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Updated Jun 17, 2024

Which Cloud-Based Business Phone System Is Right For Your Business?

There are lots of options for cloud-based phone systems, but how do you find the right one? Our buyer's guide has all the information you need.

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Kiely Kuligowski, Business Strategy Insider and Senior Writer
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This guide was reviewed by a Business News Daily editor to ensure it provides comprehensive and accurate information to aid your buying decision.

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Among the many types of phone systems available to small businesses, cloud-based systems are an increasingly popular option. They offer reliable service, low costs and plenty of business-friendly features. However, not all cloud-based phone systems are created equal, so how can you tell which one is right for your business? Read on to learn more about cloud-based systems, how to choose one for your business and our picks for the best providers.

Editor’s note: Looking for information on business phone systems? Use the questionnaire below, and our vendor partners will contact you to provide you with the information you need.

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 a cloud-based phone system works differently than traditional analog phones, which use copper wires or optical fibers to make a connection between two callers, is that a cloud-based system can store data. That data is hosted in one or more off-site secure data centers.

Cloud-based phone systems can be implemented via many devices, such as traditional phones with adapters, smartphone apps (such as Google Voice), computer calling software or VoIP-enabled phones. One example of a cloud-based phone system is a hosted PBX, or private branch exchange. All data is stored and accessed via the cloud, which saves time and money by allowing you to easily update and protect your data.

TipTip
Not sure if a cloud-based business phone system is the best choice for you? Check out our article Should You Get A Cloud-Based Business Phone System? to learn more.

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. If you’re calling a regular phone number, the signal is converted to a regular telephone signal before it reaches the recipient. A cloud-based PBX system is used to route the call through session initiation protocol (SIP) trunking. [Read related article: What Is SIP Trunking?]

Cloud-based phone systems are available for anyone with an internet connection. You can make cloud-based calls via the following devices:

  • A traditional phone with a VoIP adapter. With an adapter, you can use a regular landline phone to make calls over the internet. The adapter plugs into a phone socket in the wall or directly into your router.
  • A computer (i.e., a “softphone”). There are many programs or applications that will let you make voice calls over the internet, including Skype, Google Voice, Facetime and more. Learn how to choose a softphone app that makes it easy for your team to get started.
  • A smartphone. Download apps such as Google Voice or Skype to make internet calls from your mobile device.
  • A dedicated VoIP phone. These look like traditional analog phones, but connect directly to a computer network rather than a phone line.
Did You Know?Did you know
Cloud-based phone solutions are just one type of business phone system. Read our guide to learn more about what else is available.

Features of a cloud phone

One of the main draws of cloud-based phone systems is the many features they offer. Analog phones can be somewhat limited in their features, while cloud phones are able to add and update features as they become available. These are some of the features.

  • Unified communications: A unified communications solution consolidates your business phone system, voicemail, instant message or chat, video conferencing and faxing, and can also integrate with email, web apps, social media, and tools like a CRM.
  • Video conferencing: As remote work becomes more commonplace, businesses need reliable and easy-to-access video conferencing solutions. Many cloud-based phone systems offer video conferencing as part of their packages, so you don’t have to pay extra for it as an add-on feature.
  • International calling: Because cloud phones are internet-based, you do not incur long-distance charges when you place or receive international calls. Long-distance and international calling are included as free features in most cloud phone packages.
  • Ring anywhere: Also known as “never miss a call” or “find me, follow me,” this feature enables users to receive or place calls on multiple devices from the same number. With this feature, when the work number is called, both the user’s desk and smartphone, for example, will ring, and the user can choose which one to answer. You can also transfer calls between devices.
  • Artificial intelligence: AI is permeating almost every aspect of modern life, and cloud phones are no exception. Cloud system providers are using AI to provide customer service and perform functions like speech-to-text and sentiment analysis.
  • Instant messaging: Instant messaging is text-based communication. It allows for real-time communication that can be run through a number of devices, including desktop computers and smartphones. Instant messaging adds an additional layer of communication that is responsive and leaves information in writing that can be referenced later.
  • Cloud communication: Cloud communication is the complete bundle of communication services. It includes telephony, instant messaging, video conferencing and any other form of communication that is included in the bundle.
  • Call forwarding: Call forwarding takes calls to one number and redirects them to another line. Cloud-based call forwarding essentially works just like traditional call forwarding. The service allows users to consolidate calls to a single line, even when it is necessary or important to direct calls through specific phone numbers.
  • Auto attendant: An auto attendant is the automated voice menu that you often use in business calls. Automated directories direct calls and reduce the communication workload of persons in the business. Once the calls are properly directed, individuals can take calls or further automation services can resolve issues (e.g., voicemail).
  • Collaboration: Collaboration tools include file sharing, video/audio conferencing, real-time project contributions and other tools that help people work together without being in the same room or country.
  • Voicemail-to-email: Voicemail-to-email transcribes a voicemail and sends it as an audio file to an email address. This allows the recipient to access their voicemail without using a voice mailbox. The emailed file is accessible with a wider range of devices and typically will not clog or exceed data limitations, allowing the recipient to revisit the voicemail for as long as necessary.
  • Integrations: Cloud integrations allow for a large number of resources to be combined into a single cloud package or suite. The same service provider that allows for large-scale data storage and analytics can also handle voice calls. By consolidating services through integrated platforms, powerful tools are made accessible and easy to use. Integration is broad in scope, and it is a cornerstone in virtually every cloud service.
Did You Know?Did you know
If you have an existing landline PBX phone system that you want to keep, but also want some of the flexibility a cloud-hosted system provides, look for a provider that offers SIP trunking.

How do you find a cloud-based system provider?

If you decide a cloud-based phone system is something you’d like to pursue, the next step is finding a provider. Each vendor will offer different features and packages at varying price points, so you must evaluate which one aligns best with your needs.

The foolproof way to find the right provider is through diligent research. Read reviews of different companies, see if any offer free trials, and speak to other small business owners in your industry to see if they have recommendations. See our full guide on choosing the right business phone system for more tips.

What are the best business phone system providers?

Check out our overview of the best business phone systems. Below are three of the top cloud-based services and hosted VoIP providers.

Ooma

Ooma offers cloud-based phone services geared toward nontechnical users. Behind its simplicity – Ooma is one of our top recommendations for ease of use – are more than 35 user-friendly communication and calling features. 

Ooma’s virtual receptionist (the “press 1 for option X” prompt your customers hear when they call) is especially easy to set up. The Caller Info Match tool can also quickly import data from other platforms, such as LinkedIn and CRM databases. Read our full Ooma review to learn why it’s our top pick for small businesses.

RingCentral

RingCentral offers MVP (messaging, video and phone) communications with 99.999% uptime. It’s our top choice for collaboration, since you can use it to host unlimited audio conferences with up to 1,000 people. Similarly, you can host up to 200 people for video conferences. 

RingCentral includes a digital workspace for one-on-one messaging, data searching and note bookmarking. It also integrates with more platforms – such as CRM tools and analytics suites – than any other cloud-based phone system. Read our full RingCentral review to find out more.

Dialpad

Dialpad is our best pick among cloud-based phone systems that come with voice intelligence. This feature can transcribe and analyze all your conversations via detailed call notes and summaries. Dialpad also includes numerous graphical views of key metrics, such as call answer times, volume patterns and call origin. 

As part of its voice intelligence suite, Dialpad can coach your team members who answer the phones on how to communicate more clearly. You can also set certain calls to ring across all your team’s devices so customers never go to voicemail during business hours. Read our full Dialpad review for more info.

TipTip
For additional business phone system options, consider our review of 8x8, review of Nextiva and review of Grasshopper.

Taking your business calling to cloud nine

A cloud-based phone system can empower you and your team to make and accept business calls more easily than ever before. If you’re confident that a cloud-based business phone system is right for your team, this guide should help you find a provider and get the ball rolling. Better customer relations – and, with the right provider, improved internal communications – are right around the corner.

Max Freedman contributed to the writing and reporting in this article. 

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Kiely Kuligowski, Business Strategy Insider and Senior Writer
Kiely Kuligowski is an expert in project management and business software. Her project management experience includes establishing project scopes and timelines and monitoring progress and delivery quality on behalf of various clients. Kuligowski also has experience in product marketing and contributing to business fundraising efforts. On the business software side, Kuligowski has evaluated a range of products and developed in-depth guides for making the most of various tools, such as email marketing services, text message marketing solutions and business phone systems. In recent years, she has focused on sustainability software and project management for IBM.
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