Premise Based and Cloud Phone Systems: A Comparison

With the debate between premise based and Cloud phone systems being brought in light lately, it’s an important that we touch on this subject. While each have their own pros and cons, it’s important to compare both of these systems so consumers can make the best decision for their individual situation. To help make the decision easier, we’ve written this article touching on four essential topics that will give you a full overview so we can begin comparing premise based and Cloud phone systems.


An important topic to consider when shopping for a phone system is the features you’ll have access to. Premise based phone system are ordinarily lacking in this area. Because these systems are built with hardware, they’re typically hard to update and expensive to make changes to. So you may find that premise based phone providers might not offer the calling features you’re looking for.

Cloud phone systems, on the other hand, come with a variety of updated calling features. Because it’s hosted in the Cloud, it’s easier to update these phone systems. If you can think of a calling feature, a Cloud phone system probably offers it. IVR/Auto Attendant, Call Recording and Call Forwarding are some of the most popular calling features available today. If features like these are important to you, a Cloud system is probably the best and most viable option for you.

Startup Costs

Premise based phone systems have more expensive startup costs than a Cloud phone system. Because a premise based system requires onsite hardware, you’ll be responsible for purchasing that along with all necessary equipment and installation.

Cloud phone systems are hosted in the Cloud and thus, don’t require tons of on-site hardware, have very low startup costs. They’re also known to have a very predictable monthly bill. Most Cloud phone systems are charges as monthly fee per user which includes all system updates and maintenance.

However, for some businesses, it may make more financial sense to invest in hardware than pay a monthly fee for a Cloud phone system. Do your research to decide which system makes more sense fiscally.


To grow your business with a premise based phone system, you’ll have to purchase and expand your current hardware. On the other hand, if you need to scale down, you’ll be left with hardware that you’re no longer using. This can become pricy if you find your business constantly scaling up and down.

Scalability with a Cloud phone system is a lot simpler. Because there’s no onsite hardware you simply add or remove users from your virtual phone system. Keep in mind, adding more users usually means an increased monthly bill from your provider for the additional user.


An on premise phone system means just that, it’s on premise. That means that your phone system doesn’t have a lot of flexibility in terms of sending and receiving calls. You’re working with a wired system and thus, you’re limited to calls inside your building.

With Cloud phone systems, you aren’t restricted by wires. The system runs in the Cloud so you can take your communications anywhere with an Internet connection. This truly allows you to take your business calls anywhere.