Few SMBs can survive without a small business phone system, but choosing the right one is a daunting task. The challenge is in sorting through the enormous range of options available to an SMB. It can be confusing, especially as the technology is changing almost daily and many of the options didn’t exist until very recently.

Business Phone System – out with the old

Until a few years ago selecting a small business phone system was as easy as picking a photocopier, fax machine or any other item of office equipment. The options available to SMBs were either a key system or small PBX. Deciding between these options came down to price, expandability, and price. In those days all PBXs employed circuit based TDM technology and the differences between competing brands were not great. Despite their shortcomings, they were reliable and could be relied on to last for ten years and longer.

Technology progressed and the TDM PBX finally fell out of fashion after a season that lasted some 20-30 years. They are no longer manufactured in significant volumes, but there are still millions of units in use and undoubtedly some will remain in active service for at least another decade.

When to Upgrade?

It’s rare for SMBs to have a strategic plan for upgrading their business phone systems.

PBXs no matter how old are rarely replaced unless:

  1. They break down and the cost of repair is unexpectedly high.
  2. A business outgrows the capacity of its existing system.
  3. The cost of maintenance becomes unbearable.
  4. A business re-locates to new premises.

When events control the agenda there is usually little time for a considered evaluation of the options. Immediate decisions are required, but what are the options?

Small Business Phone System – what are the options?

With few, if any exceptions the latest generation of phone systems all support VoIP communications, but not everyone is persuaded by the arguments.

Many experienced business operators are not impressed by the hype surrounding small business VoIP solutions. Their suspicions are aroused by the overuse of words such as: free and cheap to describe them. These concerns are reinforced when answers to simple questions are peppered with technical acronyms and terms such as VoIP, IP, SIP, UC, SPIT, switch, hosted PBX, virtual PBX, Cat-5, packet, convergent, collaborative …

The challenge for the SMB operator is to separate hype from facts.

VoIP Phone Systems

The successor of circuit-based PBX technology is the VoIP PBX. It’s been around for quite a while, but not in a form that SMBs could afford. The target market for the first generation of VoIP PBXs was the large enterprise. Organizations such as universities, government agencies, hospitals and then big businesses with distributed operations.

The small business phone system market has now been targeted by the software industry and many of these new contenders are relatively new to the telephony segment. Typically they are recent start-ups. Others have been around for many years, but until recently were not associated with telephone systems and PBXs e.g. Microsoft.

SMBs that decide to install a VoIP small business solution have a matrix of options to work through. On the one hand, there are proprietary packages from major players that bundle: hardware, handsets, software, services, and support. These options provide comfort, but at a cost. Open source solutions are significantly cheaper but involve more risk. They are typically based on Asterisk Open Source software and are sold through channel partners and VARS offering varying levels of support and packaging.

Hybrid VoIP PBX Systems

There are also hybrid VoIP PBX systems. They are really more TDM than VoIP. They neatly address the requirements of SMBs requiring a staged transition to pure VoIP and amongst things defer investment in Cat-5 cabling and handsets until a future date.

Hosted VoIP PBX

The hosted small business VoIP service is an option that became possible and viable with the advent of the IP PBX. It’s a model that is ideal for SMBs. It permits them to access current generation small business phone system features without having to commit capital or accurately predicts future requirements. They also reduce or eliminate the risk of a business owner becoming entangled in the maintenance of technology and the associated opportunity cost.

Above all, hosted VoIP PBX solutions provide the flexibility to respond to changing requirements and technology. Wriggle room is an important consideration given the dynamic nature of the small business phone system market. The set and forget option is no longer viable. The technology is changing too quickly and the life span of a phone system is getting shorter.

Hosted VoIP services have proliferated. Variations on the theme are described as managed or virtual IP systems. Not all are created equal and the majority of the providers are in fact SMBs. Appropriate due diligence is an absolute necessity.

Used Phone System

An excellent option for preserving cash and reducing the impact of obsolescence.

VoIP Small Business Phone System – the Hype

Businesses with distributed national and international operations stand to make the biggest savings from implementing a VoIP small business phone system. They can largely eliminate the cost of “internal” long distance calls. These savings can be substantial, but it’s worth noting that in most businesses the biggest proportion of calls are made to external parties, such as customers. Of necessity, most external calls must be terminated via the PSTN and hence these calls not free.

All proprietary and Open source VoIP PBX channels have a Unified Communications or UC offering. The promise is a convergent toolset that will increase productivity by integrating voice and data applications. At this stage, UC is more sizzle than substance. The hard business benefits are elusive and not easily quantified.

There is then the argument that the VoIP small business phone system will enable SMBs to project a big company image. The argument relies on the SMB acquiring access to features such as auto-attendant, follow me, voice mail, IVR, and so on. The argument is that callers are given the same “professional” experience as they encounter when dealing with large corporations. There is validity to the argument, but again the business benefits are impossible to quantify and it cannot be assumed that every prospective customer is impressed by the mechanics of interacting with auto attendants and IVR systems.


In the near future, most SMBs will have a small business phone system that employs convergent voice and data technology. Until just a few years ago business phone technology hardly changed from decade to decade, but today that is no longer the case.

The option of wheeling a PBX into a back room, turning off the lights and forgetting about it will shortly become a nostalgic memory. That’s not the business phone system model for the 21st century.

SMBs will have no choice but to adopt a proactive approach to managing their business phone requirements or sign up for an outsourced small business phone service.

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