At GreatChoice Technologies, we’ve been working with hosted phone systems since VoIP first started gaining traction back in 2005. With years of experience, we’re here to walk you through how these systems work, what advantages they offer, and any potential drawbacks to consider.

Whether you’re considering making the switch or simply want to understand the technology better, this guide will provide you with the essential information you need.

A hosted phone system is a phone service that works over the internet instead of using traditional phone lines or hardware at your office. The system is managed and stored in the cloud, which means you don’t need on-site equipment to make and receive phone calls.

A hosted phone system can also be known as a cloud based phone system, cloud PBX or hosted PBX.

For businesses, hosted phone systems are a flexible and cost-effective option. They allow employees to stay connected from anywhere – whether they’re in the office, working remotely, or traveling. This makes them a great fit for modern businesses that need to be able to reliably make both inbound and outbound calls, without the hassle of maintaining physical phone systems.

With a hosted phone system, you get advanced features like call routing, conferencing, and integration with other business tools, all without the need for expensive hardware or complex maintenance. It’s a simple, scalable solution that helps businesses stay connected and adapt quickly to changes.

An important part of how a hosted phone system works is SIP trunking. SIP trunks act like digital phone lines, connecting your phone system to the PSTN (Public Switched Telephone Network). They allow your business to make and receive calls over the internet, rather than through traditional copper phone lines. This makes the whole system more flexible and cost-effective, as you’re no longer limited by the number of physical phone lines.

SIP phones are devices that connect to the PSTN using a SIP trunk. This isn’t always a desk phone or mobile device. Using a softphone, which is software that allows you to make calls over the internet, you can connect and call from any device, including desktops, laptops, tablets, etc.

When you make a call, your voice is converted into small data packets that travel through the internet (using VoIP, or Voice Over Internet Protocol) to the recipient. The hosted phone system manages this process, ensuring that the call quality remains high and that it reaches the right destination.

What features should a hosted phone system include?

Call forwarding

Easily redirect incoming calls to any number, ensuring your team can remain reachable even when they’re on the move. This flexibility helps maintain communication, no matter where your employees are.

Voicemail transcription

Convert voicemail messages into text, allowing you to read messages quickly without listening to audio. It’s a time-saving feature that makes it easy to stay on top of important business communications.

Call recording

Record and store calls for training, quality assurance, or compliance purposes. This feature helps businesses track conversations, ensuring accuracy and improving service quality.

IVR (Interactive Voice Response)

Allow callers to use voice commands or keypad inputs to interact with the system (e.g. “press 1 for sales.”). IVR improves customer service by guiding callers to the right information or department, reducing wait times.

Video conferencing

Enable face-to-face meetings with built-in video conferencing tools, making remote collaboration easier and more effective. It’s an essential feature for businesses with remote teams or clients.

Real-time analytics and reporting

Access detailed insights into call data, including call volume, duration, and peak times. Real-time analytics help businesses monitor performance and make informed decisions about their communication strategies.

A hosted phone system can transform the way you communicate, both internally and with customers. Here’s how.

Easy scalability

One of the standout benefits of a hosted phone system is its ability to easily scale with your business.

Take Seasalt, a UK-based retail chain, as an example. They needed a solution that could scale effortlessly without driving up costs. With the flexibility and easy scalability of a hosted phone system, they were able to manage communication across multiple locations, while keeping costs low. The system’s advanced features, including support for remote working, allowed Seasalt to adapt quickly to changing business needs.

Security and reliability

With cloud-based phone systems, your data is stored in secure, professional-grade data centers that use encryption and automatic backups to protect sensitive information. This means even if your office experiences disruptions, like power outages or technical issues, your communication system remains online and operational.

Cost efficiency

One of the most compelling benefits of switching to a hosted phone system is its cost efficiency. Traditional phone systems come with high upfront costs for equipment, installation, and maintenance, but hosted systems eliminate the need for on-site hardware. This leads to significant savings, both in terms of upfront investment and long-term maintenance – a Microsoft study found that 82% of businesses that adopted cloud-based technologies saw a significant reduction in costs​.

Call quality

Hosted phone systems are designed to optimize call quality by leveraging high-speed internet connections and advanced call routing technology.

Unlike traditional systems, which can suffer from poor connections or dropped calls, hosted systems use reliable data networks to ensure clear, consistent call quality. Features such as bandwidth prioritization further improve the clarity of calls, even during peak times.

This ensures that your communications are smooth, professional, and free from the frustrations often associated with older systems.

Remote working capabilities

Cloud phone systems take remote working further than ever.

With features like mobile apps, remote employees can answer calls, access voicemails, and manage customer interactions just as easily as they would from the office.

Customer satisfaction

Improving customer satisfaction is a key benefit of hosted phone systems. Features like call queuing, IVR, and auto-attendants help ensure that customers are routed to the right department quickly. Moreover, call recording and monitoring features provide valuable insights into customer interactions, allowing businesses to continuously improve service quality.

While hosted phone systems have many benefits, there are a few drawbacks. We’ve gone through some potential solutions to these below.

Dependence on internet connectivity

A common concern with hosted phone systems is their reliance on a stable internet connection. If your internet goes down, so does your phone system. However, businesses can solve this by implementing a backup internet connection or failover systems that automatically switch to another connection if the primary one fails. This ensures your phone system remains operational during outages. Additionally, setting up Quality of Service (QoS) on your network can prioritize voice traffic, ensuring high call quality even during periods of heavy internet usage.

Limited control and customization

While hosted systems are managed by the provider, meaning businesses have less control over the infrastructure, this can be mitigated by choosing a provider that offers customization options. Providers like 3CX allow you to customize key features such as call routing and Interactive Voice Response (IVR) systems, giving you the flexibility to tailor the system to your specific needs.

If extensive control is a priority, you might also consider an on-premise phone system. Whilst not hosted in the cloud, these can still use VoIP technology, allowing for more control while still benefiting from cloud technology.

When deciding between a hosted phone system and an on-premise phone system, it’s important to consider how each option fits your business needs. Here’s a side-by-side comparison to help clarify the differences:

1. Cost

1. Hosted Phone Systems: These have lower upfront costs because they don’t require on-site hardware or servers. This makes hosted systems ideal for small to medium-sized businesses looking to avoid large capital investments.
2. On-Premise PBX: Requires a higher upfront investment for hardware, installation, and ongoing maintenance. While the costs can be substantial initially, it may be more cost-effective for large enterprises with a higher number of systems or calls being made in the long term.

2. Scalability

• Hosted Phone Systems: Highly scalable. You can easily add or remove users as your business grows or contracts. It’s as simple as adjusting your plan with your provider, which makes it a great option for businesses expecting growth or changes.
• On-Premise PBX: Less flexible. Expanding your system requires purchasing additional hardware and installation, which can be costly and time-consuming. This option is better suited to businesses with more stable or predictable communication needs.

3. Control

• Hosted Phone Systems: Managed by the provider, meaning less control over the infrastructure. This is great for businesses that want a hands-off approach but may be limiting for those needing customized configurations.
• On-Premise PBX: Complete control over the system, allowing for extensive customization to meet specific business needs. This option is better for businesses with in-house IT teams.

4. Maintenance

• Hosted Phone Systems: Maintenance and updates are handled by the service provider, reducing the need for internal IT resources. It’s a hassle-free option, particularly for smaller businesses without dedicated IT staff.
• On-Premise PBX: Requires in-house maintenance, which can be costly and requires technical expertise. However, businesses with their own IT teams may prefer the control and flexibility that come with maintaining their own system.

Hosted phone systems have proven worth the investment across various industries. Here are some examples of how they can help specific types of businesses.

Industries that thrive with hosted VoIP

Retailers with multiple locations benefit from the ability to manage communications across all stores without needing separate systems in each one. This centralizes communication, making it easier for teams to stay connected and streamline operations.

In healthcare, hosted VoIP provides secure communication essential for coordinating patient care across departments. It ensures that sensitive patient information is protected whilst features like call recording, which can be required by law depending on the country, can still be achieved in a cost-effective way.

Customer service and call centers thrive with hosted systems, using features like call routing, auto attendants, and real-time analytics to handle high call volumes effectively, improving response times and overall customer satisfaction.

Explore case studies for real-life examples of our hosted phone system in action.

Choosing the right hosted phone system provider is essential for ensuring smooth communication and long-term success for your business. Here are the key factors to consider when making your decision:

1. Uptime and reliability

One of the most important factors to look at is uptime – the amount of time the system is operational without interruptions should be outlined in the Service Level Agreement. You’ll want a provider that prioritizes avoiding downtime as much as possible to avoid disruptions in your business communication. A reliable provider will ensure that your phone system remains functional even during peak usage or potential technical issues.

2. Support and customer service

Quality customer support is important, especially when your phone system is integral to daily operations. Look for a provider that offers customer support either directly or through a partner trained in the system. Having access to knowledgeable technical support can prevent downtime and ensure that any issues are resolved efficiently.

3. Features and customization

Not all hosted phone systems offer the same features, so consider what functionalities are important for your business. Does the provider offer features like call forwarding, video conferencing, call recording, and real-time analytics? Additionally, ensure that the system is flexible and customizable to suit your specific communication needs.

4. Scalability

As your business grows, your phone system needs to scale with you. Choose a provider that offers scalable solutions, allowing you to add or remove users easily without costly upgrades. This flexibility will help you manage future growth or changes efficiently.

5. Security

Make sure the provider has strong security measures in place, such as penetration testing to verify compliance with industry standards. This is particularly important if your business handles sensitive data, like in healthcare or financial services, to ensure your information is protected.

6. Pricing and value

While price is important, it’s equally essential to consider the value you’re getting for the cost. Look for transparent pricing models without hidden fees. Providers offering alternatives to per user pricing, like per system pricing for instance, can often provide better value – particularly for businesses with high call volumes.