The Case for Hosted VoIP - What Micro Businesses Need to Know

Introduction to Business VoIP

You're what we would call a Micro Business – under 20 employees, probably not using a PBX telephony system (Private Branch Exchange), and you may have multiple locations. If you do, it's likely that you have different phone systems at each location and there is no integration across them.

You've probably started hearing about VoIP – Voice over Internet Protocol - and are wondering if this might be right for your business. If you lack dedicated IT resources, you may be concerned about not being able to implement and support VoIP. Even if just some of these apply to your business, we believe this position paper will be of interest – and value – to you today.

There are two important ideas in this paper, and together, they will give you a sound basis for making some important decisions about how your business can be more cost efficient and competitive. Let's start at the beginning with VoIP and then address the hosted model.

VoIP is the acronym for Voice over Internet Protocol, and represents the successor technology to TDM – Time Division Multiplexing, which is how conventional telephony is provided today by your carrier. TDM provides the quality and reliability we've all come to expect when using the telephone, but has limitations as we move into the Internet age. Before giving serious consideration to VoIP, micro businesses need to understand what VoIP is – and is not. Below we will provide a brief summary of the basics, and serve as a starting point for understanding the value VoIP represents.

WHAT VOIP IS

Cheaper Telephony
Lower costs for long distance, network operations, maintenance and upgrades.

Better Telephony
Can do everything you do today, but even more – much more – and at less cost.

Easier Telephony
No training or behavior changes are required, and employees can easily customize their features without relying on IT or tech support.

The Future
All communications networks are moving to IP, and VoIP allows you to have all the latest features as well as the ability to integrate voice with other forms of communication such as email, fax, Instant Messaging and video.

What You Need It To Be
VoIP is very flexible and easily customized to your needs – add/drop features, scale to grow as needed, and make changes when you want to make changes.

As Good As What You Have Now
VoIP technology has matured in recent years, and is now a carrier-grade substitute for conventional telephone service for businesses of all sizes – there is no reason to expect you'll have to compromise with VoIP.

Good For Your Business
With VoIP, micro businesses can get the feature richness of a PBX at a fraction of the cost – you can operate more like a big business and create that appearance for your customers and partners.

Ready To Use Now
VoIP can be deployed more quickly and cheaply than conventional telephony – today's solutions can be self-provisioned in as little as 15 minutes.

WHAT VOIP IS NOT

Free Telephony
Some forms of VoIP are free, but micro businesses could not effectively do all their telephony this way. VoIP will eliminate several costs you're used to paying for, and reduce costs in other areas, but it will not bring your telephony costs down to zero.

Complicated
VoIP may be a new technology but has been developed around the end user, not the network manager. Ease of use is a hallmark of VoIP, and is especially important for micro businesses.

Disruptive
Things will remain "business as usual" when adopting VoIP – you will not lose touch with your customers as you make the move, and internal operations will not be effected. Generally, employees will use the same numbers and extensions, and will not need to do anything differently.

Risky
VoIP is no longer a hobby technology and is now a core offering from all service providers. In fact, you face more risk staying with conventional telephony as time goes on. VoIP provides cost certainty, easy upgrades for new features and better options for business continuity and disaster recovery.

Limited By What Your Service Provider Offers You
Micro businesses have far more control over the services they use with VoIP. They no longer must rely on what the service provider offers. With VoIP they can draw from a much broader pool of third party applications, many of which are developed for the specific needs of micro businesses.

What is Hosted VoIP ?

Now that you have a working understanding of VoIP and what it can do for your business, you need to know the second part of the story, which is how you can get VoIP. There are several approaches you can take, but the two most popular are premises-based and network-based. Without getting technical, they are defined as follows:

Premises Based VoIP :
The business owns and operates their telephony system, which is usually a PBX or a more updated IP PBX for larger businesses, or a Key Ssystem for smaller businesses. This requires a capital investment in hardware, and internal IT resources to manage it.

Network Based VoIP :
This is the outsourced model, better suited for smaller businesses that lack IT resources and/or do not wish to make a capital investment in owning a telephony system. There are several variations of this model, with hosted VoIP being one of them.

For micro businesses, our view is that hosted VoIP is the best solution. In a hosted model, the business only needs to make a nominal investment in telephone sets that are compatible with VoIP, and does not have to worry about operating, maintaining or upgrading their network to support VoIP. It really offers the best of both worlds by being a cost effective way to get PBX-caliber features without the risk or challenges of managing their network. The only real trade-off is giving up control and ownership over the telephony system, but for micro businesses, there is usually little at stake in the first place.

Benefits of a Hosted VoIP Service for Micro Businesses

Here is a summary of the important benefits and advantages of the hosted VoIP model. Think of these not just at face value, but how they are additive to what VoIP brings on its own. It is the combined set of benefits that leads us to conclude that hosted VoIP is an ideal solution for micro businesses looking to move beyond conventional telephony.

Benefits of Hosted VoIP
Only a one-time expense for IP-enabled telephones to support VoIP service and features. No capital expense is required and you are not locked into an asset with a long depreciation cycle.

Ideal For Multiple Locations
Hosted VoIP is very flexible for supporting branch offices, remote workers, and new sites as the business expands. All that's needed is to add handsets as you go when setting up a new office or adding more locations to your network.

Business Continuity
Hosted supports the 24/7, mobile, on the road realities of today's business world. Business continuity is a core element of hosted VoIP, as the network services are housed in rock solid data centers. This also includes disaster recovery, a capability that no premises–based system can provide. In the event of a natural disaster or malicious network attacks, your messages and directories are never lost, and the business can carry on under all conditions.

Reliable Service
Regardless of how busy your phone lines get, hosted VoIP always works. Your customers and employees will always be able to get dial tone, and they'll never get a busy signal, even during peak periods.

Future Proof
VoIP is still a new technology, and we are just beginning to see what is possible. With hosted VoIP, you will always have the latest features and services, and will never need to worry about implementing them with your telephone system. For the first time, micro businesses have a solution not only to match what bigger competitors can do today, but to keep pace as technology advances.

Conclusion

The micro business market has long been underserved for telephony, and as VoIP becomes more widely adopted, several solutions are now emerging. The benefits of VoIP are now apparent to businesses of all sizes, and our view is that the hosted VoIP model is very well suited for micro businesses.

Article written by J. Arnold and Associates (IP Communications Research and Analysis)

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