Small businesses are inundated with people trying to sell them one thing or another every day. One investment that nearly all businesses have to make as they add staff or offices is what type of phone system are they going to purchase. For most small business owners, the decision used to be limited to a few key points: how much am I willing to spend, what brand will I purchase, and do I need a maintenance contract for that? Since about 2000, however, more complex concerns have been introduced into the decision making process. With the advent of robust Voice over Internet Protocol (VoIP) solutions, customers had to make decisions on whether to move to newer technology platforms or stay with the tried and true technology. In the past two years, a new wrinkle has been added. A new choice is emerging for the Small to Medium Business (SMB) segment; the hosted and fully managed solution, allowing business owners to have all the features of a phone system without many of the headaches of managing one, if the marketing pitch rings true. Answering the question of which direction is best for your business is very complicated, as I firmly believe that no two businesses are exactly alike, and therefore the needs of each business will vary wildly. This will be the first in a multi-part series that attempts to help business owners understand the various technologies available to them, and the implications that each may bring for a small to medium business.

Buying a PBX: The Traditional Route

Today, most of the telecommunications manufacturers have settled in on VoIP technology platforms and consolidated their offerings to the customer base. Different manufacturers have taken different approaches to this, and as a result you see different types of products out there in the marketplace. Cisco offers an all IP solution, using routers and network switches and a call processing server, and all the phones are IP. This approach has merit, but there are some things you must be cognizant of when doing so. Your existing Local Area Network (LAN) must be ready for this, you must have robust cabling infrastructure, or be ready to invest in both of the aforementioned. Nortel and Avaya offer systems that work with all IP phones, traditional digital phones, or both. These solutions have positives and negatives as well, cost benefits and implications too, but offer a lot of flexibility. All of them have developed their solutions to the point where they have strong user interfaces that are both friendly and intuitive for basic administration functions. These three manufacturers are by no means the only players in the game, but they do control the majority of the market. While others are gaining ground and trying hard, I tend to focus on these players today as market share is a key driver of research and development dollars, and generally assures a high level of availability of parts for years to come, which keeps your long-term total cost of ownership in check. Buyers of this type of solution are typically willing to spend a little more money, may have some internal capabilities to support the solution and will typically engage a vendor for a maintenance agreement with guaranteed service response times. Taking a longer term view of this solution, it could easily prove the most cost effective in the long run, but typically requires a significant capital investment or a lease or financing arrangement. Vendors must be carefully screened in this arrangement, as it truly should be an ongoing relationship.

Another approach to the marketplace is the software PBX. This type of product is software based as the name would imply, and leverages Commercial off the Shelf (COTS) hardware. You can run it on any server you purchase that meets the minimum requirements specified, and you can use generic phones. These types of systems generally leverage Cisco IP phones, analog phones, or “soft phones” which run on your PC, or a combination of all of the above. Be leery of a system that purports to support any IP or SIP phone known to man, as ongoing support and troubleshooting of a system like that can be maddening. There are literally hundreds of entrants in this market space. Entrants range from well established smaller companies that have been doing this for 5-7 years to small start ups trying to leverage new advances in the technology to behemoths like Microsoft who joined the fray last year officially, then subsequently announced a major initiative in conjunction with Nortel to, in their words, “revolutionize the way people communicate.” It won’t be long until all of the major players follow suit to one degree or another, but it may take some time before this technology is as solid as the proprietary platforms from a features and functions standpoint, as well as reliability. The industry standard for reliability is 99.999% uptime, and when you have software and hardware variables, it is very hard to achieve that level of reliability. They will get there, and many are close, but there are hardware vulnerabilities in this model that cannot be accounted for. The lure of this type of model is typical cost and some bells and whistles. A buyer must really ask themselves what they are getting, how hard will it be to support and what are the support capabilities of the company I am buying it from, and do I need these software applications.

Coming up in Part II: The Nuance of the Hosted Solution