What’s the one thing your business uses every day that impacts customer relationships, vendor contacts, and even employee communication with one another? As popular as internet communication has become, there’s still no substitute for a telephone call in key situations. Most businesses don’t pay too much attention to their phone system unless service is down, the system is malfunctioning, or they are looking to cut costs by evaluating office expenses. This is a big mistake- the telephone system you use can have a big impact on your communications, employee productivity, and even company profitability.

The best phone systems for your business fit within your budget and will deliver the services you need. Hosted phone systems are fast becoming the top choice of businesses that want the functionality of an on-site PBX but the cost savings of VoIP. How do you know if a hosted system right for your business?

What is a “hosted” phone system?
A phone system is “hosted” because equipment (such as a phone cabinet and routing software) is housed at the provider’s data center, rather than at your office. Calls are routed to your business using a high-speed internet connection or a T-1 phone line. Hosted systems range from basic, VoIP-type systems where software can be downloaded in a few minutes to “enterprise grade” systems that require VoIP adaptors or phones. Similar to traditional PBX telephone systems, bandwidth for phone calls and data transfers can be designated by your own system operator to ensure call quality.

Calls are routed to your office from the provider location using a “dedicated connection,” or a T-1 line, or the “open internet.” A dedicated connection typically produces better call quality, but is much more expensive than routing calls using an open internet connection – usually about $500/monthly for an office with 10 employees or less and average internet use. Though routing calls over the internet can be more cost effective, it can lead to security problems for some companies if calls aren’t protected with a firewall or encryption protocol.

System Costs
Hosted system providers either work on month-to-month agreements or service contracts. Month-to-month services are typically used by smaller businesses that have one phone line and less than 10 extensions. Software for a small phone system can be downloaded from the provider website and installed within a few minutes- all you need in the way of equipment are the phones themselves. Contract services operate more like traditional phone system services: the contract specifies acceptable downtime, service offerings, maintenance, and other costs in advance.

The service cost can vary in range from $20/month for a month-to-month service to $200 or more for an enterprise based solution. You’ll also need to consider the costs of connection- using either an internet connection or T-1 line.
Make sure you compare several different price and service quotes before making a final decision. You should also compare local references and ask about call quality- especially if you choose to use an open internet connection to route calls instead of a T-1 line.

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