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Cutting Costs with a VoIP Business Phone
System
VoIP_News 29 days ago | Comments (0)
VoIP business phone systems are hyped as a
way for small businesses to cut costs. They are
touted as being more flexible, scalable and
feature-rich than traditional phone systems, for
a lot less money. Is it true? If so, how does it
work?

Cut Costs, Add Value
Basically, VoIP cuts costs because it uses the
internet to send and receive voice calls, rather
than traditional phone lines. Service,
maintenance and upgrades for traditional
telephony cost a lot more than internet telephony. And, a VoIP system comes
packaged with productivity features such as on-the-fly conference bridging that would
cost extra with traditional telephony.

A VoIP business phone system works the same basic way as a home Vonage
account: desktop phones connect to the internet via a router/server (at home, this is
likely your cable modem; for a business, its an IP PBXeither on-site or managed by
a cloud/hosted provider), and you make and receive calls just as you would with a
traditional desk phone.

The reduced capital and operating costs of VoIP systems are game-changers, said
John Hoag, an IT consultant and associate professor at Ohio Universitys McClure
School of Information and Telecommunication Systems. A VoIP PBX replacement is
a modest expense. VoIP software is often open sourced, and the additional cost for
bandwidth is much less than its TDM equivalent.

For a business with an existing commercial-grade internet connection, Hoag
estimated the cost for VoIP bandwidth can easily be 75 percent less than the
equivalent TDM bandwidth.

A VoIP business phone system doesnt just cut costs; it also adds value in a variety of
ways, many of which address the need for mobile communications. For example:
routing calls from an employees desk extension to their cell phone when they are
traveling or out of the office. Unified communications features like integrated inboxes
(voicemail, e-mail and fax) and tie-ins with customer relationship management (CRM)
tools increase employee productivity and support business growth.

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The big step forward isnt necessarily IP, but other features integrated with voice to
make people more efficient and productive, said Michael Finneran, Principal at dBrn
Associates.

So, even if all you can do now is focus on the voice benefits of VoIP, its still a good
idea to enlist the expertise of a phone system supplier or other consultant to look at
expanded communication tools. That way, you can buy confidently with anticipated
future needs in mind.

On-Premise vs. Hosted
A fundamental question that will come up early when shopping for a VoIP business
phone system is: Do we want an on-premise system or a hosted system?

In a nutshell, with a hosted PBX, phones plug into the local area network (LAN) via
Ethernet cables, a router connects the LAN to the internet, and the IP PBX service
provider does the rest. With an on-premise system, a local PBX server box connects
the LAN to the internet and, sometimes, to the public switched telephone network
(PSTN) as well.

For most businesses, an on-premise VoIP phone system has a lower total cost of
ownership (TCO), said Finneran. But, a hosted provider gives you access to new
technology and upgrades immediately, and allows you to get the new system up and
running a lot faster.

With a hosted provider, most money spent on the phone system becomes an
operating expense, Finneran noted. You can rent phones and pay for service, and
have almost no up-front investment. Its usually not practical to totally eliminate capital
expenditure (CAPEX) because of LAN upgrades like adding Power-over-Ethernet
switches and new cable drops, and more or faster routers and firewalls. Still, if the
CAPEX budget is pinched, going with a hosted option may be the best choice.

TCO and ROI
A typical VoIP business phone system requires:

Ethernet local area network (LAN)
Broadband internet connection
IP desk phone for each employee
IP speaker phone for each conference room
On-premise IP PBX or off-site hosted IP PBX provider
VoIP/internet telephony service provider
Uninterrupted power supply (UPS) for all network equipment

The most effective way to determine TCO for these items, and identify cost
reductions, starts with a needs analysis. Then, research options and prices and
choose vendor(s) and service provider(s). The last step is actually purchasing a
system, installing and configuring it, and training staff.

Return on investment (ROI) calculations depend on whether you choose an
on-premise or hosted phone system.

Hoag explained that in the case of on-premise, ROI is calculated by looking at when
the reduced cost of VoIP bandwidth catches up with investment in the phone system.
With hosted VoIP, most of the systems cost shifts to the OPEX side; ROI amounts to
comparing recurring costs now with previous support, annual equipment upgrades,
and phone service.

Bottom Line
With careful research, your new VoIP business phone system should at very least
provide the same voice capabilities as your existing system with a lower TCO. But,
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almost certainly you will also gain value in the form of mobility and other features that
help employees be more productive and better serve customers. The payoff from that
is a gift that keeps on giving.

About the Author
Mae Kowalke is a journalist and communications professional who
specializes in covering business technology. She has written
extensively about VoIP, CRM, ERP and a range of other
technologies, both as a reporter and a blogger.

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Keyword Tags: VoIP; voice over internet protocol; business telephony; VoIP features; VoIP
Venefits; cutting business costs
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