In-House vs. Hosted PBX

Full Control or Remote Access

Crash Course IP PBX

Modern IP phone systems are implemented in software practically without exception. When talking about modern IP phone systems, most manufacturers speak of PBX (Private Branch Exchange) or IP PBX. Since IP phones, SIP trunks and other services are registered at the PBX through the local network (LAN) or the Internet, the location of the PBX is initially irrelevant.
An IP PBX running on a server in a data center, is called cloud or hosted PBX. Alternatively, an IP PBX can be operated locally within the company as a so-called in-house PBX. Both solutions have individual advantages and disadvantages. However, the choice between a hosted or in-house PBX should be made at the very beginning if you plan to acquire a new phone system, as it has far-reaching consequences.

Hosted/Cloud PBX

In this case, the PBX software is installed on an external server and only accessible via internet. Depending on the provider, you have different access and configuration rights. The pricing models usually are user-based and differ greatly. Also, the cloud PBX provider usually takes care of the maintenance, and in many cases a particular SIP trunk is predetermined. The main advantage is the central location of the IP PBX. IP phones can be registered to the PBX independent of their location. This way, employees in home offices or in branch offices around the world, can be easily integrated.
The initial costs for hosted PBX are often lower as less own hardware is required on site, and the costs are incurred on a monthly base. However, this may become more expensive in the long term. Hosted solutions also provide less control as the PBX is located outside the company and internet service providers (ISPs) often can not be freely selected. In addition, even internal calls between employees are routed through the Internet, and therefore require a fast internet connection.

In-House/On-Premise PBX

If you prefer full control over your IP PBX and free choice of your ISP, in-house or on-premise solutions are the best choice. In this case, the PBX is located on site, as you are used to from your traditional phone system.

The initial costs of an in-house PBX are higher, but the monthly costs are much lower in return. Also SIP trunks can be booked from any provider, which is often not possible for hosted solutions. Internal calls are routed via the local network and therefore do not require any internet bandwidth.

Virtual or Server Hardware

In-house solutions distinguish between virtual solutions and PBX with own, dedicated server hardware. A virtual PBX can be set up easily on a server within a virtual environment, such as VirtualBox, VMware or HyperV. This way, no additional hardware is required and costs are lowered.
However, a failure of the server implies also a failure of the telephone system. Here, dedicated PBX hardware has certain advantages. The PBX software runs on a dedicated server, that generally has been optimized for operation as a telephone system.