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Considering Moving Telephony to the Cloud? Do the Math


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The march toward fully hosted VoIP systems has followed a moderately steady drumbeat over the last five years. But will the pace quicken now, with IT/communications managers’ realization that they couldn’t configure their old, digital, premises-based phone systems to allow a hoard of newly quarantined workers to make and receive business calls from home?
As dutiful telecommunications consultants, we’ve assisted many clients over the years in ditching their key systems and PBXs for either fully hosted VoIP platforms or, at the very least, upgraded IP PBXs, which can act as a closed hosted VoIP system. The hosted VoIP decision is often easy for them, once we’ve contrasted the difference between the large up-front expenditure for a new on-premises phone system against the relatively low up-front, but higher monthly, cost of hosted VoIP. The lack of maintenance needed for these cloud-hosted systems, coupled with their increasingly friendly self-service portals, make for additional selling points for most.
These are the companies that, when faced practically overnight with the need to send employees home to work in bedrooms-turned-offices, were, in a word, prepared – employees were easily able to continue making and receiving business calls. The only thing these companies really needed to worry about was whether their data and application platforms were similarly cloud-situated.
Contrast this to organizations still married to old on-premises phone systems. As shelter-in-place orders came down, companies without hosted VoIP or IP PBXs, but with PRI voice services, found themselves needing to have remote workers forward their direct lines to their cell phones — not an ideal fix, since this meant those employees were stuck using their personal cell phones to make and receive work-related outbound calls, but a fix all the same. Worse off were organizations with systems utilizing POTS lines; as they quickly found out, they could only forward the company’s main number to a single cell phone — even farther from ideal. As a result, many quickly found themselves trying to port numbers to hosted VoIP, only to learn that that can take four to six weeks — during normal times. Now they’re left paying double for monthly voice services: once for the existing service they left behind at their offices, and once for the newly purchased hosted VoIP platform where they’ve temporarily remote-forwarded their phone numbers.
So, when we finally return to our workplaces, will we be smarter? Will we, once and for all, rid ourselves of the reliable but old digital box hanging in the utility closet? Maybe, but the really smart companies will do the math first. The economics of purchasing a new IP PBX versus moving to a fully hosted VoIP platform make that requisite. The equations include multiple variables, and the calculation isn’t as simple as comparing the quoted up-front cost of the IP PBX versus the quoted monthly cost of the hosted VoIP.
Before we get to the math, first, here’s a reminder that most IP PBXs and hosted VoIP platforms have virtually the same features, including smartphone apps that allow users to take and make calls as though their cell phone is a desktop phone, softphones for your laptop or desktop computers, and plenty of call-routing options. So, features aren’t really the issue. Granted, having your own IP PBX probably gives you more control over those features, but at the same time, you have the responsibility to maintain the system.
Second, consider the large refurbished market for IP desk phones from vendors like Polycom and Cisco for your hosted VoIP, or similarly refurbished proprietary phones for your new IP PBX. Do you really need brand-new phones? We’ve found like-new devices on multiple used equipment sites, along with both Amazon and eBay at a third, or sometimes, a fourth of the cost of brand-new ones. You’ll just need to download your hosted VoIP provider’s or manufacturer’s newest firmware to the refurbished devices. Or, you could go without desk phones at all, and just invest in high-quality USB headsets and utilize the free softphone that comes with each hosted VoIP seat or IP PBX user license. If you are considering the no-desk-phone route, you may want to read the article I penned for No Jitter’s sister site, WorkSpace Connect, “Will Coronavirus Be the Death of the Desk Phone?”
Crunching the Numbers
Starting off with IP PBX costs, your math must first include all of the up-front and monthly IP PBX location costs. You can install this type of system in your office on a vendor-supplied specialized server (back to the box in the utility room) or as a piece of software. This latter option comes with lots of options as to where to install and operate that software, including on your on-prem servers, on racked computers in an external data center, on a VMware or other virtual server in that same data center, or in one of the big clouds like Microsoft Azure or Amazon Web Services. One thing that these calculations often lack is the cost of duplicate instances of these servers, as they do fail, at a higher rate than those old, but hardy, digital systems. Also often overlooked is the increased cost of backup storage for call logs, voicemails, and other system data.
Second, don’t forget to figure the cost of both the manufacturer’s upgrades and vendor’s professional services to maintain the newest version of the software, often released multiple times per year and essential to preserve your manufacturer’s warranty.
Third, if at all possible, obtain a traffic study from your current voice provider to determine the actual quantity of unlimited domestic local and long-distance SIP trunk call paths you’ll need. Then get a quote from multiple providers to determine the future monthly cost of your voice service.
Now moving over to the hosted VoIP math and considerations, first, when counting the number of seats for which you obtain quotes, consider that locations like unassigned areas, for example, breakrooms and reception, could carry a lower monthly seat cost. That’s because those seats will require fewer features and a metered local and long-distance plan, versus full-featured, unlimited domestic long-distance calling needed for desktop workers.
Second, make sure your comparison quotes contain everything you’ll need to replicate your current system, including the monthly cost and usage of toll-free and fax numbers along with auto-attendants, which are almost never included in the cost of the seats.
Check the Expiration Date
Here are some final thoughts. While you’re working through the math on both sides, pay close attention to the expiration dates of your current voice contracts so you don’t get hit with early termination fees. Similarly, since not all hosted VoIP and SIP trunk providers are the same; don’t commit yourself to one for more than one year, even if the monthly cost is a little higher for the shorter-term contract. I have many stories to tell on this front!
Finally, don’t let your rush to deal with your, albeit temporary, situation force you to make a move without doing the math. In the meantime, ask your carrier to help you forward your calls to cell phones, or, if absolutely needed, forward to a hosted VoIP provider using a month-to-month contract. Keep your calls flowing however you need to right now, and then, when social distancing is lifted, first, hug each other, and then do the math.

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"SCTC Perspective" is written by members of the Society of Communications Technology Consultants, an international organization of independent information and communications technology professionals serving clients in all business sectors and government worldwide.


Knowing the challenges many enterprises are facing during COVID-19, the SCTC is offering to qualified members of the No Jitter/Enterprise Connect user community a limited, pro bono consulting engagement, approximately 2 - 4 hours, including a small discovery, analysis, and a deliverable. This engagement will be strictly voluntary, with no requirement for the user/client to continue beyond this initial engagement. For more information or to apply, please visit us here.