Traditional PBX & Hosted VOIP Technology: The Key Differences & What They Mean For Your Business

Traditional PBX & Hosted VOIP Technology: The Key Differences & What They Mean For Your Business

CONTENTS Summary... 3 What s The Buzz About?... 3 What It Means For Businesses... 3 What It Means For Employees... 3 Introduction... 4 Hosted VOIP On-Premise PBX Comparison... 4 Main Technological Differences... 4 Analog Signal vs. Data Packets... 4 PBX Technology... 5 Major PBX Components... 5 Specialized Applications... 5 PBX End-Of-Life (EOL)... 5 Hosted VOIP Technology... 6 Cloud Computing... 6 Broadband Networks... 6 Softswitch Technology... 7 Quality of Service (QoS)... 7 Cisco QoS Standards Evaluate:... 7 Private Network & Public Internet... 7 Data Connectivity - Main Differences... 8 Service Level Agreements & Private Network Connections... 8 Maintenance & Obsolescence... 8 Cost Comparison PBX vs. Hosted VOIP... 9 Epik s Total Voice vs. Nortel PBX... 9 Conclusion... 12 About Epik Networks...12 Key Differences Between Hosted VOIP and Traditional PBX 2

SUMMARY Summary What s The Buzz About? Hosted Voice Over Internet Protocol (VOIP), also known as IP PBX, Virtual PBX or Cloud VOIP, is the next big thing in business telecommunications. It is changing the limitations of voice systems and bringing those changes to businesses of all sizes and industries. In the last few years alone, advanced VOIP systems have gone from an enterprise-only technology to an everyday reality for businesses across North America. And, amazingly, of the millions of VOIP end-users, many are working on comprehensive phone systems that aren t even located in the same building as their offces. After decades of PBX systems, what has changed? The answer is at the root of the technology, in the transition from traditional telephony to cloud technology, and the new possibilities that come with it. What It Means For Businesses The transition from traditional PBX to Hosted VOIP is more than just a change in provider, a new system model, or a new service. It is a new technology altogether, capable of providing the voice services that people are familiar with as well as more than they ever considered. The advantages range from cost savings and scalability to enhanced features and mobile integration. What It Means For Employees Employees can experience an offce phone network that meets their consumer standards for ease-of-use, multiple device integration, and virtual collaboration. Colleagues are able to track and communicate with each other, better manage their interface and shortcuts, and, in a general sense, appreciate using a truly contemporary system. Why should the offce toolkit lag behind personal technology for the average business? Key Differences Between Hosted VOIP and Traditional PBX 3

INTRODUCTION Introduction In less than 15 years, Information Technology has gone from a costly, raw potential to a widely accessible and refined toolkit. From software applications to mobile devices to the sophisticated networks they inhabit, the private sector has undergone a transformation driven by new technology. This is perhaps nowhere more visible than in business telephony, where legacy phone networks are quickly giving way to the IP and Cloud Revolution. As the telecommunications industry introduces more mobile and multi-media capabilities while streamlining operations and expenses, PBX networks become increasingly outdated and limited. Hosted VOIP On-Premise PBX Comparison Main Technological Differences Public Branch Exchange (PBX) Uses traditional telephone receiver to convert voice into analog or digital signals Transmits analog signals via legacy landlines Internally deployed & managed Minimal integration with computer applications Moves, Additions & Changes (MAC) require internal IT developments Hosted Voice Over Internet Protocol (VOIP) Uses VOIP software to convert voice into data packets Transmits data packets via an IP-enabled private network or the Internet Hosted off-site / delivered via The Cloud Advanced integration with computer and data applications Moves, Additions & Changes (MAC) require request to provider Analog Signal vs. Data Packets The fundamental difference between VOIP and PBX technology is the method of transmitting audio information. In both systems, the sounds entering the receiver are converted into signals. A PBX uses either analog, transmitted in wave format or digital signals, for digital phone equipment. VOIP uses data packets small pieces of information encoded and transmitted via Internet Protocol (IP), the widely used standard for encoding and transmitting data over the Internet or other IP-enabled networks. Key Differences Between Hosted VOIP and Traditional PBX 4

PBX TECHNOLOGY PBX Technology A Private Branch Exchange (PBX) is designed to provide phone service to a group of people without purchasing independent lines and features for each user from a telephone service provider. It acts like a Public Switched Phone Network (PSTN) on a small scale, allowing organizations to use extensions and share a common connection to the PSTN. When calls are made, they are interpreted and rerouted by the PBX to another internal number via an extension or to an external number via the PSTN. Many standard offce phone features were developed on traditional PBX systems, such as call routing, auto-attendants, user shortcuts, voicemail, fax-integration and countless others. PBX are capable of connecting complex applications, like call centre systems that enable large scale call management or Integrated Service for Digital Network (ISDN) systems that enable digital data to travel over traditional landline networks. Major PBX Components Telephone Trunk Line Multiple shared phone lines for each user Computer Manages call switching, routing and other features Maintenance Console Specialized Applications (e.g. Call Center, ISDN, Conference System, Auto-Attendant) Specialized Applications In order to add new features to a PBX, additional hardware and software systems have to be installed. A call centre application, for instance, has to be purchased from a vendor and integrated with the PBX by the offce IT staff. Any specialized function requires a system addition, followed by ongoing updates and upgrades for continual use. PBX End-Of-Life (EOL) PBX phone systems, like other on-premise networks, eventually reach their End-of- Life (EOL). This indicates when a particular model is no longer in production or when support from vendors and manufacturers has ended. In many cases, the system can continue to operate as normal, becoming an issue only once repairs or updates are required. While the EOL date is not always pressing, it marks the beginning of the system s decline and the need to explore new options. EOL usually occurs between 5 and 10 years after the product s launch. Key Differences Between Hosted VOIP and Traditional PBX 5

HOSTED VOIP TECHNOLOGY Hosted VOIP Technology Voice Over Internet Protocol (VOIP) converts analog signals into data packets that can be transmitted over the Internet or any other Internet Protocol (IP) enabled network. Internet Protocol is the standardized method of communicating between locations and structuring data over digital networks. Each packet is encoded with the receiver s address and instructions like other forms of data including emails or web pages. By sending the voice data over the Internet or a dedicated network connection, the Public Switch Telephone System (PSTN) and traditional phone carrier play a less significant role in placing interoffce calls, inter-company calls or long distance calls. Hosted VOIP uses the same principles of transmitting data, but combines other breakthrough in communication technology Cloud Computer and Broadband Networks to offer the services and applications in a very different way. Cloud Computing Cloud Computing is a general term for a number of different services and applications that can be delivered over the Internet instead of developed at the location of the user. Many things today use cloud technology to offer software subscriptions, server space or virtual networks. Cloud-based services rely on centralized servers that perform a particular set of functions and then broadband network infrastructure that deliver it to customer locations as a simplified service. Broadband Networks Broadband refers to high-speed and high-capacity data networks and data-handling techniques. The development and proliferation of broadband has allowed residential and commercial users to use increasingly complicated and data-laden services at sustainable costs. Broadband connections, including cable, DSL and fiber optics, allow Internet Service Providers to stream high-bandwidth voice data with fewer quality issues. Hosted VOIP services combined with a fiber optic connection can offer applications like video-conferencing for entire offces without sacrificing the quality of service. Key Differences Between Hosted VOIP and Traditional PBX 6

SOFTSWITCH TECHNOLOGY Softswitch Technology An advanced software platform, known as the softswitch, functions like a remote PBX system. As the brains of the Hosted VOIP network, it handles call routing, switching, advanced applications and enhanced features for the provider s entire network. Through various built-in or add-on capabilities, the provider can offer on-demand and customizable service. The complexity of the softswitch will largely determine the capabilities of the Hosted VOIP service provider. Some providers opt for a basic softswitch that provides fundamental phone services that a traditional PBX would, without the hassle of managing it internally. Providers with advanced softswitches have many more features to offer clients, including upcoming technologies in the telecom market. Quality of Service (QoS) VOIP has struggled with quality issues since it first became commercially available in the 1990s. It proved diffcult to achieve the same audio quality and consistency with data packets and IP-enabled packets, especially during peak traffc periods. Since, VOIP developers and providers use VOIP-specific Quality of Service (QoS) standards that measure the transmission of high-bandwidth applications in order to better manage network performance. QoS standards are used to shape and prioritize data to increase, predict and guarantee network performance. Cisco QoS Standards Evaluate: Bandwidth Requirements Packet Classification Queuing Traffc Shaping Data Compression Frame Relay Private Network & Public Internet Connection quality directly influences Hosted VOIP voice quality. One reason is that voice data is high-bandwidth, meaning that it can disrupt a standard connection if it not managed properly or if there are too many users. Private connections also influence service quality by providing voice data with a distinct pathway between calls instead of traveling various pathways across the Internet. Key Differences Between Hosted VOIP and Traditional PBX 7

MAINTENANCE AND OBSOLESCENCE Data Connectivity - Main Differences VOIP over Private Network Guaranteed Voice Quality Controlled Data Routes Uptime Guarantee VOIP over Public Internet Standard Voice Quality Data Travels Unpredictably Best Effort Service Service Level Agreements & Private Network Connections Voice quality and network uptime can only be guaranteed if the Hosted VOIP service is deployed via a Private Network. The added control of the private connection makes it possible to guarantee performance standards that match the reliability of traditional PBX phones. Hosted VOIP services offered over a generic best effort connection can only be as reliable as that network. A best effort service increases the chances of network and voice disruptions for organizations with many users, continual usage or data-driven applications. Maintenance & Obsolescence Hosted VOIP providers can absorb maintenance and update expenses for all of their customers without incurring major costs. Issues can be detected and resolved offsite from the cloud facility, just as updates and upgrades can be focused on the softswitch. Changes made to the central network in turn effect client networks, providing simplified network maintenance, continually updates and system-wide upgrades. This is often an included part of the service, alleviating operational expenses and the risk of system obsolescence. Key Differences Between Hosted VOIP and Traditional PBX 8

COST COMPARISON Cost Comparison PBX vs. Hosted VOIP The savings associated with Hosted VOIP services come directly from the advantages of the technology; every aspect of an offce network can be treated as a service, allowing the provider to absorb operational and maintenance costs by managing a single cloud network for countless clients. The client can deploy up-to-date functionality without the risk and effort of investing in an advanced system. The results are reduced capital expenditure and operational expenditure. Depending on the businesses current system and particular needs, savings can fluctuate between the two, but are often possible in both areas. PBX systems, by comparison, often demand large upfront investments as well as ongoing maintenance in the form of IT efforts or contracts with PBX vendors. In most cases this translates to more investment and attention for less functionality. Epik s Total Voice vs. Nortel PBX A comparison of Epik s Hosted VOIP service and a client s current Nortel PBX. The Hosted VOIP service creates 18% savings over 36 months, with the possibility to easily adjust services and applications along the way. Figure 1 Key Differences Between Hosted VOIP and Traditional PBX 9

COST COMPARISON In this case, the savings result from bundling the phone service with enterprise Internet services from the same provider, and monthly VOIP long distance fees. There would be a similar pattern with other voice applications, like conferencing or enhanced features that would be more cost-effective and easier to manage with the Hosted VOIP system (Figure 1.1). Figure 1.1 The monthly savings would actually be significantly more as maintenance and update costs are not always known in advance (an estimated 15-20%) but are includes in Hosted VOIP services since the system is managed offsite (Figure 1.2). Figure 1.2 Key Differences Between Hosted VOIP and Traditional PBX 10

COST COMPARISON As demonstrated below, businesses that prefer to purchase the onsite equipment routers, switches and IP phones can pay more upfront instead of a monthly fee. This means that businesses that take on the capital expense will still see significant savings. Large capital expense is still compensated for by the monthly operational savings of Hosted VOIP, saving the client 27% over 36 months (Figure 2). Figure 2 In this example, it is clear how a specific voice applications (in this case conferencing), long distance and maintenance add up to significant savings. Each of these is inherently more cost-effective than the PBX equivalent because of the underlying technology. Figure 3 Key Differences Between Hosted VOIP and Traditional PBX 11

COST COMPARISON Conclusion Comparing traditional PBX systems to Hosted VOIP technology is becoming more and more of an Old vs. New story. The core technological differences and the dropoff in future potential put them in practically different categories altogether. Heavily invested in PBX systems and general offce complacency make it diffcult to transition out of traditional telephony, even as employees continue to adopt and develop work behaviours in relation to high-tech personal and consumer technologies. The proliferation of VOIP, cloud computing and broadband networks have made advanced IP telephony widely available and affordable, even more so than standard PBX networks. Businesses looking for a new system should reconsider what comes to mind when they think business phone system, because for many companies it is the last barrier between their operation and today s telecommunications. About Epik Networks Epik Networks is the industry leader in advanced data and communication services, offering turnkey solutions for almost a decade. Through centralized Broadsoft softswitches and high-speed fiber-optic connections, Epik Networks provides companies of all sizes with highly customized telecommunications solutions that are both affordable and completely reliable. We take care of everything from the hardware and software, to ongoing maintenance. You will never worry about your voice services again. In addition to all the equipment, Epik Networks offers one easy-to-understand bill. Let us show you why over 8000 users have made the choice to use Epik Networks as their service provider. Feel free to call us at 1-866-353-9333. Epik sales consultants are standing by to help guide you to make the best possible decisions for all your telecommunication needs. epiknetworks.com sales@epiknetworks.com Epik Networks Inc. Head Offce 80 Bloor St West, Suite 503 Toronto, Ontario, M5S 2V1 Toll Free: 1-866-353-9333 Phone: 416-921-7000 Fax: 416-855-763 Key Differences Between Hosted VOIP and Traditional PBX 12