If you manage the communications infrastructure at a small to medium sized business (SMB), you may be considering switching to Voice over IP, or VoIP, from a traditional telephone service.  There are many reasons to consider such a move but, before you get started, a very important question needs to be answered:  what makes more sense, an on premise equipment-based VoIP solution or a fully managed VoIP service provider?

 

In many cases, you will want to go with a provider that offers managed fully managed VoIP service provider.  Why?  The short answer is: Total Cost of Ownership (TCO).

 

TCO for a phone system can be calculated with this formula:  TCO = Acquisition Costs + Monthly Recurring Costs + Annual Maintenance Costs.  Each of these costs is summarized below.

 

Acquisition Costs – any cost that is paid to get a phone system up and running. This includes equipment purchases, system installation and employee training.

 

Monthly Recurring Costs – charges for voice and data carrier services, as well as any other monthly fees.  Some providers charge per minute for voice service on top of fixed monthly fees for data transfer. Others include all of their services (with the possible exception of long distance minutes) in one monthly, per use or per “seat” charge.

 

Annual Maintenance Costs – technical support and product upgrades. You may pay as much as 10-20 percent of the purchase cost of the system on yearly support.

 

VoIP offers many advantages over traditional PBX or Key systems (such as lower cost calls between company locations and enhanced calling features), but they also have downsides.  The primary disadvantage of an on premise equipment-based VoIP solution can be … you guessed it, acquisition cost.  Purchasing an IP PBX (News - Alert) and the other equipment required for an IP phone system can be a very expensive undertaking -- it may, in fact, be more costly than a traditional PBX or Key system.  Most IP PBXs run in the tens of thousands of dollars, even for modest-sized companies.

 

Also driving up the TCO for an on premise equipment-based VoIP solution is that your investments may quickly become obsolete, and be expensive to manage.

 

Fortunately, there is a way to get all of the advantages of an on premise equipment-based VoIP solution without the headaches:  choosing a fully a managed VoIP service provider. A fully managed solution offers a number of advantages, including:

 

Low or no up-front capital expenditures. Since the features and functions of an IP PBX and other associated equipment are delivered over the network, you avoid the cost of purchasing these very expensive items. You may even be able to use your existing telephones with the new system.

 

Predictable operating expense.  Managed services typically are contracted based on monthly voice and data charges, calculated per seat.  This means you can predict in advance how much you will spend, and budget accordingly.

 

No maintenance or management costs.  A fully managed VoIP service provider takes care of all the details involved with the upkeep the equipment required to deliver its services, other than the client’s on premise local are network (which it must already maintain for its employees’ computers and the company’s printers and file servers).

 

Beyond the ways in which a fully managed VoIP solution lowers TCO, SMBs weighing the on premise vs. fully managed decision should consider these factors:

 

VoIP network performance – a fully managed VoIP solution likely offers improved service quality, security, reliability, business continuity and disaster recovery over on premise equipment.

 

Solution scalability – fully managed VoIP solutions generally are much more flexible than premise equipment when it comes to cost-effectively scaling up as a company grows or scaling down during, for example, seasons when companies get less business.

 

Productivity improvements – VoIP offers a number of advantages over traditional telephony, especially in the areas of mobility and productivity tools (such as unified messaging). A fully managed VoIP solution adds many more advantages, including the availability of customized and Web portal-based communication management applications, such as wide area network management, automated call distribution, call detail records analysis and much more.

 

To learn more about the advantages of fully managed VoIP solutions, please visit Smoothstone’s TMCnet.com channel, VoIP Service Providers.