- A cloud-based phone system is a phone service that allows you to make calls over the internet and store data in the cloud.
- These systems are cost-efficient and reliable, but only if you have a strong internet connection.
- Cloud telephony systems are popular, but they are not the right choice for every business.
Among the many types of phone systems available to small businesses, cloud-based systems are an increasingly popular option, offering reliable service, low costs and plenty of business-friendly features, but it may not be right solution for everyone. Read on to learn more about cloud-based systems and how to decide if they are right for your business.
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What is a cloud-based phone system?
A cloud-based phone system is a phone service that allows you to make calls over the internet. It's also called cloud calling or a Voice over Internet Protocol (VoIP) phone system. One of the ways that a cloud-based phone system works differently than traditional analog phones that use copper wires or optical fibers to make a connection between two callers is that it can store data, which is hosted in one or more offsite secure data centers.
Cloud-based phone systems can be employed using many devices, such as traditional phones with adaptors, smartphone apps (such as Google Voice), computer calling software, or VoIP-enabled phones. An example of a cloud-based phone system is hosted PBX, or private branch exchange. All data is stored and accessed via the cloud, which saves you time and money by allowing you to easily update and protect your data.
How do cloud-based phone systems work?
Cloud-based phone systems break your calls into small digital audio packets that are sent as data via the internet to the recipient on the other end of the call. For example, if you are calling a regular phone number, the signal is converted to a regular telephone signal before it reaches the recipient. A cloud-based PBX is used to route the call through SIP trunking. [Read related article: What Is SIP Trunking? Do You Need It for Your Business?]
Cloud-based phone systems can be used by a variety of methods, making them available for anyone with an internet connection to use. You can make cloud-based calls via:
A traditional phone with a VoIP adaptor. With an adaptor, you can use a regular landline phone to make calls over the internet. The adaptors plug into a phone socket in the wall or directly into your router.
A computer (i.e., a "softphone"). There are many programs or applications available that will let you make voice calls over the internet, including Skype, Google Voice, Apple Facetime, and more.
A smartphone. With your smartphone, you can download apps such as Google Voice or Skype to make internet calls.
- A dedicated VoIP phone. These look like traditional analog phones but connect directly to a computer network rather than a phone line.
Pros and cons of cloud-based phone systems
Cloud-based phone systems are becoming popular as businesses become more comfortable using digital and internet-based services, but it is still important to assess all aspects of cloud-based phone systems before deciding if they are right for your business.
Pros of cloud-based phone systems
As with many cloud services, the main benefit of cloud-based phone systems is their low cost. Because all of your calls are conducted through the internet, you are only responsible for the cost of your internet use, rather than for your call minutes or phone service, as you would be with a traditional phone system, which charges extra for features like voicemail or auto attendant. Most cloud-based systems offer major features included with your phone service, so you only have one monthly cost for your communication needs.
Another main draw of cloud-based phone systems is their reliability. Because most businesses are reliant on communicating with customers and other outside parties, having a reliable line is vital. Cloud-based phone systems are hosted in multiple locations, which means that you and your data are protected even if a server fails. This is referred to as geographic redundancy and it is highly effective in helping businesses avoid service issues and downtime.
Cloud-based phone systems provide almost unlimited flexibility, making them an attractive option for businesses with remote workers or frequent travelers. A cloud-based phone is able to route calls to your VoIP-enabled phone no matter where you are, provided you have an internet connection.
If your company is growing, cloud-based phone systems offer flexibility in scaling. A cloud management system allows you to easily add phone lines, extensions and advanced features as needed, without having to pay for professional installation or purchase additional equipment. Updates and maintenance are also carried out directly in the cloud, which saves you time and money and helps avoid communication downtime.
Cons of cloud-based phone systems
While cloud-based phone systems are popular, there are some drawbacks that may make them unsuitable for your business.
The primary con of cloud-based phone systems is that, because they are internet-based, they are susceptible to internet connectivity issues and outages. If you have spotty or unreliable internet service that frequently drops or fails, a cloud-based system may not be right for you. A strong, consistent internet signal is vital to a cloud-based phone system functioning properly.
Being internet-based also raises questions of security. Cloud-based systems can be susceptible to malware and hacking without proper precautions and safeguards. Be sure that your internet connection is protected and that your cloud system provider has security measures in place to further protect your data.
If you are concerned about emergency service access, it is important to note that some VoIP and cloud-based phone systems may not guarantee 911 calling support. This is because cloud-based phone systems are not tied to a single geographic location like traditional phones are, which makes it difficult to accurately trace a 911 call.
Thus, VoIP and cloud system providers must have Enhanced 911, or E911, enabled, which has customers set a physical address that shows up when they dial 911 on their IP phone. However, not all cloud or VoIP providers offer this service because to do so, they must cooperate with traditional phone companies that control access to the public telephone system and 911 operators, which can be a complicated issue, because cloud-based phone system providers and the public telephone systems are direct competitors.
The best way to find out if a VoIP provider offers 911 service automatically, if it must be activated or if it is not supported at all is to ask the provider directly.
Finally, if your business already has significant traditional telephone equipment, it can be very costly to purchase adaptors to turn them into cloud-enabled phones, or to buy all new IP phones. Consider the equipment you already have and see it makes financial sense for you to pay to convert your existing system or purchase a whole new service.
Features to look for in a cloud-based phone system
A major advantage of a cloud-based phone system is the plethora of features that generally come included in your package. Here are the key features you should look for:
Voicemail. This feature generally comes standard with cloud system packages and allows you to receive messages from missed calls.
Messaging: Also known as team collaboration, this feature allows multiple collaboration methods such as screen sharing, file sharing, document editing and conferencing.
Do not disturb. Do not disturb sends all incoming calls directly to voicemail without the phone ringing.
Caller ID. Caller ID enables you to see who is calling. Caller ID displays the number of the caller, while caller ID with name shows you the number and name of the caller. This can be helpful to identify which calls are important and which calls are spam.
Ring groups. Ring groups are a useful feature for teams who answer calls from the same group of customers. Any time the phone rings for that team, each member will be notified.
Call forwarding. This feature enables users to send calls to another number.
Online management. Most cloud-based phone systems are managed via an online portal or management system wherein the administrator can add users, set numbers, create ring groups and see call data. Users can check voicemail, access company directories and set call-forwarding routes.
Unified communications. Unified communications, also known as a single cloud solution or complete cloud platform, enables real-time collaboration and allows a business to combine all of its communications services like its CRM, live chat, analytics and more into one application.
Voicemail-to-text or email. Voicemail-to-email, or voicemail-to-text, is a useful feature that transcribes audio voicemails into easy-to-manage emails or text formats.
Automated attendant. An auto attendant automatically answers phone calls placed to your business and directs callers to whoever they are trying to reach.
How to decide if your business needs a cloud-based phone system
There are many factors to consider when deciding whether a cloud-based phone system is right for you, whether you are considering switching systems or starting completely fresh. Here a few key initial things to consider:
Equipment. Do you already have IP phones that can easily be added to a cloud system? Or are all of your phones traditional and will require a desk phone adaptor? Your existing equipment can have a big impact on costs, so consider carefully.
Costs. Equipment aside, you need to determine what features you pay for under your current system and if there are features you do not need and what features you like with your new system. You will need to check whether these features are included in your package or if they must be purchased as add-ons.
Reliability. Cloud-based phone systems are entirely dependent on the internet. If you do not have a strong and secure internet connection, do not choose a cloud-based phone system. A traditional landline may be the better option.
Your business. If you own a small or medium-size business, a cloud-based phone system can be a good option for saving money on installation and maintenance, as well as providing continued flexibility that allows your communication system to change alongside your business.
Control. If you are someone who likes to have or requires complete control of your system and data, a cloud system may not be the best fit, since calls are routed through a provider and stored via a hosted server. Businesses that deal with sensitive data may also encounter issues with insufficient security.
How to find a cloud-based system provider
When you have decided that a cloud-based phone system is something you’d like to pursue, the next step is finding a provider. Each provider will offer different features and packages at different price points, so you must evaluate which one aligns best with your needs.
The best way to find the right provider is through diligent and thorough research. Read reviews of companies, see if any offer free trials, and speak to other small business owners in your industry to see if they have any recommendations.
Check out our reviews of the best business phone systems. Below are some of the most popular cloud-based services and hosted VoIP providers: