Breaking Down VoIP: Selecting the Best Solution for Success

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Emmeline Blankenship
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1 Breaking Down VoIP: Selecting the Best Solution for Success July 2013

2 Introduction With technology in a perpetual state of evolution, it s no wonder that many companies feel overwhelmed with the array of Voice over Internet Protocol (VoIP) options that are available when their phone system contracts are up for review. Navigating these treacherous VoIP waters can often lead to excess spending of time and money. Whether you re ready to upgrade your copper-wire system or are trying to determine if you have the best VoIP fit for your company, this white paper will break down the insand-outs of VoIP so that you can make a strongly informed decision on a solution for your office telecom. VoIP systems have become the standard telephone implementation approach in today s offices and there are two variations to consider when selecting a solution for your business: Hosted VoIP and VoIP-PBX (IP-PBX, IPBX). Each method has positives and negatives depending on the needs and resources of your business, but these strong points and drawbacks will guide a business in the best direction for its overall operational requirements. While this white paper will provide an overview for the types of VoIP to consider, each provider that offers Hosted VoIP or VoIP-PBX will have differing cost structures as well as an array of features depending on a business needs. It is recommended that an inhouse staff member or an outside consultant research and review all available Hosted VoIP or VoIP PBX providers to seek out a strategic partner for a cost-effective solution.

Whether you re ready to upgrade your copper-wire system or are trying to determine if you have the best VoIP fit for your company, this white paper will break down the insand-outs of VoIP so that you

3 Hosted VoIP What is Hosted VoIP? Hosted VoIP is the set it and forget it option for your company s phone system. With this environment, a Hosted VoIP provider will host and manage the system for a monthly recurring charge. While you are responsible for supplying a broadband connection and purchasing the phones (and possibly a router) for a Hosted VoIP system, all other equipment, along with the PSTN trunking lines, is managed and upgraded by the provider. Hosted VoIP providers offer the base services with a monthly recurring charge. Depending on the number of users, necessary additional features, and the overall structure of your company, the additional monthly costs can quickly rise. Furthermore, your company is at the will of the provider. The provider decides which new features they will offer with their services in addition to the customizability of these features. Although the provider will handle any system alterations, any requests may not be implemented instantly. How Much Does Hosted VoIP Cost Overall? Not including the broadband connection that you will need to run a Hosted VoIP phone system, the costs revolve around the initial setup fees and activation expenses, which vary by provider. While VoIP phones will be the initial recommendation for implementing a Hosted VoIP solution, other alternative phone solutions include analog adaptors, the integration of mobile devices, and softphones (computer software that acts as a phone). A router may also need to be purchased for each location that will be using the system.

While you are responsible for supplying a broadband connection and purchasing the phones (and possibly a router) for a Hosted VoIP system, all other equipment, along with the PSTN trunking lines, is

4 VoIP PBX What is VoIP PBX? Unlike Hosted VoIP, a VoIP PBX system is managed completely in-house by dedicated staff generally within an organization s IT department. All of the necessary equipment including servers, routers, gateways and phones will need to be purchased from a VoIP PBX vendor. There are no monthly recurring charges paid to the VoIP PBX equipment provider, but the company must provide access to a broadband connection and PSTN trunking lines in order to operate a VoIP PBX system. While maintenance is the responsibility of the company, this allows for complete control for customization and the addition of new features. How Much Does VoIP PBX Cost Overall? The costs for a VoIP PBX system include the purchase of the necessary hardware, software, and licensing as well as the costs of in-house staff dedicated to its management and maintenance. As with a Hosted VoIP system, there are additional expenses related to purchasing VoIP phones (or an analog adaptor, smart phones, or softphones ) as well as PSTN trunking and the maintenance of a broadband connection necessary to host a VoIP PBX. Depending on the provider, there may be additional costs for system upgrades.

There are no monthly recurring charges paid to the VoIP PBX equipment provider, but the company must provide access to a broadband connection and PSTN trunking lines in order to operate a VoIP PBX

5 Summary Breakdown Management Hosted VoIP Managed off-site by a VoIP provider VoIP PBX Managed in-house by trained IT staff Operation Fees Low upfront costs, monthly recurring costs, fees for additional features High upfront costs, additional fees for repairs and upgrades Additional Fees Costs for a suitable broadband connection Costs for a suitable broadband connection, PSTN trunking lines, and IT staff Transferability Easily move phones to a new location or provider Must physically move all hardware and phones to new location, changing providers will require new equipment Contracts Month-to-month No contract Features Most popular features included, as customizable as the provider allows at an additional cost Highly customizable

connection, PSTN trunking lines, and IT staff Transferability Easily move phones to a new location or provider Must physically move all hardware and phones to new location, changing

6 Which System is Better for your Business? There are many factors to consider when selecting a VoIP option for your business. Depending on the size, technical staff, and financial resources of your company, along with desired and predicted growth, there is likely a clear-cut direction in which to proceed. In general, the Hosted VoIP structure is geared towards small to medium-sized businesses since it will provide the desired VoIP features without the additional responsibility. Hosted VoIP also allows for less of a drain of your resources since it is managed by an outside provider who will take care of any issues, upgrades, or changes. While there is always the possibility that a Hosted VoIP company could close and leave you without a phone system, the phones are easily transferable and can instantly be used with another Hosted VoIP provider. VoIP PBX is ideal for larger companies and businesses looking to grow into a bigger organization. If you already have an existing infrastructure and the financial resources to withstand the initial upfront costs, a VoIP PBX system can allow for extreme customization based on the needs of your organization. If and when these needs change, the VoIP PBX system can be modified to work most efficiently with the modified structure. Each Hosted VoIP or VoIP PBX provider offers not only a different variety of services, but the costs involved with each feature vary as well. As stated before, it is recommended that an in-house staff member or an outside consultant research and review all available Hosted VoIP or VoIP PBX providers to seek out a strategic partner for your business.

In general, the Hosted VoIP structure is geared towards small to medium-sized businesses since it will provide the desired VoIP features without the additional responsibility.

7 About Us RAK Consulting, Inc ( is a full-service communications consultancy that specializes in telecommunication cost-reduction and telecom management. Offering unbiased advice and solutions for communications needs, RAK Consulting is and always has been completely independent of all telecom vendors. With our experience and unique blend of technical, financial, and management expertise applied to all of the projects that we take on, we are able to offer a wide range of solutions that are focused on the specific needs and best interests of our clients.

Offering unbiased advice and solutions for communications needs, RAK Consulting is and always has been completely independent of all telecom

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