The Math Behind Cloud Based Telephone Systems

Similar to many applications, the decision to consider a Cloud vs. premises based telephone system is truly a matter of math.  What is the balance of hard and soft CAPEX and OPEX to each of the solutions?  Of course, the equation for each organization is unique to their short and long term objectives, but overall the factors to be considered are the same.

Premises-Based Telephone System

Capital Expense Factors

  • The physical telephone system
    • The core operating system
    • Software
    • Physical Server(s)/VM
    • Carrier interface cards
    • Session border controller for SIP
    • Voice Mail
  • User Costs
    • Telephone sets – physical sets, mobile devices, softphones
    • Operator/Receptionist sets
    • User licenses
  • Other Considerations
    • Number of locations to be supported
    • Business continuity
    • Call Center Functionality
    • Reporting Capabilities
    • Implementation/Configuration/Training Hours

Operating Expense Factors

  • The physical telephone system
    • System maintenance
    • System Upgrade
    • Management
    • Support – in-house expertise vs vendor support
    • Electricity, HVAC, space
  • Telecommunications Costs
    • Primary services
    • Secondary/Redundancy services
    • Usage – local, long distance and toll-free
    • WAN services for multiple sites

Cloud-Based Telephone System

Capital Expense Factors

  • The physical telephone system
    • Telephone sets – purchase vs. lease
  • Implementation/Configuration/Training Hours
  • Security

Operating Expense Factors

  • Seat licenses
    • User licenses – dependent on feature packages
      • Operator/Receptionist
      • Voice mail
    • Site licenses for multiple locations
    • Casual licenses
      • Breakroom
      • Reception area
      • Phones not allocated to specific users
    • Call center agent licenses
      • Management
      • Agent
    • Telecommunications Costs
      • Primary access facilities to cloud-based provider
        • Internet bandwidth
        • Dedicated access
      • Secondary/Redundancy services
      • Usage – local, long distance and toll-free

Other Factors

  • CAPEX Amortization – Every organization has a different perspective on how capital costs should be extended. In the past, a premises-based phone system was considered to be a long-term investment.  Organizations have found telephone systems have remained operational for as long as twenty years.
  • Internal Support Resources – As organizations have maximized their resources, they often find their internal resources need to be dedicated to driving the business rather than supporting it. Many have turned to third parties to provide day-to-day support.
  • Flexibility – Crystal balls have become cloudier these days. The tools required to support their users and customers tend to change more often.  Many organizations have found capital expenditures to become outdated more quickly.
  • Growth – Controlled growth is generally considered a good thing. But, what will it take to expand their investment as expansion occurs by location or user count?
  • Mobility – It is no longer the case where users are always locked to a physical workspace. An increasing number of organizations have users on the move or even home office inclusions.
  • Hybrid Environments – For many organization, the decision to select premises vs cloud based is not all inclusive. Many choose to utilize a hybrid topology merging the two solutions.