Hosted (cloud) vs On-premise
Hosted phone system vs on-premise PBX
Where the system lives changes who fixes it, what happens in a power cut, and how much you pay up front. It changes less about the phones on the desk than people expect.
| What is being compared | Hosted (cloud) | On-premise |
|---|---|---|
| Up-front cost | Low. Handsets and installation, then a monthly service. | High. Hardware, licensing and installation, owned outright. |
| Ongoing cost | A monthly fee that includes maintenance and upgrades. | Lower monthly, plus maintenance, upgrades and eventual replacement. |
| When the office internet drops | Calls can divert to mobiles automatically. The system itself is unaffected. | Internal calls between desks keep working. Outside calls do not, unless there is a backup line. |
| When the power goes out | The system is elsewhere and unaffected; the handsets in the office are not. | Everything stops unless the equipment is on a UPS. |
| Adding a site or a remote worker | A configuration change. Distance is irrelevant. | Needs a link between sites, or a second system. |
| Upgrades | Handled for you, on the provider’s schedule rather than yours. | Yours to schedule — which some businesses strongly prefer. |
| Control and customisation | Broad, within what the platform allows. | Total. If you have an unusual integration or a regulatory reason to keep call data on site, this can be decisive. |
| Who fixes it at 3pm on a Friday | Your provider, remotely, usually before you have finished describing it. | Whoever holds the maintenance contract, often on site. |
Checked as at . Vendor features change — if something here has gone out of date, tell us.
The honest answer
For most Australian businesses under a hundred staff, hosted wins on every practical measure and the decision is not close. The up-front cost is the difference between a project and a purchase order, and multi-site or hybrid working stops being an engineering problem. On-premise still makes sense in two situations, and they are real: when a regulatory or contractual obligation requires call recordings and call data to stay on your own equipment, and when you have a mature, working system that is fully depreciated and nothing is wrong with it. "It still works" is a legitimate reason to keep it. Replacing a functioning PBX to be modern is a cost with no return, and we would rather tell you that than sell you a migration.
The thing people worry about that turns out not to matter
Call quality. On a business connection with adequate upload and sensible network configuration, a hosted system is indistinguishable from an on-premise one. Where quality problems do appear, they trace to the connection or the local network rather than to where the system lives — which means an on-premise system would have had the same problem.
The thing people do not worry about that should decide it
What happens when the person who understands the system leaves. An on-premise PBX tends to accumulate undocumented configuration known to one person. That is fine right up until it is not, and it is the single most common reason we are called about a system nobody wants to touch.
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