Should You Upgrade Your Phone System or Move to the Cloud?

Reliable communication is not just a mission-critical function for businesses — it’s a matter of survival. A loss of phone service can result in lost sales, lost customers and lost profits, which is why many organizations are ditching older premises-based systems in favor of newer cloud-based hosted systems. Cloud telephony services are currently enjoying a healthy 17 percent annual growth rate, according to new market analysis from ResearchAndMarkets.

There’s certainly a lot to like about cloud telephony — it can bring important flexibility, scalability and manageability benefits. Still, it isn’t always the ideal solution. The transition can be fraught with pitfalls and drawbacks that produce unexpected costs, functional limits and reduced agility.

In some cases, updating your existing on-premises phone system can be a more efficient and cost-effective approach.

Here are two criteria to help you decide between upgrading an existing phone system or moving to the cloud:

Evaluating TCO

Cost has always been a major selling point for hosted solutions. The model allows you to conserve cash flow by accessing enterprise-class technology and applications for a predictable monthly fee. There’s no need to purchase, configure, deploy or manage on-premises gear. Those costs and responsibilities are shifted to a service provider.

Cloud cost benefits relative to on-premises expenses tend to diminish over time, however. Once you’ve made the significant upfront investment in an on-premises system, you won’t incur additional costs for the hardware. Meanwhile, hosted telephony subscription costs never go away and are likely to steadily increase over time.

There can be significant hidden costs with hosted solutions as well. Fees, taxes, connectivity charges and other costs can up your monthly bill by as much as 25 percent. That’s why it is essential to conduct a thorough TCO analysis for both options to determine long-term costs. In a recent cost evaluation, Mitel found that the three-year cost of upgrading and supporting an existing 100-seat on-premises system was $81,000 compared to $108,000 for a new cloud-based system.

There are operational considerations as well. Cloud communications providers host essential applications and services on their servers and are responsible for all call routing, but that doesn’t relieve the burden on your own internal network. Because you are connecting to the provider through the Internet, any network bottlenecks are amplified. That can lead to network congestion, latency, jitter and packet loss that contribute to a poor user experience.

Extending Functionality

An on-premises system won’t last forever, but it is possible to prolong its useful life and capture additional value with no loss of functionality. Upgrading your system with the latest software releases and integrating collaboration, conferencing and mobility features can improve efficiency and increase productivity.

Mitel makes it easy to extend the capabilities of the MiVoice on-premises business communication system through its Software Assurance program. An ongoing tune-up process provides patch updates, hot fixes and major software releases that keep your system up-to-date. The program also includes a real-time network monitoring solution to ensure optimal network performance and faster problem resolution.

It’s also easy to integrate additional features and functions you’d expect from a newer hosted solution. For example, adding Mitel MiCollab collaboration software to the system will provide users with a single application for voice, video, messaging, presence, audio conferencing, mobility and team collaboration. It’s also easy to integrate MiTeam Meetings, a cloud-based video conferencing solution.

Cloud telephony solutions are experiencing rapid growth because they lay the foundation for highly flexible, scalable and efficient business communication systems. While most organizations are likely to wind up with a hosted system, a premature transition risks wasting existing investments in an on-premises system. Give us a call to learn more about extending the capabilities of your current system to meet your business requirements.