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Grow Your Business Technology

Should Your Business Switch to Cloud PBX?

image for Bojan89 / Getty Images
Bojan89 / Getty Images
  • A hosted PBX system is a cost-effective and flexible telephony option for your business.
  • Cloud systems offer many features and consistent service.
  • If you do not have a reliable internet connection, however, cloud PBX might not be right for you.

If you're looking for a phone solution for your business, a cloud PBX system might be the one for you. Cloud PBX has become one of the most popular telephony systems on the market thanks to its ease of use and low costs, but it's not right for everyone. Read on to see if a cloud PBX system suits your business.

A private branch exchange (PBX) system is a business-grade telephone network that enables communication both within and outside your organization. A business phone system is different from residential or cell services in that it has additional service offerings, which typically include call conferencing, extension dialing, business-hour settings to route off-hour calls, customer waiting queues and hold music.

Cloud PBX, also known as hosted PBX or virtual PBX, is an IP-based PBX solution provided and accessed completely through the internet. Instead of hosting software on a server, the way digital systems do, cloud PBX hosts all software and data in the cloud.


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Cloud systems have evolved from digital – or on-premise – PBX systems, which are housed in large hardware units that have to be stored onsite and operated by hand. On-premise systems can be very costly for companies because of their size and requirements for a special storage facility and manual operation. Companies are also on the hook for expensive regular maintenance, since the machines are complex and require professional attention.

Digital PBX phone systems are monitored through the use of a PBX switchboard. The switchboard processes the connections between telephones to facilitate a call, provides accounting information and controls many business-grade phone system features.

Cloud PBX takes all the functionality of a digital system and moves it into a virtual space, eliminating the need for hardware and other equipment, which saves you money on installation and maintenance. Hosted PBX systems have become popular largely because they provide all the functions of digital PBX and more without clunky, costly equipment and are easier to use.

Cloud PBX is an internet phone system where the provider is responsible for both housing the PBX and providing your phone services. Your desk set will plug into a router, and any calls, signaling, and features are handled through a server at the provider's physical location.

The PBX is responsible for routing incoming calls, enabling call transfers to other extensions, and running all of your phone system's communications features, such as call waiting and voicemail. Your system can be managed through the use of a call flow, which is a collection of features and rules you assign to a given phone number.

 A call flow helps you manage how your calls are routed, which is especially helpful if you use the same mobile phone for both personal and business calls. A call flow configuration lets you control when, where and how calls come in through your cloud number. This means that you can set certain business hours for receiving calls, see the location of the caller, or control who the call goes to. The call flow interface will vary by provider, but most offer similar customization options for your hosted PBX solution.

For example, you can specify which phones you or your employees are using, in what order those phones should ring (parallel or in a sequence), and rules of call handling should someone not answer.

The greatest benefit of a hosted cloud PBX system is its low cost. Because hosted PBX is provided as a service, you are not required to purchase any physical equipment whatsoever – you can purchase VoIP-enabled desktop phones if you would like, or have your system go through mobile phones. The lack of equipment also helps you save on installation and maintenance costs. All of your services and features are hosted fully in the cloud and maintained by your provider, which means that the cost of your phone service covers regular updates and maintenance. Most providers offer online portals through which you can manage your phone lines, updates and maintenance needs.

A hosted PBX solution also gives you significant control over how much you pay, since you will only pay for the features and number of phone lines that you need.

Cloud-based PBX systems offer significant benefits in terms of features and flexibility. As the world moves increasingly to flexible and nontraditional working environments, it has become a large business priority to be reachable anywhere, anytime. Hosted PBX systems allow you to conduct business calls via your smartphone or computer as long as you have an internet connection, and your employees can customize their phone settings to whatever works best for them, such as having all their calls routed to both their phone and computer or to their desk and mobile phones.

Cloud PBX also provides features for modern business, such as texting, voicemail with transcription, call recording and integration with vendor services. Each system varies in its offering of features, so you should explore what features you think your business will need and shop around to see what features each vendor includes and which you must purchase as add-ons. [Read related article: Choosing a Business Phone System]

For many businesses, phone communication is the backbone of their day-to-day activities, so reliable service is a must. Cloud PBX systems provide superior service to that of traditional public switched telephone network (PSTN) lines due to their being hosted on the internet and the several backup methods they have in place.

Traditional phone services use copper cabling to transfer phone calls, which are vulnerable to natural disasters, vandalism, and general wear and tear, all of which can mean extended outages of your phone service. Cloud PBX systems use the internet, which means your phone service is as strong as your internet connection. Because all of your information is in the cloud, your system should experience little to no downtime in the event of an issue. Geographic redundancy is one of the most common reliability measures: This is when the provider has several servers in different physical locations. Each server contains identical information, so if one fails, another can take its place almost instantly. 

Although hosted systems seem to be the most popular option in the current market, a cloud PBX system may not be the right option for your business.

If you have a poor internet connection or cannot properly secure your connection, cloud PBX may bring you more frustration than it's worth. The system is entirely dependent on the internet and will not function properly without a strong connection, so if your internet service provider (ISP) is unreliable or frequently drops your internet service, hosted PBX may not work for you.

Additionally, due to their internet-based nature, cloud PBX systems are more susceptible to security breaches than digital systems. When speaking to vendors, be sure to ask about their security measures and how they protect your data. You should make sure they have both physical and network security, SIP endpoint security, toll fraud monitoring and detection, and a dedicated monitoring system that alerts you to any suspicious activity.

Kiely Kuligowski

Kiely is a staff writer based in New York City. She worked as a marketing copywriter after graduating with her bachelor’s in English from Miami University (OH) and is now embracing her hipster side as a new resident of Brooklyn. You can reach her on Twitter or by email.