sized this system for my peak demand?
As with many businesses, the plumbers in our case study need to work on the go. Whether picking up client queries, manning the phones out of hours, responding to emergency contact or most importantly, calling clients while out on the road before service visits, but they struggled to do this in a professional and compliant manner. A cloud based PBX meant it was possible to complete all this with minimum added cost by utilising a cloud-based unified communication solution that is scalable to the workforce whenever the demand. Read more here.

Site redundancy will add at least an extra system to your costs. Look at how the PBX system handles calls if you lose the equipment room due to flood, fire or electrical failure. Because it’s hosted is in the cloud, your business communications service is always available on multiple devices.
Question to ask: Have you factored in the cost of site redundancy?
It also meant when our plumbers found out about two fraudulent employees not using the Cloud based PBX app, they were easily able to evidence the deceiving activity, bring it to a halt and divert these resources to new staff who could pick up the workload. Crisis management can be as easy as downloading an app when using a Cloud based solution.

3. Running out of capacity
On-premises systems rely on servers for features like call recording that have a finite disk capacity. When you run out of space, you cannot record any more calls. Not great if you have a regulated requirement that necessitates calls are recorded. With hosted, the recording capacity is delivered via cloud storage so you don’t need to worry about on-premises storage capacity.
Question to ask: How many hours of call recording have you quoted me? What is the maximum I can buy? How much will the maximum cost me?

4. The cost of obsolescence
The average lifespan of a premises-based system is about 7 years, mainly due to the hardware going obsolete in that time. You may also discover features your business relies on that are no longer being upgraded, leaving you with a system that cannot meet your future business needs. Cloud is an evergreen platform that continually adds new features that regularly improve your employee productivity.
Question to ask: How old is this product? When will the manufacturer stop developing features for it? Have they stopped already?
Our plumbers use their mobile phones with a specific mobile client that turns personal phones into company extensions for work calls. This client can update as often as it innovates, keeping the company on the cutting edge of communication technology. It reduces hardware costs, increases compliance and means employees are using a familiar device, their own phone.

5. Mobility
Mobile integration with the PBX is often cumbersome and ends up with additional call charges on the PBX trunks with calls being hair pinned in and out of the system.
Question to ask: How is mobility supported on this system? Do calls route in an out of the PBX for call treatment? If they do how much extra will that cost me in trunk calls?

6. Fraud costs
Smaller PBX systems in particular, are prone to fraud attacks that can leave huge bills to be paid by the business who is attacked. With the cloud, your phone system is protected in a highly secure telco network. It’s a bit like keeping your money under the mattress vs. putting it in the bank.
Question to ask: How many times has this type of system been hacked? Does the manufacturer release any data on such occurrences? What happens if I get hacked – do I have to pay all the costs?
It also protects against the risk of internal fraud. With detailed reports readily available online, you are in control and can see how your staff is using the resources provided. In the case of our plumber, he found that two employees were failing to use the company’s new mobile app and were instead phoning clients directly using private numbers. Find out what they discovered and the action they were able to take here.

7. Maintenance costs of the hardware
With PBX systems you need to factor in maintenance costs of on-premises hardware, including all the server hardware that may fail due to spikes in power supply or overheating. With cloud, all the system hardware is located in the telco data centre so you have no direct maintenance costs.
Question to ask: What are the annual maintenance costs of the hardware and software in this system? Will they rise as the system gets older?

8. Integration costs
Need to integrate with a CRM system? This is the most common requirement of a PBX and normally costs you extra to get a system integrator to perform what can be a complex task. With cloud based systems the integration is already done and can be switched on at a moment’s notice.
Question to ask: Which third party systems have you integrated this PBX with? How much will it cost?

9. Performance
The more features you switch on in a premises-based system the more likely it is that your system will need an upgrade to the processor board. Rarely factored in at the time of purchase. That can end up costing you thousands because you are in effect replacing the entire core of the system. With the cloud, your performance never changes with virtually limitless amounts of processor capacity available in the telco cloud.
Question to ask: What happens if the system slows down due to switching on extra features? Do I have to pay for another upgrade? If so how much will it cost me? For our plumbers, this means features like auto-attendant, reportability, caller ID, easy access to the company directory, use of instant messaging and even use of voice or video conferencing to consult with colleagues are not a drain on the companies processing power or resources as it all takes place in the cloud. Updates can easily be rolled out across the app without the need for any physical costly changes to hardware.

10. Management
System management can be costly and is often overlooked. Phone systems need to be maintained. That can cost a lot especially if integrated with other applications/IT services. Outsourced management to a third party will incur charges for a minimum number of service calls per year regardless of use. With the cloud, all your management is performed simply via web interfaces. All remote sites can be easily managed from a central location without a large number of field personnel.
Question to ask: How many man hours per week would it cost to manage my system? How much will it cost to hire an engineer to support this?
Control is firmly in the hands of the user meaning the system works for them. Read even more about how our plumbers have benefited from the cloud-based system here.

You can see other case studies from across ExcelRedstone by clicking here.

To find out more about the RedstoneConnect Virtual Infrastructure Platform, Voice & Video Collaboration click here.