Premise-based Managed VoIP vs. Hosted VoIP Solutions

Editor's Note: This blog and its main components were originally published by John Miller in January 2013. 

For most small to medium-sized businesses, the old fashioned phone closet filled with equipment is no longer a viable option, so it’s time to help them migrate to a new solution—one that will work for them today and well into the future.

Virtually every small and medium-sized business owner wants a VoIP-based solution, but they might not understand the benefits and challenges presented by different forms of VoIP. For instance, should prospects go with a Premise-based Managed VoIP solution, or is Hosted VoIP a better fit for their overall business needs?

hosted voip

MSPs and Interconnects should have a working understanding of their customers' needs, such as how they make and take calls, what they need to improve communications and business processes, and whether or not application integration is important," said Alan Rihm, CEO of CoreDial. “MSPs and Interconnects have been servicing these customers for years, and now, they need to offer the right solution for the each individual customer. Most of the time that’s a Hosted VoIP solution, but sometimes it’s a Premise-based Managed VoIP solution, including SIP trunking.”

Here is a comparison of Managed Premise-based VoIP and Hosted VoIP, and advice on which solution will work best for customers:

Premise-based Managed VoIP

With Premise-based Managed VoIP, you’re providing all the equipment, software, and operations and technical expertise for your customers. This includes the design and deployment of their new IP telephony system, and ongoing maintenance and management. In other words, the day-to-day management of the system is your responsibility and because of that, the customer is surrendering a certain amount of control. It’s up to you to manage to the level of the Service Level Agreement.

For your customer, there’s going to be a bigger capital expenditure to have the equipment on their premises. And because they’ll be paying you a recurring fee (good for you) to manage the system, their TCO will be higher. It’s important for the MSP or Interconnect to understand the scope of responsibility to which it’s committing—you’ll have more truck rolls to deal with issues that inevitably crop up over time.

hosted voip

Hosted VoIP

A Hosted solution delivers the same software, services, and capabilities (in most cases), but everything is Hosted on the cloud. This is typically an appealing option for customers because it provides high quality, flexible and scalable communications services without the major upfront capex hit. Additionally, it costs less over time, and it’s future-proof for them because software and equipment gets updated by the provider as it becomes available, rather than them being stuck with outdated equipment.

Obviously, a Premise-based Managed solution is going to create more revenue for you up front, but the revenue can be lumpy or inconsistent, and the margins are typically much lower. The infrastructure needed to sell, deliver, and support the old premise-based model is also very costly to maintain.

Ultimately, the solution you choose to present to a customer comes down to your understanding of how they work, and their preference. The good news is that nowadays the technical capabilities are so similar that the customer has options.

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