When it comes to hosted PBX (News - Alert) (as opposed to premise PBX) considerations, there are some things to bear in mind:

There are two primary types of PBX solutions for business, according to VoIP-News, hosted PBX and premise-based IP PBX. “Hosted systems take most of the switching and intelligence of the system and move it offsite to a remote location where it is managed by the service provider,” VoIP-News officials say, adding that equipment at an organization’s site is limited to the phones themselves, some dedicated routing equipment and perhaps a switch to provide emergency access to the older traditional TDM (time-division multiplexing) telephone network.

As a result, VoIP-News officials say, “hosted systems are usually quicker and cheaper to install and set up. They offer a standardized set of services.” Because they are hosted remotely, there is less maintenance for a business and no need to perform upgrades, the industry journal says, adding that the downside is that upgrades often must wait until the service provider is prepared to offer them, so there is less flexibility and fewer options in configuring the system.

In contrast, premise-based PBXs require servers and more switches to be located at the business site: “The organization also has to be prepared to install, manage and upgrade them. The downside is a higher startup cost, the need to manage and maintain the system, and more difficulty growing the system in the future. On the other hand, the organization can upgrade to new features at will and has full ability to configure the system any way it likes.”

You’ll want to select a hosted PBX provider carefully, VoIP-News officials caution, warning that “some specialize in organizations of a particular size and can turn out to be unable to scale up beyond a certain number of users. On the other hand, others are unable to provide affordable service for a very small organization.”

When it comes to the typical scenario for a hosted provider, there are no or basic fixed setup costs, and the company pays a monthly charge per user. In contrast, premise-based systems feature a larger initial cost that covers servers, software, switches and gateways. “However,” VoIP-News officials say, after the initial setup, ongoing costs can be much lower. “It is also easy to predict the cost of growth with a hosted PBX, but scalability and expansion can be much harder to predict with premise-based IP PBXs.”

The bottom line: hosted PBXs are best for small businesses but good for medium-size businesses as well. They’re also good for businesses with a lot of remote users or those that anticipate rapid changes in size.

Premise systems are best for large, stable businesses with predictable volume that need custom features or to integrate the phone system into multiple business operations.