What is a Cloud PBX in 2021?

what is cloud pbx

Before 2020, only about one in five employed Americans worked from home. As of December 2020, 71% worked from home or remotely. And 54% of those say they’d like to continue working from home even after the pandemic is over, according to the Pew Research Center

If you’re a call center or business that has always operated with all employees under one roof and one phone system, what do you do to meet employees’ demand for workplace flexibility but also keep everyone connected on the phones?

You turn to a cloud PBX. 

This virtual, cloud-based phone system operates the same as a traditional PBX but with huge cost-saving and maintenance advantages. Cloud PBX phone systems eliminate the need for businesses to invest in costly on-premise phone servers. They can be set up in minutes and reconfigured to allow for additional phone lines, roles, and call flows equally fast. 

Have you been considering a cloud PBX but aren’t quite convinced enough to make the switch? It’s a big decision. That’s why we’re explaining:

  • What a cloud PBX (or hosted phone system) is
  • The advantages and disadvantages of moving to a cloud-based phone system
  • How a cloud PBX compares to a traditional PBX, 
  • And what to expect when preparing to set up and maintain a virtual hosted phone system. 

Read up for yourself and we have no doubt that you’ll see that switching to a cloud PBX is a great decision for your organization.

What is a Cloud PBX?

First, let’s review what a regular PBX is: PBX is short for a Private Business Exchange, which is the internal phone network your business or organization uses to call individual extensions within your office (or across remote workspaces, as has become more common lately!). 

Your IT department has likely connected your organization’s PBX to the public switched telephone network (PSTN) or a Voice over Internet Protocol network so you can make external calls as well. The PSTN is a fancy name for all the circuit-switched telephone wires that connect households and businesses across the globe. VoIP is the same thing… except that all phone connections are made over internet connections. You probably just call both the ‘phone system!’

There are a few definitions for what Cloud PBX is, but to keep it simple: Cloud PBX is a virtual phone system that provides a secure and reliable business phone system through the internet. Some other names for a Cloud PBX are:

  • A hosted phone system
  • Hosted PBX
  • Virtual phone system
  • Virtual PBX
  • VoIP phone system
  • VoIP PBX
  • Online phone system
  • IP (Internet Protocol) PBX

All of these names allude to the fact that a cloud-based private branch exchange is a phone system that’s exclusive to your business and uses soft phones and the Internet to connect callers. There’s still hardware powering a cloud PBX system, but that server is more often than not located at a remote data center, and not on-premise the way a traditional PBX system must be. Hence the ‘hosted’ or ‘virtual’ moniker for cloud-based PBX systems- A company that specializes in providing business phone services is hosting the hardware and providing phone service virtually through the Internet. 

Not having to purchase and maintain the big machines that power a PBX is a huge plus for many smaller businesses and organizations that don’t have the capacity to fund that kind of capital purchase or the staff to pay attention to it.

Why Use a PBX System?

You may be asking: Why does our organization need a private branch exchange in the first place? Why can’t we just use our cell phones or regular hardwired phones? 

You could use residential phones or smartphones to manage your business’s phone communications, but do you really want to give out your employee’s home phone numbers or cell phone numbers to thousands or hundreds of thousands of strangers? Besides, if you limit your employee’s phone capabilities to what’s available on consumer phones, you’d miss out on many features that streamline business operations including:

  • Call recording: For documenting the content of phone calls for training, legal or regulatory reasons.
  • Auto attendant: For guiding inbound callers or customers to the right person or department.
  • Call analytics: For improving your call center metrics or customer service KPIs by measuring real-time data such as calls answered, average waiting time, average talk time, and more.
  • Call queues: For keeping a customer on hold while you wrap up a previous conversation.
  • Call routing: For distributing calls to the right available person, no matter where they’re located.
  • Call transfers: For transferring a caller to a co-worker who can better resolve the issue the caller had contacted your business about.
  • Software integrations: For automatically sending call and customer data to your CRM, helpdesk, or other productivity tools, thus reducing the possibility of overlooking an important metric or incorrectly entering data by hand.
  • Vanity phone numbers: For presenting a unified way for others to get in touch with your business that is memorable and easy to dial, no matter how many individual phone numbers your business needs at a given moment.

A PBX system also makes it much easier for employees to communicate. With a PBX, they can pick up their phone and dial a simple extension instead of a seven or 10-digit number every time. 

In addition to user features, a PBX can be a more secure way of conducting internal and external phone communications. It’s relatively easy to set up multiple security layers for your hosted phone system by using a session border control (SBC), an SIP firewall and/or security patches to protect against attacks. It’s also easier to regularly change all passwords and disable any unused phone numbers when you have a central control hub through a PBX.

Cloud PBX vs. On-Premise Phone Systems

Now you know what a private branch exchange is and why it’s a good idea for businesses to use one. But what’s the difference between a PBX hosted in the cloud and one hosted on site (on-premise)? Glad you asked. Let’s dive into the similarities and differences between a cloud PBX and a more traditional, on-premise PBX.

Cloud PBX

The main difference between cloud PBX and a traditional phone system is that the hardware for a cloud PBX is not physically located onsite at a business. A cloud-based phone system is hosted offsite at a data server center. The data server center provides businesses’ phone services over the internet and requires no additional equipment at the business. Employees can still use handsets or headsets to place or answer calls, but they can also manage their calls via computer-based call software. 

Even if employees are using traditional handsets to make and take calls, with a cloud-based PBX you’d never know the phone system wasn’t actually on-site. The phone, whether it’s a desk phone or a soft phone, connects to a router. All calls are trafficked through the business’s server and phone software. Phones ring as usual, and as long as you have these features established, callers can leave voicemails, wait on hold, or conference in the same as with traditional phone systems. With the advent of fiber networks and more reliable Internet service, virtual phone systems have become just as reliable as traditional PBX systems in terms of call quality and reliability.

Onsite / On-Premise / Traditional PBX

Meanwhile, the servers and other hardware that power an onsite private branch exchange phone system are located on premise. The business using the traditional PBX owns and maintains all phone hardware themselves. Traditional PBX phone systems require a professional to regularly maintain and update the equipment, including setting up or disabling individual phone lines as employees are hired and leave the organization. 

A traditional PBX can employ the same features as a cloud-based system listed above: call waiting, voicemails, auto attendant, call forwarding, call recording, call metrics, software integrations. Using these features through an on-premise phone system simply requires a staff dedicated to overseeing the phone system, updating it to grow or contract with your staff size, and troubleshooting as needed. Maintaining a traditional PBX requires a lot of time and funds, which is why many companies are switching to cloud PBX systems.

Cloud PBX Advantages & Disadvantages

Migrating to a cloud-based virtual phone system is a savvy move for many businesses, but it has its downsides just like any technology. Here, we’ll cover some of the advantages of using a cloud PBX as well as the disadvantages.

Cloud PBX Advantages

  1.  Scalability: Cloud PBX systems are easily scalable and generally support an unlimited number of users. Adding users (new phone numbers) is instantaneous and only requires a few clicks of a mouse. 
  2.  Lower cost: Cloud-hosted PBX systems tend to be more budget-friendly than on-premises PBX systems because they do not require equipment or ongoing updates and maintenance. Your company doesn’t have to purchase as much equipment as you would for an on-premise network, either. 
  3.  Flexibility: Most cloud-based PBX systems don’t require yearly or monthly contracts. If you decide your business needs a different phone system, it’s relatively easy to change.
  4.  Extended presence: With a cloud PBX system, there is minimal hassle for businesses that want to set their employees up in home or remote offices. Because the phone system operates over the Internet, your employees can be anywhere in the world but operate as one unified call center. All your phone numbers can follow the same pattern, and features such as auto attendant, voicemail and call distribution will function the same for all inbound calls, no matter who is taking them. A cloud-based system makes it easier for businesses to scale beyond physical boundaries and create a larger local, national or even global presence.
  5.  Easier maintenance: Your off site VoIP provider handles the upkeep of your cloud-based phone system. They handle infrastructure upgrades, hardware maintenance, and fixes. Even if there is a problem with their system, your business’s PBX usually won’t have to go offline while they fix it because they will have built several backups and failsafes into their network. Support is almost always 24/7 given the global nature of Internet users, so you will ever have to worry about waiting for business hours to start to resolve a technical issue or get help adding a phone line.
  6.  Simple to update call flows: Call flows are the rules and processes you put in place to direct calls to the appropriate receiver. With a cloud-based PBX, setting up such processes is easy to do through your phone software. You can change your call routing to accommodate new personnel or roles with a few clicks.

Cloud PBX Disadvantages

There are a few disadvantages to a hosted phone system. Here are the main two:

  1. High-speed Internet is a must. If your business is located in an area without high-speed internet, your call quality may suffer if you rely upon cloud-based services. Virtual phone systems depend upon reliable, strong Internet service to function well. If your Internet provider frequently cuts off service, a traditional PBX that provides more consistent phone service may be the way to go.
  2. Be vigilant about security: A cloud PBX system can be more susceptible to security breaches than a server-based system because it’s connected to the Internet, and we all know there is no shortage of bad actors looking to scam others online. Your business should work with your hosted phone service provider to ensure you’ll both implement multiple layers of security measures such as a session border control, SIP endpoint security, toll fraud detection, regular password updates, firewalls, and suspicious activity monitoring.

Onsite PBX Advantages & Disadvantages

If you’ve considered the above advantages and disadvantages of a cloud PBX and are still considering an onsite PBX, here are the pros and cons of this more traditional phone system:

Onsite PBX Advantages

  1. Better security: Traditional PBX systems don’t rely upon the Internet to transfer data. Instead, as we explained above, an onsite private branch exchange connects to the external world through the public switched telephone network. This is the same way a residential landline connects to other residences and businesses. It’s much more difficult for someone to hack into a traditional PBX and attempt to commit toll fraud, steal data or hijack calls. 
  2. More company-based control: Your company will have more control over the functionality of a traditional PBX. You can customize your own phone system to the nth degree because you own the equipment, the software, and the processes that make it work. This will require a dedicated staff of phone service professionals, but if you’re a larger company with specific phone system needs, the staff and time outlays could be worth matching your phone services to your business needs in every way. 
  3. Better option in areas without high-speed Internet: If your business is located in a rural area or a country that does not yet have access to high-speed Internet, an onsite PBX is going to offer you more reliable and consistent call quality.
  4. Internal cost: All internal calls are free because your company owns the internal phone system. You will only pay for calls placed outside of your business.

Onsite PBX Disadvantages

  1. Relatively high cost: Although internal calls are free, the overall price of purchasing and maintaining an onsite PBX (plus the cost of those external calls) is cost-prohibitive for many small businesses and startups. One source estimates that the cost of hardware, phones, setup, licensing fees and monthly service costs start around $6,500. Adding and removing lines can be expensive, especially if your company is in a phase of rapid growth. If you’re expanding offices, you’ll need a completely separate PBX for each location. 
  2. Minimal flexibility: Once you’ve set up your traditional PBX, changing it isn’t impossible, just expensive. Much of the hardware and servers for a PBX are large and clunky. They require their own special storage area, and they often determine, at least in part, the layout of the rest of your office.
  3. Maintenance: Because you’re responsible for all hardware, your company must update configurations, security patches, and other fixes every time a change is needed. That requires staff time and money.

Getting Started with Cloud PBX

Technology Requirements

High-speed internet is a must for using virtual, cloud-hosted phone services, but how fast is fast enough? Part of that answer depends on how many extensions or agents will be simultaneously using your phone system. In general, we recommend an Internet speed of 150 kbps per concurrent call. 

You’ll need to dedicate a CPU and a certain amount of RAM to your phone system. Again, this depends on how many phones you will need to host. We recommend one CPU core and 1 GB of RAM for up to 50 extensions. Talk with your hosted service provider for their recommended system requirements.

How to Set Up Cloud PBX

Once you pick your top choices for a virtual phone services provider, what does the process for setting up your solution look like? Like any smart consumer, you should gather a few quotes/estimates from a few different providers. You should also research different use cases for cloud-based PBX systems to get an idea of what your system setup will look like. 

Sometimes, setting up a cloud PBX is as simple as setting up your account online. Sometimes, setup is a more custom affair that involves plenty of account verification, fraud prevention measures and call quality testing. In general, expect to go through these steps when setting up your cloud PBX:

  1. Purchase/rent your required number of VoIP phones.
  2. Get your preferred phone numbers.
  3. Register your phones and numbers to your cloud PBX.
  4. Enable emergency calls.
  5. Start making and receiving calls!

Cloud PBX Management

During implementation, you’ll want to ask your hosted phone service provider about how you’ll work together to manage your cloud-based PBX on an ongoing basis. Some questions you’ll want to ask them are:

  • Which tasks should your organization be able to manage on your own?
  • Which issues should you try to troubleshoot yourself, and which ones should you immediately ask for help with from your provider?
  • How often should you expect to have to work with your provider? 
  • Does your provider offer 24/7 support, or do you pay for additional help during non-business hours? 
  • How often is the phone system upgraded? Will that involve much downtime for your individual PBX?
  • If the cost of monthly services increases, how much notice will your provider give you?

Hosted PBX or Cloud PBX: Which is Right For Your Business?

There are a lot of factors that go into the decision to switch to a virtual, cloud-based private branch exchange. The advantages of a cloud PBX include better scalability, lower cost, more flexibility in setup and configuration, dedicated tech support, easier maintenance and simple process updates. But cloud PBX systems also come with the disadvantages of a reliance upon the consistent local internet service for quality call service, and greater security risks. 

For most businesses, however, the ability to set up a virtual phone system and start receiving calls in minutes outweighs those drawbacks. AVOXI is one provider that can set up your business with a reliable cloud-based PBX in a few easy steps. AVOXI makes it easy to get business phone numbers anywhere you need them in minutes. There are no setup fees or minimum contracts, and AVOXI’s virtual PBX service includes more than 20 VoIP features like call recording, voicemail, auto attendant, and voicemail-to-email at no extra cost. Your business can be talking with potential clients from more than 170 countries for an affordable price. 

For flexible and affordable international virtual phone services, contact AVOXI today.