Great content delivered right to your mailbox

Thank you! Check your inbox for our monthly recap!

Let’s face it. Even though nearly half of CIOs in large companies are spending 80% of their budgets to maintain existing on-premises systems, many of them are also increasingly moving to the cloud. In particular, voice over IP (VoIP) adoption has grown steadily over the past decade, with the worldwide market at nearly $40 billion in 2014 and with a projected value of $155 billion by 2024. That’s massive growth.

In addition, it’s estimated that there are close to 700 businesses operating in the VoIP industry. Many of these businesses are traditional on-premises PBX vendors that are making the switch to the cloud. The problem is that this transition isn’t always seamless or without problems, which can overshadow the benefits that businesses enjoy with cloud-based communications.

Want to learn more about VoIP? We have an ebook to help you get started.

Benefits of Cloud-Based Communications

There’s a whole host of benefits to switching to cloud communication services. For businesses, these include:

  • Lower costs
  • Better scalability
  • Improved portability for mobile businesses and employees
  • Full versatility in supporting rich media applications like Skype, allowing for the sharing of data and applications
  • Overall ease of use

Unfortunately, not all cloud-based vendors are equal in terms of how they reap these benefits, regardless of whether they were originally born in the cloud. But there can be additional challenges when a traditional PBX vendor switches to or includes cloud-based services in its offerings. When it comes to considering whether to stick with your on-premises PBX vendor who’s switching to the cloud, you need to consider some potential stumbling blocks.

Are On-premises PBX Vendors the Best Cloud Providers? Probably Not.

Yes, you might have a trusted on-premises PBX vendor with whom you’ve worked for a long time. However, just because that vendor was great at supplying on-premises services doesn’t mean this will hold true for their cloud-based services. The long and the short of it is that you don’t need to stay with your on-premises PBX vendor when you move to the cloud.

Often, there are problems when an on-premises vendor tries to switch to the cloud—problems that aren’t unique to just cloud-based vendors. Let’s look at the most significant problems with traditional on-premises PBX vendors shifting to the cloud and how these can affect you as the customer.

1. On-premises PBX Vendors and Their Partners Need to Invest in Certifications

Traditional on-premises vendors have partners, other companies they do business with in the traditional on-premises sphere. These partners aren’t going to go away when your PBX vendor decides to adopt the cloud as a service. So not only does your vendor have to get the required certifications for operating on the cloud and ensuring regulatory compliance, but so do their partners. These certifications can cost as much as $500 to $600 each per person and that cost is passed on to the consumer. In addition, regulations may vary, even from state-to-state, so coordinating these certifications can be quite challenging.

2. On-premises PBX Vendors Don’t Have the Required Agility

One of the primary benefits of cloud-based communications is that they allow a business to scale up and down as needed. A business’s needs might fluctuate from week to week, month to month, or season to season. Traditional PBX vendors offering cloud-based solutions often don’t have the required flexibility or agility. They can scale up easily enough, but they aren’t so great at scaling down. This can leave businesses paying more than they need to at certain times of the year.

3. They’re Still Operating on Minimum Quotas

Traditional PBX vendors and their partners have always made their money by selling large systems and installing lots of costly equipment. This meant securing large profits all in one go. While a PBX vendor might be adopting cloud-based services, they’re still in the business of selling on-premises systems, and they’re required to meet a minimum selling quota.

It’s important to remember that on-premises systems result in large sales up front, whereas cloud-based services rely on an easy setup, lack of equipment sales, and a pay-as-you-go model. This means that selling a few cloud-based services may not have much of an impact when trying to meet monthly sales quotas, and that means your PBX vendor may focus more on meeting on-premises quotas than on meeting your needs.

4. They Don’t Target the SMB Market

This idea of PBX vendors meeting sales quotas and making big sales is important. Since they aren’t making many large equipment-heavy sales with their cloud-based services, these vendors need to make every sale count, especially their cloud-based ones. That means focusing on larger companies that are going to require significant services at a higher cost, whether those companies are on the cloud or using a hybrid approach.

Unfortunately, small- and medium-sized business are often left in the dust because their needs are not significant enough to be considered worth chasing. The result? The SMB market is often neglected in favor of bigger, better deals.

5. They Favor Supporting Their Own Hardware

Again, it comes down to the bigger fish. Since traditional PBX vendors still operate with on-premises systems and customers, and these systems earn higher sales and commissions, their focus is on selling first-party hardware on every new contract, even when they sell their cloud systems. Unfortunately, that means these vendors’ cloud-based customers are a mere afterthought when it comes to non-first-party hardware and technical support.

The Bottom Line…

Ultimately, unless they have the resources and motivation to create their own cloud-based infrastructure to serve their customers, traditional on-premises PBX vendors are going to need to partner with cloud providers to offer cloud communication services. And if that’s the case, it makes more sense—particularly for SMBs—to switch to a completely cloud-based provider from the beginning. This eliminates the middleman and allows businesses to get the most from their cloud-based services for less.

Download Your Free Guide!


What do you know about VoIP? This guide will help you learn everything about it.

Thank you! We've just sent you your eBook.

Written by The Sherweb Team Collaborators @ Sherweb