VoIP ROI: Cloud vs. Premise vs. Hybrid

So you’re thinking about a VoIP telephone system for your business? Making the switch to internet telephony is a business-smart and increasingly popular choice for getting more out of your phones for less money, but the different options for deploying a VoIP solution can be confusing. What are the differences between cloud-based, on-premise, and hybrid VoIP systems? And which one has the best potential return on investment for your company?


Right off the bat, cloud-based VoIP systems have an advantage over the other two types in terms of start-up costs because you don’t have to purchase expensive hardware and installation. Rather, the service provider will handle the infrastructure and software in their own data centers, leaving you with much smaller capital outlays such as a dedicated VoIP router and handsets or headsets. Without extensive installation to consider, you can start using your new phone system almost immediately, decreasing interruptions to your business. With cloud-based, or hosted, VoIP solutions, you pay for only what you use, with monthly subscriptions that are based on users or “seats.”

Because of the service model of cloud VoIP, it is a very cost-effective option for small to mid-sized businesses for whom a large up-front cost and responsibility for system and hardware maintenance is not feasible. A lower cost doesn’t mean decreased functionality, however. In fact, depending on your provider, a hosted VoIP solution could offer more features than an on-premise or hybrid system, including improved call routing, mobile VoIP, voice conferencing, enhanced voicemail options, and more. Therefore, it's easy to see a substantial ROI relatively quickly after switching to hosted VoIP, as you can see the benefits of efficient communication and better customer service after only a few months. With more businesses making the switch, a speedy deployment can give you a leg up on the competition and establish you as a leader before your competitors even get set up.

Be sure to think big when considering a switch to VoIP: if you can foresee your company scaling up significantly, the price-per-user subscription model could be less cost-effective than an on-premise system.


As opposed to a cloud-based system, premise VoIP solutions involve installing IP PBX equipment and phones on-site. All related equipment and software is owned and maintained by your company, which means you have greater control over every aspect of your phone service. With a cloud-based service, downtime and other issues are handled on your provider’s schedule, whereas premise VoIP problems can be dealt with on-the-spot by your own IT specialists.

For large enterprises with over 100 users in a single location, premise VoIP is often considered to be a better return on investment than cloud-based solutions. Because the company owns the equipment, scaling up after the initial investment is easy, and the more users on the system, the better the potential ROI. In addition, controlling your VoIP system means you can pick and choose the features your employees need without paying for the ones they don't. This strategic spending can translate into increased productivity and better savings. Be prepared for sticker shock, however. With significant investments in both operational and capital start-up costs, premise VoIP systems are expensive to start out, and require time for installation, during which there could be some interruptions in business operations as phone systems are switched over. Premise VoIP systems also require IT man-hours and infrastructure to manage and maintain.


Hybrid solutions, which build on existing ISDN telephone systems, are good options for businesses that already have an extensive phone system in place. Hybrid VoIP allows internet telephony and traditional telephone networks to be used concurrently, and gives you a whole host of VoIP features without investing in all new hardware and infrastructure.

Cost is an important consideration when thinking about a hybrid solution. Since you’re using your existing PBX phone system, you maintain the cost of that with an additional on-premise hybrid PBX device on top. The ROI of a hybrid system can be difficult to calculate, but even with the additional costs, be sure to track improved customer and employee satisfaction due to added VoIP features. Often, hybrid VoIP can be used as a good stepping stone to a hosted VoIP system, because you’re not discarding your existing infrastructure outright while getting used to everything that VoIP can offer.


Whichever type of VoIP you decide is the best fit for your company, switching to VoIP can help you make the most of your phone system. Whether you’re thinking about switching to save money, get ahead of your competition technologically, or provide more options for your employees and customers, choosing the right VoIP delivery option will give you more bang for your buck.


Every business needs different things from their phone system, and so every VoIP solution we offer is tailored for our clients. See how we offer each business the perfect solution with our case studies:

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