Cloud Phone System vs. On Premises Phone System. What’s best for your business?

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Bruce Gibbs
, President of ServiceMark Telecom
presents an honest, common sense approach to explore hosted cloud based telephone systems versus on-premises telephone systems. 









In this presentation we’ll explore the following topics:

  • What is an on premises phone system?
  • What is meant by a “hosted” or “cloud based” phone system?
  • Why consider a hosted, cloud based telephone system?
  • Why consider an on premises telephone system?

What does Cloud and On-Premises Mean?

So what is an on premises telephone system? Simply stated, an on premises phone system involves hardware and software that is located in a customer’s building. These on premises components of a telephone system are commonly referred to as common equipment units, phone system cabinets, servers, and central processing units.

So what is a “hosted” or “cloud based” telephone system? A cloud phone system solution involves hardware and software that is not located in a customer’s building. Hardware and software is provided by a service provider “off premises”.

Several phrases are used for off premises phone systems such as:

In this presentation, we’ll commonly refer to a telephone system provided by an off premises service provider as a cloud based phone system.

Decision Points: Cloud or On-Premises

So why should a business consider a hosted, cloud based telephone system? Cloud based phone systems can be cost effective for small companies if they are willing to connect to the cloud based phone system via the public internet. It’s cost effective because it eliminates the cost of telephone lines. However, there are several possible drawbacks:

Telephone service using the public internet is described as “best effort” with no guarantees.
Vendors can’t control the number of “hops” (or number of routers) that a call has to go through via the public internet, which can result in latency, jitter, hearing bits and pieces of words, and dropped phone calls.

Univerge blue demo










While ServiceMark (like any vendor) can’t control the quality of the public internet, ServiceMark can measure the quality of a customer’s internet service. ServiceMark can install a diagnostic tool to measure a customer’s internet quality as a means of connectivity to NEC’s cloud based telephone system. Call quality can be guaranteed to NEC’s cloud based telephone system by installing a private, managed MPLS connection which is considered a best practice. Obviously, there is an additional monthly cost to install a guaranteed MPLS connection as opposed to simply using the public internet to connect to a cloud phone system.

Univerge blue demo










Cloud based telephone systems provide the opportunity to install a solution with a minimal initial investment. However, it’s also important to remember that a cloud based telephone system requires an ongoing monthly fee that never goes away.

The UNIVERGE BLUE Opportunity

UNIVERGEBLUE Business Cloud Services by NEC provides the opportunity for small and medium sized businesses to deploy technology and feature functionality that historically was only available to large enterprises. UNIVERGEBLUE Business Cloud Services by NEC provides high end Unified Communications, Mobility, and Contact Center functionality for businesses of all sizes. In summary, cloud telephone systems can be cost effective by eliminating the cost of telephone lines by utilizing the public internet. And UNIVERGEBLUE Business Cloud Services by NEC provides the opportunity to deliver big enterprise technology to businesses of all sizes.

While cloud telephone systems are worth exploring for many customers, it’s also worthwhile to explore an on premises telephone system.

  • On premises telephone systems can interface with a variety of different types of telephone services that do not depend on the public internet, and are delivered using best practices that come with an expectation that the service will work and maintain high quality close to 99.999% of the time.

  • Historically on premises telephone systems are very reliable. After the initial purchase price the cost of ownership of an on premises telephone system is very low. Service orders related to fixing and repairing malfunctions are very rare. And current VoIP based on premises telephone systems require less hardware and are even more reliable than telephone systems designed 10 or 20 years ago.
  • Today, on premises NEC telephone systems include Unified Communications, mobility features, and contact center functionality that is affordable for businesses of all sizes!

  • If a customer purchases a quality telephone system from a qualified vendor, it’s likely that a customer will keep and like the telephone system for a long time. ServiceMark customers rarely even think about replacing a telephone system until it’s about 10 years old.

Therefore, since ServiceMark customers keep and like an on premises telephone system for a long time, and on premises telephone systems don’t require a lot of time, attention, and money to maintain, purchasing an on premises telephone system from ServiceMark may make more sense than a cloud based telephone system solution that requires monthly fees that never go away.

ServiceMark: Cloud and On-Premises Professionals

At ServiceMark, we are strong proponents of hosted, cloud based telephone system solutions. We are also proponents of on-premises telephone systems. We are not advocates of technology for technology sake. I can assure you that at ServiceMark we’ll provide an honest, common sense approach to help you discover the technology that is the best fit.

Please contact us at 816-478-2000 or This email address is being protected from spambots. You need JavaScript enabled to view it. to schedule a no cost consultation to determine what is best for you!