Itechra: Blog


Business Hosted VoIP Vs On-Premise VoIP Phone System: Which Is Right for You?

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Analog phones have quickly become a thing of the past with VoIP phone systems taking over the business world. With this technological shift, it’s important to understand the two main types of VoIP and what they can do for your organization.

There’s no doubt that VoIP has many advantages over analog phones, but when you’re determining which type of VoIP is right for you, you’ll want to make note of these key factors.

Here we’ll break down these two systems so that you can figure out which one is best going to meet your needs.


What is a VoIP System?


If you’re new to the world of VoIP, let us quickly explain. A VoIP telephone system allows you to make calls using a broadband internet connection instead of an analog phone line.

Why does this matter?

As technology continues to evolve, business telephone systems are now taking full advantage of features such as voicemail to email, video chat, instant messaging, and more.

VoIP makes all of these different capabilities possible. You’ll be able to receive and place calls on a variety of devices anywhere you can access the internet.


Business Hosted VoIP


There are two main types of VoIP, the first being a business hosted system. 

This means that your business phone system is “hosted” by another company. Your phones do not connect directly to an internal server. So, you’re not responsible for any configuration, on-site support, or maintenance. Your third-party manages all of this for you.

You’ll get the benefits of a VoIP, without the extra hassle.


On-Premise VoIP


With an on-premise VoIP, your phone system is installed on your business premises. You’ll buy or lease the software and server hardware, and you and your IT team are responsible for configuration, servicing, system maintenance, user support, and anything needed to ensure the system functions properly.

Different from a hosted VoIP, an on-premise system requires much more hands-on attention from your organization.


Things to Consider


Now that you understand the types of VoIP systems, how can you determine which is right for your business?

Here are some of the key things you’ll want to consider when choosing which VoIP you want your company to use.




When it comes to customizations, the on-premise system takes the cake here. Your IT staff can continuously update and change the internal workings of this VoIP, tweaking it to your exact liking.

Whether that means adding a handful of applications or simplifying the overall system, it’s up to you how you want to go about it.

Though hosted systems come with a wide range of capabilities, an on-premise system is fully customizable, as your team is fully in charge of its functionality.


Internet Speed


If your business struggles with slow internet speeds, then an on-premise system may be the way to go.

Dropped calls and spotty sound quality are things all businesses are keen to avoid. With an on-premise system, your Internet connection speed is sure to be high enough to handle your company’s needs and requirements when it comes to your phone service.




If you’re looking for a lower cost solution, a hosted VoIP system is typically the smarter investment.

It’s important to note that upgrading to any type of VoIP system will require an investment, as is the case with most technological updates.

An on-premise VoIP system requires higher costs upfront, due to the purchasing of hardware as well as third-party IT support if needed.

Hosted VoIP systems have lower upfront costs, but your organization will be responsible for the monthly costs that cover the service, maintenance, and upgrade costs. This will all depend on your provider and the contract they share with you.

However, having a predictable monthly cost and not having to manage any part of the system might make this hosted option worth it for your business.

Typically, on-premise systems aren’t the way to go if you’re a smaller sized business. These systems are less portable, require specific personnel, and come with less predictable costs overall.




With a customizable on-premise system, this means that you’re on your own when it comes to maintenance. Should something go wrong, you’ll need your IT staff to address the problem.

On top of that, the servers will also need continuous repair work, which is time and money coming out of your organization.

With a hosted system, if something goes wrong, your organization doesn’t need to worry about putting in the work to fix it. The third-party professionals are there to make sure your system runs without any issues.

If your organization lacks an advanced IT team, a hosted system might be the best solution. With built-in customer support, you won’t have to worry about what to do when inevitable issues pop up. 

However, when you work with a third-party, there’s always going to be a risk in getting “stuck” with a provider that isn’t giving you the attention or solutions your business needs.

Customer service delays or lack of transparency may make it difficult to use your hosted system. We recommend a trial when using a hosted system, so you can get a feel for what you’ll be using before signing any lengthy contracts.




Though any VoIP system will offer a variety of features, especially more features than an analog system, hosted systems tend to offer the maximum amount of capabilities.

Most hosted systems come with video conferencing, integrations with CRM platforms such as Salesforce, voicemail to email, ACD queues, unified communication interfaces, and more.

While on-premise systems can have some of these features as well, you’re much more likely to find a hosted provider that can provide the latest solutions for your organization.

Think about the needs of your business and its phone system before jumping into a hosted or on-premise system. 




If you’re hoping to grow your business, you’ll want to make sure your technology grows along with you.

An on-premise system makes it tough to scale, as you’ll need to manage these updates on your own. When you use a hosted system, your third-party team takes on the job of adding new devices and securing them properly.

New users can be added quickly and if you ever need to scale back, it’s all taken care of. No extra purchasing of hardware or installation will be required on your part.

When your business grows, a hosted system makes the transition much more seamless.




Security is always a top concern for business, especially when it comes to a communication system. 

On-premise VoIP systems allow you to control your own security measures, since you’ll know the ins and outs of the system.

However, if you’re a smaller sized business, hosted VoIP systems take care of every aspect of security. Your host’s reputation relies on them providing the best security measures, and if they’ve been doing this for years, they’re aware of the attacks they need to protect you against.

With an on-premise system, your in-house personnel will need to keep security at the forefront of their management. With a hosted system, you’ll have a team of IT experts ready to protect you against any security breaches.

There’s a lot to consider when it comes to your VoIP system, so if you have any additional questions, be sure to send us a message.

One thing is for sure: VoIP is the way to go and analog phones are a thing to leave behind.


Itechra Team

Itechra Team

From 2000, we set out to solve what was then a major problem for small businesses: having difficulty keeping up with their IT needs. We noticed that large corporations often had multiple employees specializing in different aspects of the industry and realized this approach could work well also among smaller organizations who might not be able to sustain such teams, but still require help managing an oversized workload. We provide a single resource for all your IT issues.