What Is VoIP and Why Is It Good for Your Business

You may have heard about VoIP, but you are not sure what it is. Understanding how it works will enable you to use this technology to your company’s advantage. 

What is VoIP?

VoIP, which stands for voice over internet protocol, is a technology that allows you to make and receive telephone calls using the internet instead of a traditional phone line.

VoIP converts analog – the traditional – voice calls into packets of data. These packets of data travel over the internet just like any other type of data, such as email. Using a VoIP service, you can call a landline or a cell phone. When calling a landline or a cell phone, the packets of data are converted back to telephone signal – the traditional voice signal – before they reach the person you are calling.

You can also make or receive calls using landline telephones via your VoIP service. For this purpose, you need an analog telephone adapter to be connected to your network. In addition, you can call someone via computer-to-computer, with you – the caller – and the receiver speaking into computer microphones and listening through computer headsets or speakers.

A basic VoIP system only requires a broadband internet connection and a VoIP-enabled phone; a computer with VoIP software and a headset; or a traditional phone connected to an adapter.

VoIP versus Unified Communications

Aside from VoIP, you may have heard about “unified communications”. VoIP refers to the basic internet-based telephony system. Unified communications, meanwhile, is a communication system that includes not just VoIP, but other communication services, including conferencing that combines video, data and desktop sharing. You can also instantly monitor the availability of your colleagues through this unified system.

Benefits of Using VoIP

Your company’s aging telephone system only causes productivity slowdowns, as well as loss of revenue due to poor quality and expensive maintenance. VoIP, on the other hand, gives your business the following benefits:

  • It allows for individual employee telephone numbers without the need for multiple physical landlines.
  • It reduces local and long-distance charges.
  • It reduces travel costs as on certain occasions your staff need not have to travel – thanks to online conferencing, a convenient way to use video calls and other collaboration tools.
  • It can easily make changes – adds or moves phone extensions and locations – saving your company money and giving your company more flexibility.
  • With the unified communications solution, your employees have more ways to collaborate – through voice calls, video chat, web conference and instant messaging.
  • Your customers can contact your staff more easily.

Hosted VoIP versus On-site Installed VoIP

Once you have made the decision to replace your aging telephone hardware with VoIP, you have to choose which solution is best for your small business: a hosted VoIP or an on-site installed VoIP.

Both hosted VoIP and premise-based VoIP have their distinct advantages and disadvantages. Some small businesses favor the greater customization and control of premise-based VoIP, while other small businesses favor the scalability and ease of hosted VoIP.

Your decision on what VoIP solution to choose will depend on how your company views VoIP – whether as an operating expenditure (OpEx) or capital expenditure (CapEx). Your organization’s growth plans, as well as the availability of in-house experts to manage the VoIP will also be factored in when deciding to choose between hosted VoIP and premise-based VoIP.

The following are some of the major differences between hosted VoIP and premise-based VoIP:

1. Installation and Management

One of the main differences between the two is that hosted VoIP can be accessed over the internet as a hosted service, while premise-based VoIP is installed on your local network.

A premise-based VoIP runs on your I.T. infrastructure and connects to the public switched telephone network (PSTN). If you choose this path, your IT staff or IT partner will be responsible for the installation of the VoIP system and the upgrading of the routers needed as voice gateway to support the system. With a hosted VoIP, there is no need to upgrade the router as the voice getaway is part and parcel of the network of the hosted VoIP.

Both hosted VoIP and premise-based VoIP require a fast internet connection to transmit voice traffic.

A premise-based VoIP needs on-site resources and experts to manage the system, a hosted solution, on the other hand, does not need them. This management issue is one of the main reasons why small businesses pick hosted VoIP instead of premise-based VoIP. Some larger small businesses may opt for premise-based VoIP if they have in-house experts as they can have more control over the system. For instance, with premise-based VoIP, your company can upgrade the system anytime, instead of relying on the hosted VoIP provider.

A premise-based solution also enables your company to exercise control over which features should be enabled for an enhanced VoIP system. Hosted solution, on the hand, offers VoIP features as bundles or packages, as such your organization cannot select the features that you want.

2. Scalability

If for instance, your company hires a large pool of temporary workers during holidays and you need more phone lines, it makes sense to choose the hosted solution. It is simpler to add more phone lines with hosted solution compared to premise-based solution. With hosted solution, adding more users can be enabled with just a few clicks of the mouse. On the other hand, adding users to the premise-based solution will involve installing network and phone system equipment – an ordeal that makes it difficult to scale.

3. Cost and Pricing Models

Companies often choose their VoIP solution based on the number of users that must be supported. The initial costs and regular costs differ between hosted and premise-based solutions. The premise-based solution needs money to buy the necessary hardware, software, as well as the impending installation fees and assistance from the VoIP vendor.

Hosted VoIP, meanwhile, charge users a monthly fee for the service. This fee is dependent upon the number of phone lines your organization subscribes to. The bundles or packages you choose are also factored into the fee, for instance, if your organization opts to avail of advanced features such as the unified communications or video conferencing.

At GenX, we ensure that your organization gets the best VoIP system by using the following 5-step approach:

  1. Planning and Assessment
  2. Cost Analysis
  3. Long Distance Requirements
  4. Audio and Videoconferencing
  5. Implementation and Training

Contact us today to get started – (416) 920-3000.

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