It was great to hear so many opinions from the channel on this important topic. While there was inevitable a range of views expressed, overall two dominant themes emerged:
- There is no doubt UCaaS offers certain key advantages to the end user which is driving widespread adoption.
- It would be a mistake to sound the death knell of the on-premises PBX just yet, especially as hybrid solutions grow in popularity.
To book-end that discussion, we thought it would be worth drawing together the key points as part of our cloud communications Technology Track.
Not so black and white
The first thing to say is, despite the convenience of the phrase we’ve used in the title, things are not quite so simple as saying there is a straight choice between two options in business communications systems. Cloud communications is itself a wide field, ranging from specialised single-function apps to full hosted UC services. PBX systems, which nowadays are more or less synonymous with VoIP telephony, also have different numerous variations, from on-premises hardware to hosted cloud solutions.
Here is a more detailed breakdown of the options we are talking about when we compare cloud to on-premises:
- UCaaS: ‘Full service’ managed solutions where access to a complete UC suite is provided by a third party host
- Cloud PBX: Nowadays often interchangeable with UCaaS, hosted services where the focus is on telephony
- Specialised hosted solutions: Examples where a single mode of communication, e.g. video, is provided as a hosted SaaS service
- Downloadable apps: There are numerous cloud-based communications platforms available simply by downloading an app, without any service management
- ‘Traditional’ PBX hardware designed for analogue and digital phone networks
- Software-based PBX run on a specialised server, or switch
- Software-based PBX run in the data centre
- Software-based PBX run in a virtualised environment
- Software-based UC platforms run alongside any of the software-based PBX options
So as you can see, when we talk about ‘Cloud vs PBX’, there are actually a lot of different options to weigh up. In the rest of this article, we’re going to dig deeper into two of the main battlegrounds on which the cloud vs on-premises struggle is played out, cost and flexibility, and see if this added level of complexity shakes any of the entrenched positions which are forming in the debate.
It is already in danger of becoming a truism in the UC industry to say that cloud solutions cost less than on-premises. But what exactly is that based on, and if true why would businesses keep buying on-premises?
Cloud solutions certainly have the advantage of lower up-front costs. There are no hardware servers or switches to buy, no software to purchase. Indeed, the entire infrastructure on which the communications system is based is already in place, fully functioning, and accessible through a simple subscription.
However, the story of costs does not end with upfront purchases. Once you have bought your on-premises PBX and accompanying UC software suite, that is it in terms of system outlay. With a UCaaS solution, you are tied into spending long term, usually in the form of a monthly or annual bill.
The decision on costs therefore often boils down to a preference for financing your comms system through capital expenditure (CAPEX) or operational expenditure (OPEX). Many businesses choose cloud solutions out of preference for OPEX, for reasons ranging from more straightforward accounting to the fact that comms equipment does not retain value well as a tangible asset. Ultimately, however, this is a decision for each individual business.
One other factor which comes into play is Total Cost of Ownership (TCO). Whenever you buy a piece of equipment to purchase outright, the spending doesn’t quite stop there. There are also running costs to bear in mind, for everything from repair and maintenance to potentially having wages for IT staff to manage the system. For managed cloud services, although not necessarily for downloadable apps, all of this is included as part of the contract. This is why many people argue that cloud solutions offer lower TCO than on-premises.
Another oft-repeated claim is that UCaaS offers much greater flexibility than on-premises solutions, both in terms of scaling systems vertically for a greater or lesser number of users, or horizontally to add or cast off different tools and applications.
Certainly the ease of deployment of cloud solutions makes them very flexible. Adding new users is just a case of signing the up, and unlike all but virtualised on-premises PBX solutions, there is no upper limit on user numbers. Because all you need is an internet connection to access a cloud service, it makes it much easier to link different branches or integrate mobile devices. Plus, most (but not all) UCaaS providers use an application-based approach allowing users to pick and choose the platforms they need. Alternatively, businesses can simply pick the different apps and specialised SaaS services they want from a range of sources.
However, for a big company operating multiple sites, virtualisation arguably makes it just as easy to create a large-scale network these days. Most software solutions come with downloadable apps to integrate mobile anyway. PBX solutions are usually better for connecting to PSTN telephone lines – cloud solutions need additional SIP trunking services.
The direction of travel in how technology is evolving suggests that UCaaS will offer increasing levels of flexibility, however. Many cloud vendors are embracing platform consolidation and open architecture, designing their services to readily compatible with other software and making APIs available so users can dictate exactly how they run communications in different contexts. The increased use of WebRTC in cloud solutions is also making the communications experience ever faster and user friendly, providing high quality browser-based communication in real time on any device, replacing the need even for apps or downloads.
The Role of Hybrid
Even if you are convinced by the arguments that UCaaS offers better scalability and flexibility for lower TCO, it does not always follow that a full migration to the Cloud makes good business sense. Perhaps you have invested heavily in a high quality on-premises system already, you have an in-house IT team which manages it effectively and don’t want to lose ROI by switching.
The good news is, a choice between cloud and on-premises does not need to be either-or. Even if you run an on-premises PBX, you can still access cloud services to extend your UC suite flexibly, conveniently and cheaply. The open source nature of many cloud platforms mean they will plug into your on-premises systems easily. And while you have the core of a reliable PBX asset, you can still take advantage of the most cutting edge communications technologies like WebRTC to improve and expand efficiency and productivity.
This article is part of the July Series of the Technology Track on Cloud Communications, follow the link to see all published and planned articles.
Cloud Communications Series Sponsors
Natterbox is a UK based provider of Global Cloud Telephony service for businesses. The company provides a cloud communications platform, mobile call recording and 100% integration with Salesforce CRM.