VoIP vs PBX: Which Business Phone System Will Meet Your Needs?

Jenna Bunnell of Dialpad discusses the differences between VoIP and PBX phone systems

VoIP vs PBX: Which Business Phone System Will Meet Your Needs?
Contact CentreInsights

Published: March 11, 2022

Guest Blogger

Good communication and a reliable business phone system are critical to ensure seamless contact center conversations. In terms of the latter, many businesses choose to use either a PBX system or a VoIP system. But which is the right one for your business’s needs?

What Is PBX?

PBX systems are private branch exchange systems. Companies use them to connect all landline phones within the team, allowing contact center agents to direct internal calls to one another and communicate effortlessly with colleagues.

This system is usually subject to installation costs. The primary benefit of this system is that it doesn’t necessarily rely on a steady internet connection.

There are two major types of PBX:

  1. Analog: This type of PBX uses dedicated on-site hardware to connect desk phones.
  2. Internet protocol (IP): This phone system connects to the company’s internet system using ethernet hardware.

Which system a company installs depends on business needs. Just be aware that IP PBX requires less storage space for hardware.

What Is VoIP?

VoIP stands for voice over internet protocol. It’s a phone system that allows team members to make calls on an internet-enabled device from any location.

Such a service is usually subject to subscription/ongoing costs. Companies typically work with a SaaS company (software as a service) that hosts the system through their servers. This means that the vendor manages issues on the business’s behalf.

Yet arguably the significant benefit of this system is that it facilitates remote working. Home workers can access these systems on their desktops and even their smartphones, thanks to VoIP apps.

Comparing PBX and VoIP

Several factors determine which system a company opts for. Here are 11 key differences between these two business communication systems.

  1. Cost

Cost is a significant factor for businesses when choosing their communications infrastructure.

PBX systems generally involve higher initial costs as they require expensive hardware and physical storage space. While they are usually free of subscription costs, they may also bring monthly calling bills, repair costs, and the cost of in-house IT support.

VoIP systems generally require a business to pay a subscription cost. However, they need no additional hardware and have a much lower installation cost.

Overall, VoIP systems are usually more cost-effective for businesses, especially those with little brick-and-mortar assets or a geographically diverse team.

  1. International Calling

Using PBX to make international calls may be more reliable in areas with a poor internet connection. However, the costs can add up.

Since PBX systems hinge on landlines, businesses will pay standard international rates. For example, as of February 2022, Verizon lists its international rates per minute as $0.49.

By contrast, VOIP providers typically include overseas calls within a subscription plan.

  1. Scalability

A growing business needs a communication system that can quickly scale up. To add new users to a VoIP system, all a company needs is to send a digital invitation to the user’s email inbox. Such an approach is often helpful when there has been a high level of new recruitment or before a call center training program.

PBX systems require extra hardware to expand a team’s usage. At the very least, a  company needs a new desk phone for every new user. In addition, it may need to invest in more hardware to connect new users to the system.

VoIP systems scale more seamlessly and faster with minimal intervention from IT services.

  1. Service Providers

Unlike in previous years, there is now a higher proportion of VoIP/IP PBX service providers in the market than traditional PBX providers.

With more options for a virtual calling system, businesses are more likely to find a plan and provider that suits their specific needs than when using a PBX system.

  1. Team Size

Both PBX and VoIP systems adapt to different team sizes.

PBX systems require companies to have a discreet piece of hardware (i.e., a desk phone) for each team member. In this respect, it’s relatively simple to account for any team size and manage any new additions.

VoIP providers are on the cutting edge of improving telecom customer experiences, meeting customer demands for more flexible options based on team size. Most providers offer plans with basic features and then provide additions to larger teams for an extra cost.

VoIP systems are a great way of keeping costs down for smaller teams. Larger teams may find that costs add up for both systems, although VoIP may offer a more flexible choice depending on existing hardware and team growth.

  1. Security

Security is always critical, but it is often the top priority depending on the industry.

Most VoIP systems come with embedded security software to protect against hacking and data loss.

However, since traditional PBX systems do not route through the internet, these systems aren’t at risk of hacking. So, PBX systems that use on-site hardware may have an edge when it comes to security.

  1. Customization Features

Both PBX and VoIP vendors typically offer basic plans that work well for small teams. However, large contact centers may need additional features tailored to their unique proposition.

For example, say that an international business needs to collaborate in registering its new domain. It may require the functionality to manage significant time differences and conferences with colleagues abroad.

Of course, it is possible to customize both systems. However, PBX customization requires a high level of IT expertise and new hardware. On the other hand, VoIP providers include customizations within particular plans.

  1. Automation

The goal of automation is to improve efficiency. Automation in calling systems represents an opportunity to enhance customer service.

Examples of such automation include automatically directing calls to the correct department and automating voicemail messages.

PBX does allow for some of this functionality. Users are often able to direct calls using an automated attendant.

VoIP also allows for this feature alongside other opportunities for automation. An excellent example is setting up automated appointment confirmation emails and reminders.

  1. Quality of Calls

With more workplace communications taking place virtually, ensuring high audio quality becomes increasingly critical.

Both systems can provide a high call quality. Yet, the functionality of wiring determines PBX call quality. If call quality is low or inconsistent, it’s best to have hardware serviced for issues.

VoIP call quality relies on sufficient bandwidth for everyone using the system. Therefore, a high-quality internet connection is crucial to keeping up call quality.

  1. Device Compatibility

Remote working is becoming more popular in the business world. New technologies make this easier, allowing colleagues to communicate with one another effortlessly.

Companies can harness VoIP calling systems on any mobile device which downloads software or apps. Alternatively, PBX systems use desk phones to make connections. So, if a team favors remote working, VoIP is likely its preferred option.

  1. IT Team Capacity

Every communication system requires a certain degree of maintenance from the IT department. But companies must consider exactly how much work their IT team can dedicate to their phone system before deciding the best telephony platform.

Issues with PBX systems are generally limited to its hardware, so companies that implement these solutions often lean heavily on the IT team. VoIP systems may have connectivity issues, but the service provider can manage these.

Therefore, companies must consider whether they want more control over system repairs or to have them externally managed and how much capacity for extra work the IT team has.

Final Thoughts

Get to grips with the team’s needs before settling on a business phone system. Also, consider how much storage space the business has and its budget for installation and maintenance.

In addition, timing is crucial as installing phone systems often takes more time than planned. Take your next steps by learning about the timeline of implementing contact systems.

Jenna Bunnell is the Senior Manager for Content Marketing at Dialpad, an AI-incorporated cloud-hosted unified communications system that provides valuable call details for business owners and sales representatives.




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