SIP, Hosted Telephony in The Cloud or retain a PBX?

Much of our time involves advising customers that have Legacy PBX phone systems on what their best path is in terms of upgrading.

Do they ditch the phone system for a fully-hosted phone system in The Cloud? Or do they simply upgrade their ISDN and port their numbers to SIP – or maybe something in between.

Deciding this isn’t always easy and every situation is different and different premises have different options in terms of their internet connectivity.

Here is a real-life email (a typical case study so to speak) sent to one of our customers this week. He has an AVAYA IP Office system which we supplied and maintain with ISDN2e (from BT, not us strangely), mostly analogue (basic) telephones on old telephone wiring. His business spends a lot of time on long phone calls as they do market research and are calling all around the world. They also record calls so they can send the recordings to clients.


Thanks for your time on the phone the other day – good to talk to you as always!

Here is the email I promised you. However, firstly, I think I should summarise some important points for you that will be factors in making your decisions. The danger is that you are speaking to several different suppliers about different permutations and it could get very confusing. Also, some may have their own agenda. As stated, I will always give best advice – what is right for one customer is wrong for another. So here are some key points to bear in mind:

  1. If you have to keep your ISDN with BT (due to you being under contract which I believe they will hold you to), you cannot have a fully hosted cloud-based phone system. You have to use (or keep) a phone system.
  2. A phone system (like your current AVAYA IP Office) will allow you to have both SIP trunks and ISDN connected and use them together
  3. A call recording solution cannot typically (or easily/cost-effectively) record SIP trunks and ISDN – so you would have to install extension-side call recording which is possible with some call recording solutions but not others. You then pick which extension’s calls are recorded – excluded extensions will not have their calls recorded
  4. PBX or phone system vendors do not typically have their own call recording system offering (where they do the functionality is normally only basic)– you normally have to use a third-party product. Note some call recording solutions do not provide encryption and therefore cannot be used in court. You have to also ensure you use a PCI compliant system if you are taking sensitive information over the phone (such as financial details – eg credit/debit cards). Also call recording solutions vary in what functionality you get and what search criteria you use.
  5. The phone system option will allow you to keep nearly everything you have invested in so far (the AVAYA system unit, cards, licenses and all existing handsets) – note handsets are a major cost of any upgrade
  6. Both SIP trunks and a Hosted connection must have a decent internet connection. For both we would normally install our own managed connection which guarantees call quality and would normally come with an SLA (service Level Agreement). Depending on requirements, this connection could also be used for your normal data connection for internet, email etc
  7. We are now installing lots of fully hosted phone systems, particularly for offices with less than 30 users.

Advantages of a Cloud-based phone system

The benefits of a fully hosted system include:

Low or Zero upfront costs

  • Costs tend to be on a subscriber basis (ie so much per user per month – this is attractive to many people but if you calculate the total cost of ownership over a longer period, like 5 or 7 years, it works out more expensive than a traditional phone system – sometimes considerably more)
  • You have no line rental apart from the cost of the internet connection and the number of users you pay for on a monthly basis, Similarly there is no cost for additional services such as caller ID and DDI’s (unlike ISDN2e or ISDN30 – in our case anyway – I cannot speak for the competition)
  • On our hosted system we give handsets away free on a 3 year contract. Otherwise, handsets are chargeable. Alternatively, we can amortise the cost of the handsets by increasing the monthly user charge
  • I cannot speak for others but on our hosted system calls to UK landlines and UK mobiles are normally free and calls to International destinations are cheaper as BT wholesale are not involved. This also normally applies to SIP trunks on a phone system
  • You can (generally) port any existing number to a hosted system (SIP is the same). You can also use any number (eg any national, international and non-geographical number both ways – inbound and outbound)
  • You have no physical phone system – just a network switch is installed connected to a router connected to the internet
  • You can scale up and down more easily (subject to contract) and much more quickly. Plus you can add numbers and services instantly – no more BT visits to add lines
  • The fraud settings and features are much better on Hosted (and SIP trunks) – in fairness they have to be as SIP is more susceptible to fraud and precautions are critical (such as installing extra hardware/software, such as Session Border Controllers.
  • You can take a handset and connect it to any internet connection in the world and it will work as your phone/extension on the system (subject to a small caviat on some routers)
  • There is no ongoing annual maintenance charge
  • Call recording can be free. However, normally you would be charged a monthly fee for storage (what you use) and this can be EXTREMELY expensive on a hosted system – far more expensive than using a phone system with ISDN/SIP
  • You can have users spread all over the world and very easily be part of the same system – great for remote working and organisations with multiple sites/branches (eg Retail)
  • SIP and Hosted offer a lot more features than traditional ISDN. For instance, you can queue calls at network level (rather having to have lines rented at your premises with the relevant capacity and cost). You can also potentially have voicemail greetings, different numbers in different hunt groups (including mobile numbers), load balancing between sites etc etc
  • You can only have IP phones – no digital phones. You can have analogue extensions but only by installing Analogue Terminal Adaptors which adds to the costs and is another point of failure introducing another 3rdparty piece of hardware
  • Given that you have to pay for each handset user, hosted systems can be very expensive for situations where you have extensions which are only rarely utilised (eg staff rooms, conference phone sin meeting rooms, bells, spare offices, site phones, door entry phones etc). The vast majority of hosted solutions make you pay per month for EACH position although our system is going to move to a concurrent user license at some point which will be a huge thing as we will see a much larger take-up with organisations like schools and colleges (for example).

Disadvantages of a Hosted Phone System

You should also be aware of some of the disadvantages of a hosted system:

  • The handsets have to be IP phones. In your case, this is a big issue as your current system uses old traditional telephone wiring. So we would need to install a lot of new category 5e cabling for each phone. Alternatively, we could use your existing data cabling used for your PC’s but this would need to inspected to ensure it is up to standard. We would probably also have to install a new network switch and configure your network to work with V/Lans so that voice and data traffic are virtually separated to ensure call quality is maintained.
  • Hosted systems connect to The Cloud – so if the internet connection fails, you lose everything. This can be mitigated using various techniques, all of which have a cost. There are various things you can do, such as setting up failovers to other connections and diverts to other numbers. What you put in place depends on budget and circumstance
  • You cannot connect other types of lines (eg ISDN2e, ISDN30, analogue) – it’s the internet all the way
  • You have no say on when maintenance is performed or what features/functions you get – you get what you get or wait until it becomes available. Often, even though hosted systems offer a lot of functionality, you may have to pay for ‘extras’, which may be standard features on a traditional system
  • Longer term hosted systems can cost a lot more (a physical phone system lease may last just 3 or 5 years – with hosted systems your payments don’t stop)
  • Note it can be confusing but some sales people will tell you that you can only have certain things with their products (they may say you can only have soft phones with hosted system or you can only have mobile applications with phone systems). This is NOT the case. This kind of basic functionality is available with both hosted and traditional premises-based phone systems (PBX)

So can you please let me know which route you want me to quote on? I would say, bearing in mind that BT will not allow you to break contract on the ISDN and bearing in mind the situation with your cabling and handsets,  I would retain your AVAYA IP Office system, upgrade the software to the latest level and install some SIP trunks with a managed internet connection with extension-side recording. Otherwise, although some might argue otherwise, I think it is going to cost you a lot more than you think if you go hosted.

I know this is a long email but it is important to understand all of this so you can make the right decision.

If you agree with my last point (or otherwise), let me know and I will provide costs etc.

Thanks for reading!


So as you can see, it is often not a straightforward choice of A or B.

If this situation resonates with you, please call us on 01233 527 100 to chat through your best options

Ready to talk?

Contact us to learn how your organisation can begin moving to digital, or call us on 01233 527 100.

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