The decision to implement a VoIP solution leads to a perplexing choice: on-premise, hosted or hybrid? Each of these delivery methods has pros and cons—most widely accepted, but some highly contested.

Hype and buzz aside, it boils down to determining which type of solution is optimal for your company.

Key considerations should include:

  • Current/near-term/future business needs
  • Number of users, including remote workers and temporary/seasonal staffing for peak times
  • Growth strategy and company goals (e.g. mergers, acquisitions, new locations)
  • Security/redundancy/disaster planning/business continuity
  • Existing telecom assets, telecom contracts and network capacity
  • In-house expertise, resources and desired timeframes
  • CapEx vs. OpEx

This assessment helps you gauge the functionality, capabilities, scalability, and flexibility needed to establish solution criteria.

On-Premise VoIP
With an on-premise VoIP system, IP PBX equipment and IP phones are installed on-site and connected to your LAN. You own/administer/maintain all related equipment and software. Calls come to the system from a communications service provider over traditional PSTN (Public Switched Telephone Network) lines—or over your T-1/PRI connections or SIP trunks—and are distributed to VoIP phones.


  • Greater control over your telecom investment – Ownership means that hardware, software, devices, messages, records, etc. all remain on your company’s premises. You have tight control over updates and security – and with the system on-site – can quickly address outages and issues.
  • Enhanced customization – Applications, system specifications and configuration details can be tailored to your exact needs, which is difficult to achieve with pre-packaged hosted solutions.
  • Total Cost of Ownership – An on-premise solution requires a one-time capital outlay. After that, the only recurring costs are for maintenance and upgrades. Your service is managed internally. Generally speaking, companies with 100 or more users at any one location consider this solution to be more cost-effective in the long run.
  • Superior QoS – On-premise solutions run on your infrastructure. With hosted solutions, traffic runs on the provider’s WAN, which can compromise quality and reliability.
  • Network Convergence – Combine voice and data traffic on the same network to reduce network costs.


  • Substantial capital outlay – The initial costs for IP-PBX’s, servers, phones, software and maintenance contracts, etc. are significant. Given the inherent robustness of hosted offerings, many companies feel it is better to reserve capital spending for other projects.
  • Requires in-house resources to manage and maintain – Many organizations would rather focus their IT talent on other initiatives. Many IT staffs are limited and can become overburdened with maintenance/management tasks, which can delay upgrades, etc. Delayed upgrades can lead to operating on old versions that may no longer be supported by the manufacturer.
  • Limited flexibility and scalability – Routine activities like Moves/Adds/Changes (MAC), adding new system features, configuring remote users, scaling to handle growth or peak call volumes, etc. require IT resources and/or hardware/software upgrades to execute. With hosted solutions, many of these modifications can be done – on-demand – through web-based administration.
  • Time-to-solution – On-premise systems can require a lengthy implementation period, and the project is typically complex. Hosted solutions are more rapidly deployed.
  • Total Cost of Ownership – Capital outlay aside – annual maintenance costs, additional licenses, hardware replacements and upgrades add-up over time. Company is also responsible for redundancy, downtime and power costs.

Hosted VoIP (facilities-based/cloud-based providers)
With a hosted VoIP solution, the service provider owns and manages most of the necessary infrastructure, equipment, software, etc. in their data center. In most cases, the company only needs to have an integrated access device (IAD) on-premise (e.g. QoS router), any necessary switches and IP phones on the desk. Hosted VoIP service provides all of the features/capabilities of traditional phone systems and, frequently, many more. Services are accessed from anywhere via an Internet connection.


  • Minimal up-front costs and rapid deployment – With hosted VoIP, you are up-and-running quickly. Because it is delivered “as a service,” there is reduced capital outlay and investment risk. Monthly recurring charges (MRC’s) are subscription-based and come out of your operating budget. Subscription MRC’s are based on users, seats and/or call paths.
  • Best-of-breed technologies and advanced features/capabilities – With a hosted solution, you are ensured access to the latest functionality. SMBs have access to enterprise-level capabilities. Adopting new features/functionality happens almost immediately as upgrades are “pushed” out to the customer premises – you bypass upgrade costs, delays and the need to involve in-house resources. Hosted VoIP easily integrates with unified communications.
  • Highly flexible and scalable – Web-based administration enables you to easily and rapidly make changes that would otherwise (with on-premise) involve hardware/software upgrades, in-house IT resources, complexities and delays. You can manage MAC needs, add remote users, and optimize services/features/capacities/capabilities based on up-to-the-minute needs.
  • 24/7 monitoring – With service providers monitoring around the clock, performance remains consistently high.
  • Redundancy/disaster recovery for voice and data – Most providers offer an embedded continuity plan that protects the integrity of your voice calls and messages.
  • Exiting the telecom management and maintenance business – Hosted VoIP eliminates a myriad of headaches, hassles, costs, and complexities that come with managing, maintaining and upgrading an on-premise solution. You bypass the added power expenses. Companies can focus IT resources on other strategic activities.
  • Network Convergence – Combine voice and data traffic on the same network to reduce network costs.


  • Total Cost of Ownership – Over time, recurring service charges add to operating budgets – diminishing the value of initial CapEx savings. Additionally, bandwidth upgrades could be required to adequately support services.
  • System improvements/upgrades are on the provider’s timetable – Although many modifications can be made to services through web-based administration, overall system improvements are out of your control.
  • Limited customization Applications, system specifications and configuration details are largely determined by the provider in pre-packaged offers.
  • QoS and service interruption – Hosted VoIP calls are subject to quality problems if not set up correctly. Additionally, in the event of power outages and Internet down time, your system is down locally.
  • Loss of control – Letting go of telecom management can be a difficult adjustment – particularly for companies with concerns about records, voicemails, prompts, data, etc. residing on a provider’s external server.


Hybrid VoIP
A hybrid VoIP solution is an attractive upgrade option for companies that are ready to migrate to VoIP, but do not want to replace their TDM PBX or invest in re-wiring/re-cabling. The solution is essentially a TDM PDX with a VoIP gateway. Through this gateway, businesses connect to VoIP devices using existing handsets and lines.

Another example of a hybrid VoIP solution would be one in which some components are on-premise while others are hosted by the provider. The idea of a hybrid solution is to combine the “pros” of both the on-premise and hosted VoIP solutions to create a blended architecture which combines an on-premise PBX system with a suite of services hosted at the provider’s data center(s).

ATC Facilitates Assessment, Selection and Deployment
The right VoIP solution can transform the way you conduct business, so why leave anything to chance?

At ATC, we specialize in facilitating VoIP decision-making processes through solution roll-out.

Our phased approach begins with an assessment of your current infrastructure and assets. From there, we leverage strategic relationships with VoIP service providers and equipment vendors to propose the ideal solutions for your company. Since the average lifecycle of a VoIP phone system is 8-12 years, the proposal includes 5-year and 10-year cost projections for increased visibility into total cost of ownership.

A professionally managed implementation reduces your time-to-benefit.