Hidden Costs of Premise Based Phone Systems

30 November, 2016

Many manufacturers of Business Phone Systems (PBX) claim that buying a solution is more cost-effective over 5 years. What are the hidden costs they are not telling you about?

Flexibility

With premise-based Business Phone Systems (PBX) you are typically buying a fixed asset. This is either constrained by the appliance hardware, the servers you need to buy to run it on or the licensing model from the vendor. This means that you need to estimate your peak demand 5 years in advance to buy for what you might need. The risks here are that you buy a business phone system for what you need today. This decision can also be influenced by getting the best commercial outcome for today’s needs and not paying for future needs that don’t eventuate. You could end up with a PBX that won’t meet the demand of your future business. Questions to ask are:

  • Can your premise based PBX scale to meet the needs of peak demands?
  • What are the physical limits of the system?
  • How do you scale rapidly if needed?
  • Redundancy

Adding redundancy to on-premise business phone systems generally means duplicating it to another site. This is an expensive form of insurance in the event something happens. Have you factored in this cost of building redundancy?

Capacity planning

On-premise PBXs often rely on servers for functions like call recording. These servers will have a fixed storage capability and when full, no more calls can be recorded without purging old files. Questions to answer are:

  • What is the total capacity?
  • What is my capacity planning threshold (IE when do I need to buy more)?
  • Who is going to manage these servers and at what cost?
  • How is my data backed up?

The cost of obsolescence

The average lifespan of an on-premise phone system is 7 years and longer if companies are looking to maximise the return on big investments that they haven’t fully used.

Industries, companies, and the way people work change much quicker than this. You may find yourself without features that your competitors have, costing your business revenue. Alternatively, you may find your business cobbling together other technologies that don’t integrate well into your business phone system or even having to give your employees multiple applications for communication. Questions to answer are:

  • How old is the product [not the one you are buying but the platform/technology]?
  • When is the next big release and do I get the new features automatically?
  • What is the cost to upgrade?
  • Mobility

Businesses are more mobile than ever, and employees are starting to use their mobiles more than their desk phone. Integrating mobility into on premise-based PBXs can be difficult and expensive with calls having to be delivered to your site before being sent out to the mobile. This incurs additional costs and with employees manually forwarding phones the potential for toll fraud is heightened. Questions to answer:

  • How many more voice lines do I need to cater for mobility?
  • What are the call costs?
  • Can my mobile users call from the office line while on the road?
  • Maintaining the hardware

With on-premise PBX you need to factor in additional costs to maintain the hardware. If the PBX is an application you may also need to factor in licensing costs for the servers. You need to house the equipment in a suitable environment which means a computer room with appropriate cooling, or you need to buy colocation services from a data centre provider. Questions to answer:

  • Who is maintaining the PBX and at what cost?
  • What additional licensing costs do I need to factor in?
  • What is the cost to house the equipment in my office and what is the opportunity cost if I was to use that space for staff, not computers?
  • Ability to integrate

Most businesses these days are looking to integrate their business phone system into their CRM. With an on-premise system, this normally is left to the business to manage which means additional costs for someone to integrate the two systems. Questions to answer:

  • Which third party systems does the system integrate out of the box?
  • What is the cost to install 3rd party integration, and to maintain it?
  • Performance

Due to most of the premise-based systems being confined to physical equipment on site the more features you turn on the more resources that equipment needs. Often features needed now are unknown when you buy the on-premise PBX. Businesses can find that the new features use up too much capacity of the system creating performance issues. Questions to answer:

  • What resource does this new feature need?
  • Who is running my configuration successfully and are they willing to help?
  • Management

For most businesses the business phone system provides a means to contact customers. Managing complex IT and telephony environments is not a core capability and therefore either needs to be managed internally at considerable cost or outsourced on a one to one basis. This can add additional costs. Questions to answer:

  • If you need to make a change, what is the cost of this and who does the work?
  • How do you prevent errors?

Whilst on occasion it can seem commercially attractive to simply own the PBX, the costs to do this don’t show the full picture. Using a cloud business phone system removes ancillary costs and simplifies management allowing you to focus on your core business, not the management of a phone system.

 

Design + code by Jalapeno Creative.

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