Phone Servers On Prem or Hosted?

As a contractor and an employee I’ve seen my share of on prem servers. Clients from 15 and 20 years ago didn’t have many options. If you wanted a phone server, you needed to stand-up the server, maintain it, and make it what you want. Within the last 10 years the ability to have a hosted server has become much more of an option. We are all so used to the on prem solution and the perceived control that it gives us. So, now what is there to consider? 

The Old Way: On Prem

On premises phone servers cost companies both in infrastructure and employees. There is the cost of the phone and Internet lines, server hardware, a temperature controlled room, and redundancy. The even greater cost is having employees that know hardware and phone systems in general. Ongoing redundancy, failover testing and proper functioning of the system are vital to the reliability of the platform.

Things happen. Sometimes it’s in your control and it is you on prem server or a change to the code that causes problems. Other times it is the ISP or phone line and you’re not in control. You don’t want your phones down for hours or days while your telecommunication administrators (they likely have other roles as well) that partially know what they are doing fumble about to discover and correct the issues. This loss is obviously a loss of customer service in the moment, but also makes your company look less professional. Why should the clients and customers trust you if you can’t even keep your phones working? 

On Prem and PCI Compliance

How secure are your phone servers? If you’re taking credit cards over the phone you must meet the standards of PCI. This is more challanging as you must be sure the servers, transmission lines, and recordings are properly managed. You are responsible for all aspects of PCI. Do you have a budget for more than one telecommunications administrator? You don’t want one person to always be on-call. Are they truly dedicated in their skills and knowledge? 

So, Why Should We Consider Hosted?

Hosted options are perceived as expensive and you’re seeding control. In my experience though they are less costly in a number of ways and redundancy can be a part of the plan so that the loss of control to fix the problems is less of an issue. Once your phones are hosted you no longer need dedicated ISPs because you’re using VoIP. As long as you can connect to the hosted phone server you’re able to take calls. So your employees can be at home or even on their cell phones. 

Your server hardware is unnecessary and you no longer need a telecommunications admin. (For larger companies you’ll still want someone that can create and modify IVRs.) Now your helpdesk support and system/network admins are able to work with the vendor to report, solve and keep your phones running. This is a large savings since you don’t need people dedicated to phone systems. 

Example of Hosted: Twilio (I am not at all affiliated with or get any kickbacks from Twilio)

So what are the actual costs for a hosted option? Let’s look at Twilio for an example. (I’ll look at other options in future articles that will focus on contact center vs office phones.) As of January 2021 they offer $1 per active user an hour or $150 per month per named user. You’ll be paying per minute on top of that cost which varies by volume. The prices per minute are starting at.0085 cents per minute to receive calls and .013 cents per minute to place calls. Depending on the size of your company prices will obviously vary. What about redundancy? It’s already built in; no additional work or charges. 

Hosted and PCI

If you’re looking for PCI compliance they have additional workflows to be sure their side of the platform is complient. However, hosted does not mean you are not responsible for PCI. It’s a shared responsibility, Twillio will take care of their portion of the phone system compliance while you will be responsible for your environment. 


Bottom Line

Hosted phone services are clearly the better option in employee time and hardware costs. You will be giving up some control, but with that control goes costs and responsibility for aspects of PCI and the hardware in your office. You’re giving up control to a company that has a whole team dedicated to phone, network, and software technology. This will allow your business to grow and be more flexible in a world where calls can be taken from cell phones and off site in a secure and redundant format.


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