The 10 hidden costs of premise-based telephony systems

While email and other communication channels are important, one of the more traditional channels – telephony – remains of critical importance today. Even with the advent of chatbots, instant messaging, smartphones, tablets, unified communication systems and other platforms, telephony remains an integral part of the customer and employee communications experience for the vast majority of enterprises. It is still how we deliver all sensitive & confidential information, how we communicate our biggest achievements and execute on priority tasks.

Until recently, businesses had limited choice when it came to PBX and UC technologies: this needed making considerable investments in premises-based solutions. Today, on-premise equipment tends to be more expensive and resource-intensive when compared to cloud, requiring a significant amount of IT staff to deploy, manage, and maintain these systems. In contrast to cloud-based services, premises-based communications solutions can also be challenging upgrade or scale, often requiring new hardware and software. Because of that, premises-based solutions are slower to take advantage of newer capabilities in the market.

There can also be some hidden costs involved with on-premises PBX systems that sometimes get overlooked. Uncovering these costs may help you make a more compelling case for investment in Cloud-based UCaaS solutions more compelling.

What are these hidden costs? We lay out the most important ones in this below.

The 10 biggest hidden costs of premise-based PBX

1. Low Flexibility

On-premises PBX costs provide less flexibility and can be less adaptive to the ebbs and flows of some organisations' business models, especially those with seasonal demand or due to economic change. On-premise systems are often over-provisioned because they need to be sufficiently robust to accommodate peak calling times, which might be relatively infrequent. So whether a business is picking up or slowing down, there might be some degree of cost included covering the peaks for the entire year, even if the organisation only needs peak capacity for a few weeks each year.

2. Running out of room

An on-premise PBX uses servers with limited capacity to store call recordings and related data. Running out of space can increase costs and could create challenges if you’re  unable to find call recordings when needed.

3. Connecting multiple locations

If your organisation needs to add multiple locations to a  PBX system, the platform may require additional hardware to facilitate communication between those locations. Depending on when your individual installations take place, you may find it necessary to integrate multiple   PBX models, which can lead to complexity and functional compatibility issues.

4. Sudden replacement costs

Should on-premise equipment develop unexpected faults (through accidental damage for example) it may require additional spend to cover hardware and installation/configuration costs a second time.

5. Opportunity costs

The telecom industry is not immune to today’s nearly constant technological advancements. On-premises PBX systems usually last for about 8.5 years before becoming obsolete. During that time - particularly toward the end - you could find that the services on which you rely are no longer fully supported by your supplier. But even though the functionality you’re receiving is no longer market-leading, organisations may find they are still paying industry-standard prices.

6. Vulnerability to fraud

In recent years, enterprises that use on-premise PBX systems have fallen victim to fraud. PBX hacking costs US businesses about $1.9B annually and one San Francisco-based architecture firm lost $166,000 over a single weekend when hackers accessed their system.

Through brute-force or social engineering of system or admin-level passwords, hackers can access your on-premise PBX system and make outbound calls freely. This could leave you not only with a large telephony phone bill, but could also result in reputational damage if malicious actors contact customers on your behalf.

7.  CRM integration

If you use a cloud-based CRM system and you integrate your on-premise PBX into it, there will probably be an additional charge for the professional and configuration services. Connecting a  system to a CRM platform is often a labor-intensive task.

8. Performance issues

The more features and capabilities you demand from your on-premise PBX system will place growing processor and memory demands on the platform. To experience the best performance and user experience it may require further investment in these elements to match the demand necessary for the new functionality.

9. Keeping your PBX up-to-date

On-premise PBX systems require upgrades and maintenance. Add these recurring costs to the costs of employing or contracting trained IT professionals, license fees, installation costs, and the cost of installing cabling g, and you begin to see how recurring costs can significantly grow

Image of three business people working at meeting

10. Growing out of built-in features

If further down the line you need additional capabilities like team messaging, video conferencing, web meetings, eFax, task management tools, cloud storage etc., you’ll usually have to pay for each one individually. Some providers even charge for these on a per-minute basis, which makes budgeting for these functionalities very difficult.

Every time you need to add a feature, you’ll have to negotiate with your provider on cost. Bottom line: an on-premise PBX is not future-proof. Technology is always advancing and if you want to keep up you need to make continual investments.

Have you considered using a cloud-based UC as a service (UCaaS) platform instead?

Cloud-based UCaaS systems are installed and maintained in your provider’s data centers, so you don’t actually have to install PBX hardware at your locations to access the functionality of a PBX system. Because of this critical difference, a hosted PBX doesn’t have many of the hidden costs of an on-premise PBX.

Group of people using mobile devices

Here’s a quick summary of how Cloud based UCaaS  compares on the hidden costs noted above:

1. Cloud-based UCaaS plans are based on a flexible contract, meaning that you’ll only pay for what you use. Adding capacity is as simple as upgrading your subscription.

3. Adding more locations to your system is as simple is adjusting your subscription. Once you update your subscription, you can use your existing telephone technology to make calls from a new office almost immediately.

5. Cloud-based UCaaS technology is always improving, with new features added on a regular basis. As a subscriber you get access to these new features as they’re released - with no need to install new hardware.

7. Cloud-based UCaaS subscriptions come with an array of built-in CRM integrations. No additional technical expertise is required.

9. With Cloud-based UCaaS, systems, updates are performed automatically.

2. Cloud-based UCaaS utilizes state-of-the-art cloud technology, meaning your storage space is virtually limitless.

4. Since your data is stored in the cloud, it’s safe from on-site electrical failures or accidental damage-related disasters.

6. Cloud-based UCaaS data is stored in high-security data centers dedicated to keeping your proprietary information safe from hacking.

8. Cloud-based systems will maintain optimal performance levels no matter how many add-ons you need. You’re free to customize your service to best suit your business needs without having to worry about performance.

10. Cloud-based UCaaS subscriptions feature transparent pricing, making it easy to choose the features that make sense for your business.

So, which PBX system is right for you?

Millions of businesses with premises-based PBXs are moving their telephony to UCaaS —also known as unified communications as a service or UCaaS—for bringing together voice, text, messaging, video, conferencing, meetings, and more. With UCaaS, workers can seamlessly communicate over voice, instant messaging, and video from any device and location, improving worker productivity and effectiveness. UCaaS has been helping European businesses improve internal and external communications, modernize their communications systems, and access new capabilities and functionality.

Atos has an industry-leading UCaaS solution called Unify Office by RingCentral offering the most advanced Cloud-based UCaaS feature set on the market today. Unify Office’s rapid innovation cycles of 12-week release cadences for new features and enhancements means you will never be end-of-life or out of date with your communications technology again. This cycle is backed by one of the industry’s largest reinvestments of top-line revenues into R&D and cloud telephony. Other key differentiators are that we offer the industry’s highest financially backed SLA with 99.999% guaranteed uptime. Unify Office provides emergency calling, callback, outbound/inbound calls, and extension-to-extension dialing as standard cloud phone services, making the package very attractive for large enterprise organisations. Further, you can integrate Unify Office with all your favorite cloud apps without the hassle by using our 240+ out-of-box integrations with popular business apps Salesforce, Zendesk, ServiceNow, plus thousands of open APIs to build custom integrations. Unify Office data is defaulted to our Frankfurt, Germany data center but if you need local UK data residency this is available on request.

Find out how moving to the cloud can help your business get higher value for lower cost visit https://unifyoffice.com to request a demo.

Share this blog article


About Sebastian Tietz

Head of Cloud and Contact Center
Sebastian is Group Vice President Head of Cloud & Contact Center for the Unify solutions business as part of Atos. Sebastian leads our global cloud team and is responsible for both direct & channel sales. He also globally manages our portfolio element Contact Center, including our corresponding competence center, in South & North America, Australia, Benelux, Germany, Austria, France, and UK etc.

Follow or contact Sebastian