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By: Angela Cook on April 15, 2021

Cloud-Based Phone Systems Vs. On-Premise Phone Systems (Pros & Cons)

Cloud Phone Solutions | Cloud Services | On-Premises Phone Solutions | UCaaS | Unified Communications

When thinking of a phone system, what comes to mind for you? For many, phone systems can be defined as a network of chunky black telephones with several buttons and wires connected to a wall. This type of phone system has been the tried and true way for companies to communicate with potential prospects, clients, and team members for a while. However, it isn’t the only way to call someone nor conduct business anymore.

You may be wondering, “Wait, are you saying there’s another type of phone system?” Why, yes! There is. Picture this, a phone system that enables you to do all the regular telephone functions. Instead, your call is hosted in the cloud.  

Here at LDI, we have helped several clients migrate to a cloud-based phone solution from their on-premises phone system. While LDI offers both on-premise and cloud-based phone systems, we work with each customer to assess their current phone infrastructure and help them decide which will best meet their needs. At LDI, we offer LDI Elevate, a cloud-based unified communications solution that enables users to integrate all their communication tools via the cloud.

While all of this may be a tad confusing at first, this article is meant to clarify the pros and cons of both a cloud-based phone system and an on-premises phone system. By the end of this article, you will have read the difference between both and have a better idea regarding which system is right for you.


What Is A Cloud-Based Phone System?

A cloud-based phone system allows you to make phone calls via the internet instead of through a physical analog or digital phone line. A digital/IP telephone utilizes a network connection consisting of optical or copper wires, a cloud-based phone system solely using an existing internet connection.

Essentially, a cloud-based phone system stores your unified communications application on a server that can be accessed at any time via the internet. Your employees’ calls can conveniently be routed to any computing device they see fit, thanks to your phone system being hosted in the cloud.


What Are the Pros and Cons of a Cloud-Based Phone System? 

Now whether you are looking to upgrade your company’s phone system or have never heard of alternative phone system options before, let’s spend some time detailing a few pros and cons of using a cloud-based phone system.


Below are a few pros that come along with implementing a cloud-based phone system.


Using a cloud-based solution, your company will automatically pay less than your regular land-line phone system because it only needs a reliable internet connection to make or receive a call.

Expensive software or hardware is also not needed to use a cloud-based phone system.


By simply downloading an application to your computing device, team members can make or receive calls from anywhere at any time. How cool is that?

By simply connecting the cloud-based phone system to a reliable WiFi network, remote work becomes that much easier. Employees who are working at the office or home can quickly transfer calls between them as well. 


Below are few cons to consider if your business was to implement a cloud-based phone system.

Required Internet Connection

Having a dependable internet connection is essentially the main requirement for conducting calls via a cloud-based phone system

While a cloud-based system does not need an extreme amount of bandwidth, ensuring that your network has a reliable connection is paramount.


Latency comes with the territory of using a cloud-based solution. Latency can affect a phone-calls quality and duration and can become problematic if your internet connection is not reliable.

Testing your internal network’s bandwidth and an internet connection can ensure minimal to no latency during a phone call.


What Is An On-Premise Phone System? 

An on-premise phone system is a physically installed setup that consists of physical phones and wires. This phone system is set up on-premises in a company’s office or in a data center.

Depending on the number of telephones your company needs, an on-premise phone system can either be owned or leased. 

Keeping your phone system within your office walls has both pros and cons. Let’s explore what those are and how they can affect your company’s workflow.


What Are The Pros And Cons Of An On-Premise Phone System?

Keeping an open mind when it comes to the phone system you’ve been working with for years is imperative in optimizing your current business operations. Just as there are pros and cons with cloud-based phone systems, on-premise phone systems have their advantages and disadvantages as well. 

Let’s dive right into a few pros and cons that come along with utilizing an on-premise phone system.


Below are some pros to implementing an on-premise phone system for your company.


If your company prefers controlling every setting and feature, an on-premise phone system would be the right fit for you. With an on-premise phone system, you have the freedom to customize and manage your phone system the way you see fit.  

If the extent of controls you require is significant, then you will need to be able to customize the settings, features, and overall controls of your phone system.

VoIP and Digital Setups

On-premise phone systems may include on-premise VoIP or Voice over Internet protocol. Without using a landline or mobile network, a VoIP phone system utilizes an internet connection to make phone calls.

Using a broadband connection, VoIP can essentially turn analog voice signals into digital signals. By working with a services provider, you can expand your on-premise phone system by enabling it to use VoIP.


Now, let’s go over a few cons that come along with implementing an on-premise phone system.


To maintain your current on-premise phone system, your company will need to either outsource a Managed IT Provider or depend on your internal IT department’s strengths to solve any issues that should arise

Maintaining problems such as the phone system going down, faulty wiring, or dealing with an out-of-date system can be stressful. If your phone system goes down, this will cause customers to have no practical way to call in. 

Lack of Flexibility

Especially with work environments leaning towards more of a hybrid or remote structure, depending on an on-premise phone system to make calls might not cut it.

Any employee who needs to make a phone call needs to physically be in the office to use an on-premise phone system. Those who are remote will not be able to make or receive calls while away from their desk phone.


And finally, Which Phone System Is Right For Your Company?

Cloud-Based Phone Systems Vs. On-Premise Phone Systems-02

While some companies may find a cloud-based phone system is suitable for their business needs, other companies might want to rely on an on-premise phone system. Choosing the phone system that most aligns with your needs is imperative in making your company’s right long-term decision.

If your company’s needs align more with needing a dependable phone system that can offer flexibility, ease of use, and help employees who are working remotely or in a hybrid work environment; then a cloud-based phone system is for you.

Yet, if your company’s employees are back to working full-time in the office and rather use a traditional phone system that might be easier for your team to understand from the onset; an on-premise phone system would be the way to go.

For more information regarding our cloud-based unified communications solution, LDI Elevate, reference the image above to learn more about the pros and cons of implementing a cloud-based solution such as LDI Elevate over a regular on-premise phone system.

If you are looking to implement either a cloud-based phone system or an on-premise phone system, get in touch with an LDI representative today. We can assist you in making the right decision for your company.

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