Nearly every Voice over IP provider has a cloud offering these days, but cloud-based VoIP services thus far have failed to gain much traction outside of the small business market. Many IT leaders are eager to forgo traditional landlines but, having been burned in the past by the high cost and limited features of once-standard Centrex services, they are approaching cloud telephony services with skepticism because of concerns about reliability, performance and cost.
Improved service offerings, efforts by traditionally on-premises vendors (such as Cisco Systems) to embrace the cloud, and the overall adoption of hosted applications for messaging and customer relationship management are fueling a rise in interest in cloud-based VoIP among organizations of all types. Here are some considerations to weigh when deciding between a cloud-based service and an on-premises system.
The Pros of a Hosted Service
Organizations that have chosen hosted telephony platforms typically do so for three primary reasons.
Staff expertise and availability: Opting for a hosted platform eliminates the need for trained (and often expensive) staff to deploy and administer the system. Organizations can then free IT staff to focus on other strategic projects.
Speed to market: When IT departments want to bring a new service, feature or capability to the organization, they must buy servers, test the applications, train IT staff to use and manage it, and implement it. But in a hosted environment, the new functionality is loaded and ready to go.
Cost: Cloud services often are cheaper to implement because of the lack of upfront capital investment. Nemertes Research has found that the per-user cost for IP telephony ranges from $439 to $701, depending on the size of the rollout. To wrap those costs into a monthly service fee of about $35 to $55, on average, is appealing to many organizations.
The Cons of a Hosted Service
So why isn’t everyone in the cloud? The reality is that hosted services aren’t ideal for every organization. IT leaders who choose not to move to the cloud often base their decision on three factors.
Cost: A hosted service isn’t always cheaper — especially as deployments scale in size. While upfront costs are higher in an on-premises scenario, the ongoing costs often are lower.
In fact, a Nemertes Research cost analysis of real-world deployments has revealed that once an organization’s total endpoints exceed 2,500 to 5,000, the total cost of ownership for on-premises solutions over a five-year period is lower than for hosted offerings, even when factoring in capital investments and management costs.
Control: Organizations in heavily regulated or risk-averse industries, such as financial services, healthcare and defense, often are the least able to leverage cloud-based services because of concerns about information protection and data leakage prevention.
Reach: There are very strong in-region offerings in most parts of the world, but it’s often difficult to find a hosted provider that can support offices scattered across the globe.
Ultimately, organizations considering a move to a hosted VoIP solution should examine as many alternatives as they can.