The Growing Scale of Cloud-Based Phone Systems

May 6, 2016
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For the decade or so that cloud-based or hosted phone systems have been available, they’ve been mostly known as a small business solution. From inception of the hosted PBX, the networks that cloud-based phone systems were built on could not deliver the bandwidth or reliability needed to support companies with large call volume and strict service level requirements. In addition, the cost of a hosted phone system didn’t usually scale favorably for larger companies.

For the decade or so that cloud-based or hosted phone systems have been available, they’ve been mostly known as a small business solution. From inception of the hosted PBX, the networks that cloud-based phone systems were built on could not deliver the bandwidth or reliability needed to support companies with large call volume and strict service level requirements. In addition, the cost of a hosted phone system didn’t usually scale favorably for larger companies. It has almost always been cheaper, in the long run, for larger businesses to buy a premises-based system upfront with capital expenditure dollars rather than subscribe to a monthly, hosted service. Over the past couple of years the market has seen a shift. More medium-sized businesses and enterprise companies are moving their communications to the cloud. With the pricing models still not scaling well to larger organizations, how can that be? Why the change? The answer lies in a combination of the evolution of organizational priorities of larger businesses and the technological advancements in infrastructure and phone systems features.

IT Priority

IT organizations have evolved over the last several years from being comprised of system administrators to true revenue generators. IT is no longer just the group that manages the technology infrastructure, sets up a computer for the new employee and updates everyone’s anti-virus software. IT has expanded into playing a key role in helping generate revenue for the company by developing customer experience tools and portals, more impactful website experiences, integrations connecting key systems together, to name a few of those revenue-generating contributions. With this change of focus, day-to-day system management needs to be offloaded and that’s where cloud plays a significant role. Hosted phone systems require little or no maintenance making it the perfect option for larger businesses and enterprise companies that want to use their in-house technological expertise as a competitive advantage and money maker, instead of a sunk cost.

Network Advancements

When hosted phone systems were first available around 2003, the landscape of network infrastructure, speed and reliability looked very different than it does today. In fact, in 2003, 32.1 percent of employees had Internet connections of 56K or less. The lucky 67.9 percent of people that could get a broadband connection topped out at 1.5MB per/sec download speeds. To put that into perspective, the average phone call uses roughly 100kb/sec of bandwidth, meaning that a company in 2003 could only take and receive a total of 15 calls at a time assuming that nothing else was happening on the network. That number may be sufficient for a very small business with very low call volumes, maybe like a small hardware store, but it’s not likely to be suitable for a large financial institution or a school, for example. (If you’re interested in more stats, like the ones I’ve mentioned in this article on how communications has changed through the years, check out this resource from NCTA.com) Of course, today is a much different story when it comes to bandwidth – with speeds of more than a Gigabit-per-second becoming commonplace. Not to mention advancements in QoS (Quality of Service), network equipment and security. The networks that are the backbone of today’s hosted phone system providers are more than capable of handling the volume and support demands of enterprise customers.

Feature Maturity

One of the major historical knocks against hosted systems has been the supposition of needing to sacrifice features to have a cloud-based system. Hosted systems were available with basic call functionality, but never had advanced features for call centers, mobile teams or collaboration. And if they did, they were extremely expensive. That has all changed. When Digium’s Switchvox Cloud was first released in 2013, it was one of the only hosted phone systems with the exact same feature set as its on-premises version, and that is still true today. Cloud phone systems are no longer just small business solutions. The strength of cloud networks and the advanced features now available are supporting the desire of medium-sized business and the enterprise organization to use their IT group to generate revenue, not manage phone systems. Disclaimer: This article originally appeared on the Digium blog and was written by a guest contributor in his/her personal capacity. The opinions expressed in this article are the author’s own and do not necessarily reflect those of CloudWedge.com.