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IP PBX vs. Hosted VoIP services
If you are considering installing a VoIP phone system at your business, you have probably considered both hosted VoIP and an IP PBX. But which solution would be best for your company?
Before you can decide, it helps to know the key differences between hosted VoIP and IP PBX phone systems. This information should help you decide which solution will best suit your company.

What is Hosted VoIP?
In a hosted VoIP setup, an outside service provider manages the phone system. Your company simply needs to purchase IP telephones or mobile phones if the service provider supports mobility. All other hardware is provided and managed externally by the service provider. Once all the pieces are in place, the service provider takes the reins and handles all call management.

What is IP PBX?
An IP PBX system differs from hosted VoIP in that all hardware is purchased, managed and maintained by you. Instead of an outside service provider taking care of all call maintenance, that responsibility falls on your company.
An IP?PBX setup is typically a more elaborate phone system than hosted VoIP service, and it may also be more robust.

What are the Main Differences?
Most of the features that a hosted VoIP system offers can be found in an IP PBX system. Whether you need toll?free numbers, email integration, or faxing software, for instance, either technology will provide those services. The main difference between the two types of phone systems lies in the upfront costs, as well as ongoing costs.
With little to spend, apart from the initial setup and IP phones, a hosted VoIP system usually is pretty manageable, cost?wise. And with an outside company managing the phone system, there are no ongoing maintenance fees. You also dont need to employ an IT person to manage your phone system.
However, fees can crop up if you wish to add additional services, or new users. Changes might also not be implemented immediately. Some providers might not be able to fully customize VoIP features to your liking. Additionally, some service providers dont offer brand new features as they are developed. And lastly, if a VoIP provider goes under, youre left without a phone system.
With an IP?PBX, your company must front all initial costs for phones, a server to host the system, and any necessary line cards. These costs can be considerable, often in the thousands of Euros. And with the phone system on?site at your business, youll need an IT person to manage the setup and ongoing maintenance. The high cost of these aspects of IP PBX might deter a company that doesnt have the funds to make that initial investment.
However, because the phone system is on?site, an IP?PBX system is highly customizable. Adding users and changing numbers can be done quickly and efficiently, without having to go through an outside provider, and at no extra cost. But there is a catchall that hardware must be moved if your company moves. In a hosted VoIP setup, moving the phone system is as simple as unplugging the phones and plugging them in to a new broadband connection.
Heres a quick summary of the pros and cons of each type of VoIP service:

Hosted VoIP Pros:

  • Outside management of the phone system, decreasing need for extra resources
  • Initial costs are low
  • Few ongoing maintenance fees
  • Moving the phone system is quick and efficient

Hosted VoIP Cons:

  • Adding new users or features can incur fees
  • Customized features might be difficult to implement
  • No phone service if your VoIP provider goes under

IP PBX Pros:

  • Highly customizable
  • In?house management allows for more control over features

IP PBX Cons:

  • Considerable up?front costs, for investing in hardware and setup
  • Requires a dedicated IT person to manage the system, which can be expensive
  • Moving the phone system includes relocating the server

Which Setup is Best for Your Business?
Because an outside service provider manages a hosted VoIP setup, it is usually appealing to small businesses that lack the resources to invest in an elaborate phone system, but want the varied features and simple usability that VoIP can provide. Furthermore, with all services managed by an outside provider, a hosted VoIP setup enables a small business to rely on a comprehensive phone system without the need to worry about ongoing maintenance.
Larger companies with an existing infrastructure and the money to invest will likely find an IP?PBX to be appealing. A larger enterprise will likely also have an existing staff or the money to hire an IT person to manage the phone system.