PBX has remained the standard for most of the last 30 years, but businesses of all sizes are more and more frequently switching to cloud phone systems. Cloud systems utilize VoIP (Voice over Internet Protocol) technology to offer hosted and virtual PBX systems, enabling organizations to install scalable phone systems over Ethernet and WIFI or local network. With goals ranging from simplifying architecture to cutting costs or enabling increased flexibility and features, cloud phone systems have a lot to offer.

At the same time, virtual PBX are only a recent change from on-premise private branch exchange (PBX). Many organizations still have private switching in place, with the hardware to handle calls completely in-house, without relying on networks or bandwidth. This can have advantages over virtual PBX. Choosing whether or not to make the switch, or choosing which solution to move to, can be challenging.

Pros of Cloud Phone Systems

Cloud phone systems, also known as virtual PBX, allow organizations to quickly and affordably set up and start using a phone system. Calling is handled using Voice over Internet Protocol, so no switches or exchanges are needed, only VoIP capable phones.


Organizations installing virtual PBX can seamlessly install, move, and upgrade phone systems at very little cost. Some estimates suggest cloud phone systems cost less than ¼ of installation costs needed for a standard PBX system. Most businesses can also very quickly set up and install, with installation times sometimes running just a few hours. Why? Virtual PBX systems utilize cloud software, so everything is already installed. Once you have an account on your provider’s server, you just have to log on, set up phones, and start making calls.

This also means that cloud phone systems are extremely easy to scale. Adding more or removing phones from the system is a simple matter of changing your plan.

Reduced Hardware Costs

PBX requires a considerable quantity of hardware including phones and an exchange. Virtual PBX are typically plug and play, and are compatible with most types of existing phones you may own, including mobile devices. Employees can often easily install an app on their phone and accept calls on their personal mobile phones, from a separate work number.

This can greatly reduce the total cost and complexity of hardware, because, for the most part, there isn’t any. While you will still want to install phones and may want to invest in either desktop or mobile phones for offices, virtual PBX also allows you to simply accept calls from any computer with a headset.

Flat Monthly Fees

Most enterprise cloud phone solutions are sold using a subscription model, meaning you pay a flat monthly fee for everything. This fee will typically incorporate your user count, expected calling volume per user, and desired features. Most PBX hosts will offer features such as call forwarding, calling queues, call parking, shared lines, intercom, internet fax, etc. Some will also offer online conferencing as part of the solution.

Unlike with installing your own exchange, your subscription will include technical support, system maintenance, and infrastructure management. This will reduce the total burden on internal IT teams and may reduce costs.

Reduced Administration and Security Needs

Physical exchanges are huge cyber security risks. Virtual PBX take physical security and hardware maintenance out of your hands. Your IT team won’t have to update, manage, or repair hardware. Issues that are handled on site are typically managed remotely by your provider, with virtual or remote troubleshooting and upgrades and service personnel for when hardware does need a physical check. Most managed cloud phone service solutions mean you can essentially run a phone system with zero technical knowledge or administration, greatly reducing total burden on IT.

Most PBX hosts will also specialize in PBX, meaning they can more affordably incorporate strong security solutions into every server. Cloud-based providers offer enterprise-grade encryption and security, with no extra cost or effort to your organization or its IT teams.

Cons of Cloud Phone Systems

While cloud phone systems offer a lot of advantages, they can be disadvantageous. The largest of these issues relate to costs, internet connections, and contracts.

Potential for Increased Costs

Most virtual cloud systems are sold on a subscription basis, meaning you pay a flat rate per month for everything you need. Unfortunately, it’s important to pay attention to these subscription costs and what you are getting for the money. For example, low tier plans typically offer a fixed number of minutes per person and then when that user goes over that rate, bill a per-minute rate that can be quite expensive. This can result in bills that are higher than expected.

In addition, most enterprise cloud phone systems cost more per month than installing and implementing your own exchange. However, initial installation costs are greatly reduced. Most organizations also see reduced costs in terms of IT, maintenance, physical hardware management, and outages. It’s important to review where you would see costs increase and decrease, and weigh the pros and cons of each to determine which is better long-term.

Importantly, if your organization is scaling, planning to move within 3-5 years, or otherwise likely to need different phone solutions within 5 years, virtual PBX is almost always the better choice.

Ethernet Connections are a Consideration

Enterprise cloud phone systems rely on internet connections. This means that areas with poor or low-quality long line connections will struggle with maintaining quality calling. Review internet capabilities, determine if using mobile data is an option, and make a judgement call for your organization based on total internet capability.

Some considerations include:

  • Internet in the region or area is generally poor quality or slow
  • Your bandwidth is already heavily loaded
  • Not every building on premises has a good internet connection

Most organizations can easily support calling on their internal internet networks. However, you should review your existing architecture, as well as connections to the larger Internet, to ensure that you can.


Switching to the cloud means signing a contract, and one that will typically encourage you to sign on for a year or more. If you don’t like the organization, you’re likely stuck with them anyway because of a contract. While it is significantly easier to switch cloud PBX providers than standard PBX, it’s important to do your research upfront to ensure that your provider offers quality service.

Cloud PBX has a lot to offer for businesses of all sizes. In most cases, systems work in the same way as traditional PBX, you won’t have to change phone systems, and you likely won’t have to change numbers. In fact, employees will have more flexibility and options, with mobile device support, BYOD device support, and calling directly from computers and devices. Plus, with better calling range, cheaper calling per minute, and faster setup, virtual cloud phones make a lot of sense for many organizations.