5 Risks of On-Premises PBXs & Advantages of Cloud Phone Systems

Making the switch is much easier than you think, more cost-effective, and can give you a competitive advantage in customer service

For years, many large organizations have relied on on-premises private branch exchange (PBX) phone systems. These systems excel at handling high volumes of calls but can be costly to implement and maintain, and lack the flexibility and scalability of other, more modern solutions.

If your organization still relies on an on-premises PBX, it may be time to migrate to a cloud-based phone system. Cloud phone systems – often referred to as unified communications as a service (UCaaS) – like RingCentral and Zoom, consolidate voice, video messaging and collaboration tools into a single integrated platform. These systems aren’t just more contemporary and convenient – they are also more reliable, resilient and secure, and are often more cost-effective.

Here are five risks of continuing to use a traditional communications system and five benefits of upgrading to a cloud-based system.

The Risks of Relying on On-Prem PBXs

1. Inflexibility

Unlike feature-rich cloud phone systems, on-prem PBXs only offer basic calling functionality. If your business is like most, phone calls are just one of the many ways customers, clients and stakeholders expect they’ll be able to get in touch with you. If you lack videoconferencing and instant messaging capabilities, you’re missing out on opportunities to communicate both externally and internally.

If you have a piecemeal solution, you are likely juggling multiple vendors. Both approaches make work more difficult for you and your employees – and negatively impact customer experience.

Legacy systems also make remote and hybrid work extremely challenging, or even impossible. Without cloud connectivity, your employees can’t work from anywhere, which can limit your ability to attract and retain top talent.

2. Unreliability

On-prem systems are particularly vulnerable to outages and service disruptions. Unless your organization has a SIP trunk, an outage can completely halt business operations. This isn’t just an inconvenience – it can also be incredibly costly. When lines go down, employees can’t work, customers can’t reach you, and, depending on your industry, your business may hemorrhage money by the minute.

3. Poor Employee & Customer Experience

Outdated phone systems can create headaches for employees and negatively impact customer experience. When employees are forced to deal with inefficient communications systems, they may burn out, and turnover may increase. Low retention and constant re-hiring and re-training are costly and time-consuming – and often result in a poor customer experience.

Many legacy systems are also plagued with problems that frustrate customers, including unnecessary transfers, incorrect routing, long wait times, and dropped calls. When these issues are routine or severe, customers may eventually take their business elsewhere.

4. Cost Overruns

Legacy systems are costly to maintain and can bloat your organization’s budget. Common sources of expense include:

• Hardware costs: on-prem systems require organizations to install pricey hardware and software on-site

• Maintenance costs: organizations are responsible for maintaining their on-prem system and often require dedicated IT resources

• Vendor sprawl: if your organization has separate phone, internet, video, and other communications services, you’re paying multiple vendors for services that could be integrated at a lower cost

• Complex billing: many vendors make their bills difficult to understand, which leads companies to overpay for services that underdeliver

• Time waste: when employees are forced to manage disparate systems or communicate using outdated technology, they waste time that could be spent completing high-value work

5. Looming Obsolescence

As video conferencing and messaging become more common, on-prem PBXs are becoming less popular. In the coming years, it may be increasingly difficult to maintain, upgrade or scale systems. This could significantly hamstring growth or interfere with your business’s ability to achieve its goals.

The Benefits of Transitioning to Cloud-Based Phone Systems

1. Flexibility & Scalability

UCaaS platforms are designed to grow with your business and support you as you scale. Unlike legacy communications systems, these platforms integrate with your existing business applications – like CRM, ERP, and collaboration tools – and allow you to quickly and easily add new features.

Furthermore, cloud-based systems provide employees with the freedom and flexibility to work remotely, which can help your business attract in-demand candidates and retain top performers.

2. Reliability & Resilience

Compared to non-cloud-based communications systems, UCaaS platforms offer a high degree of reliability. As long as your business has an internet connection, you and your team will remain connected and available to customers.

For additional resilience, you can implement redundant, geographically distributed broadband solutions to support your UCaaS platform. This approach ensures that your business can continue to operate even when local infrastructure fails.

3. Robust Security

UCaaS platforms are more secure than non-cloud-based systems. The majority of solutions include advanced encryption, multi-factor authentication, and security monitoring. Some also have additional compliance certifications for heavily regulated industries, like healthcare and finance.

4. Improved Employee & Customer Experience

Cloud-based phone systems integrate all forms of communication – including calling, video and chats – into one platform. This streamlined approach eliminates app-switching and silos and makes it easier for employees to do their jobs. This results in a better customer experience: calls are more reliably routed to the correct party, wait times are shorter and representatives are more knowledgeable because they have easy access to customer data.

5. Affordable, Predictable Pricing

Traditional phone bills can be difficult to understand, which means your business may be overpaying for services that it doesn’t use. UCaaS platforms are designed to work and grow with your business, so you only pay for what you use. Most cloud-based platforms operate on a subscription model that can be scaled up or down depending on your needs. Further, UCaaS eliminates the costs associated with hardware maintenance, vendor sprawl, and the external resources needed to manage on-prem systems. 

How to Pick the Right UCaaS for Your Business

A UCaaS platform can transform your business, but when selecting a solution, proceed with caution. Vendors have one goal: to sell you on their service, regardless of whether it’s the right fit for your business. Implementing the wrong system can lead to business disruptions, improperly configured call routing, and inadequate employee training.

To avoid these pitfalls, it’s advisable to work with an unbiased advisor who puts your needs first – and isn’t motivated by meeting a sales quota. 

StrategiCom is a technology advisor that has helped businesses across industries implement right-fit communications and other technology solutions for over 20 years. Unlike direct vendors, our team of experts takes a vendor-neutral approach and will recommend the solution that best fits your needs. 

Here's how we work:

1. Tech Audit: we review your current communications services and spend, and identify areas for improvement and cost savings

2. Recommendations: we recommend the best solution for your needs, without bias or agenda

3. Ongoing Advisory: we conduct regular reviews and work with your vendor(s) to resolve issues promptly 

If you’re ready to upgrade your communications system, contact our team of cloud phone experts to learn more or schedule an audit.