What Is Cloud PBX? Benefits of Taking Your On-Site PBX to the Cloud

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Much like many disruptive technologies, the cloud has been met with reticence as well as excitement.

Where cloud computing offers better cost-efficiency, flexibility and scalable opportunities, some businesses are still hesitant about switching to a service where they don’t have full control of their data.

When company data is stored in the cloud, that means it is hosted in off-site data centres. It is this off-premises data storage that many may view as a security risk.

However, advances in cybersecurity now mitigate these security concerns. Cloud service providers run the latest security software in order to fully safeguard all their managed systems and the data they hold. In fact, many would argue that the advance of cloud technology is one of the key reasons that cybersecurity has become the competitive, sophisticated, and innovative discipline it is today.

In this article, we explore the pros and cons of adopting a cloud phone system and how you might benefit from switching from an on-site PBX to a cloud-based alternative.

What Is a Cloud PBX?

A cloud PBX (private branch exchange) is a telephony system that is built in the cloud, providing server access over the internet. Also known as a hosted PBX, this solution is essentially a telephone exchange system that is fully managed by a third-party provider as well as being provisioned and accessed via an internet connection.

Known for their reliability, hosted systems have become a popular choice for businesses looking to modernise their communications systems and strategy. As the circumstances of the pandemic have accelerated digital transformation for many, small businesses and large enterprise corporations are turning to the cloud to deliver better agility and versatility when it comes to team collaboration.

Making use of VoIP services also means these solutions can save modern businesses time and money, enabling lower maintenance requirements and offering a lower total cost of ownership than traditional or legacy solutions. 

Traditional PBX Versus Cloud PBX

The traditional PBX (or onsite PBX) has been used by businesses for many years. For those that wish to maintain full control over their own data on-site and can absorb the high upfront fees, a traditional PBX may be a favourable option. Those with a traditional PBX may also feel they benefit from stronger security, as these legacy systems transfer data via PSTN, making them less susceptible to hacking.

However, onsite PBXs have gained a reputation for being complicated and clunky in comparison with their more modern, cloud-based counterpart. While a higher level of control may be achieved with a traditional PBX system, it comes at a cost for your IT resources, as making changes, including simple updates to the system, can be complex and time-consuming.

Businesses that opt for a cloud or hosted PBX system won’t have the option of a dedicated server on-site. Therefore, they may not have the ability to control every facet of their system. But many might view this as a positive. Not having such bulky hardware on-site means more office space. Likewise, hosted systems save money and are known for providing reliable, lower maintenance, stable business phone solution over the internet.

Although some businesses have taken a little time to accept and embrace a cloud-first strategy, many are discovering the multifaceted advantages of cloud technology. Expected to reach a value of $832.1 billion by 2025, the market share of cloud computing shows that many organisations are investing in a more robust, digital future.

Powerful Cloud PBX Features

One major argument for adopting a cloud-based business phone system is the advanced features it offers in contrast to legacy solutions.

We’ve highlighted just a few of the intuitive features that usually come as standard for cloud PBX users:

Call Recording

Call recording offers businesses a chance to keep a record of their phone calls. This feature is particularly beneficial for call centre businesses looking to monitor calls for compliance purposes or training. Likewise, the recording feature is beneficial for individual agents looking to review their own calls as part of their own personal development.

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Virtual Attendant (IVR)

Many cloud providers will offer an IVR function. IVR technology is beneficial for businesses that receive a high volume of incoming calls as it enables customers to guide themselves through the caller journey and often self-serve when it comes to common queries or frequent complaints.

Call Groups

Organising call groups allows businesses to direct inbound calls to a set selection of phone numbers or extensions (often a specific department within the organisation, for example). That means the call will be directed to a number of agents (in accordance with your customised ring pattern) rather than just one specific number, reducing the likelihood of your inbound calls going unanswered.

Voicemail Transcription

Voicemail transcription helps businesses ensure that workers can pick up any necessary dialogue, even if they do miss a call. While many have a hectic and cluttered voicemail system, a cloud phone solution helps to mitigate this challenge by setting up a voicemail to email feature. In some cases, this means the content of your voicemail will be transcribed and sent via email in plain text, or it may be sent to your inbox in a recorded audio file such as an MP3.

Reporting and Analytics

For businesses wanting to collect and analyse their calling data, a cloud PBX will be a wise choice. Many virtual PBX systems allow businesses to log information such as the number of answered or missed calls, amount of time spent on a call, the number of calls answered by each agent, and call volumes or peak times. This real-time information helps managers to monitor phone usage and efficiency.

Call Queuing

Cloud PBX users can enable call queuing. This allows users to place inbound callers into a queue so agents can accept calls in a timely manner. A call queue is essentially a virtual line-up of callers waiting to be connected. Customers waiting to speak with an agent will often be able to listen to music or recording to help make their wait time feel shorter. For businesses with a high volume of inbound callers, this feature is invaluable and can often help teams to distribute calls more effectively and reduce wait times.

Live Call Monitoring and Management

In-call monitoring allows supervisors or managers to listen to phone conversations in real-time. Again, a handy tool for call centre teams, listeners can oversee quality customer service, review calls for any training needs, and even operate call barging to support agents on a live call. For cloud PBX users looking to adopt a proactive agent coaching approach and oversee calls for compliance purposes, this is another valuable everyday tool to help support the customer experience.

Call Whisper

A call whisper is a helpful way to give agents context before answering an inbound call. This informative snippet can come in the form of a display message, voice recording or text to speech generated message. This can be particularly helpful for sales reps answering inbound calls from advertising campaigns or specific calls to action.

Call Barge

The call barge is another helpful in-call management tool ideal for call centre supervisors and managers. The feature allows supervisors to access the conference bridge during an agent’s conversation. The feature is designed to support the development of agents and is best used for providing assistance in converting leads or responding to customer enquiries more effectively.

Audio and Video Conferencing

Conducting crisp, quality video conferencing is easier with a cloud-based business phone system as many will come with the feature built-in as standard. Likewise, audio conferencing can take place at the click of a button with high numbers of participants catered for by most cloud providers. Businesses using a cloud PBX generally won’t have to subscribe to another video conferencing platform separately, saving them time and money and supporting more seamless collaborations.

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How Does Cloud-PBX Work?

A virtual PBX works by using VoIP (voice over internet protocol) technology. That means all users need is an internet connection to make and receive calls.

VoIP technology works by converting audio files into digital sound waves. These sound waves are then transported via the internet to their recipient endpoint. That means cloud PBX users must ensure they have sufficient bandwidth to make and receive calls via their internet connection.

On the plus side, a cloud phone system means you can eliminate the need for traditional copper phone lines spread throughout your premises, and employees will be able to access the cloud-based system from anywhere with sufficient connectivity.

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 7 Business Benefits of Moving from On-Premises PBX to a Cloud PBX Solution

Cost Savings

Moving to a cloud PBX can significantly lower the total cost of ownership for your business telephony solutions, making it a wise decision for many as we look towards the future of the workplace. In some cases, businesses save as much as 40% on their communications costs, simply by moving to the cloud.

Consolidation is one of the key reasons for these lower costs. By consolidating multiple communications systems, including messaging, video and phone, all provided by a single vendor, organisations pay significantly less than when paying separate vendors for each function. In the same way, consolidation can eliminate hefty bills for services you don’t actually use.

With most cloud vendors, maintenance and updates to the system come as standard. That means you’ll also save money by reducing the time and costs associated with system upgrades and general maintenance of the solution.

Hardware is another area where businesses will save money. As a cloud communications system is software-based, you’ll eliminate the need for much of the hardware associated with an on-premises solution.

Scale Quickly and Easily

A cloud-based solution makes it much easier to scale your communications according to your needs as your business grows. With a cloud PBX, you’ll have less hassle provisioning and handling activation and management tasks relating to the system, meaning increased business agility.

With a cloud solution, your business will be able to add new users in minutes rather than days, and you can have whole departments of your organisation up and running much more quickly than with a traditional PBX solution.

The modern, user-friendly interfaces of a cloud communications system allow administrators to make simple changes and add users from anywhere in an instant, saving you a lot of time and resources.

Constant Innovation

Making the decision to move from an on-premises PBX to a cloud alternative means you’ll benefit from a more virtual, innovative and flexible communications platform.

With a cloud-based platform, businesses benefit from a more modernised IT environment as well as support and maintenance delivered by their chosen vendor, including regular updates to the system.

Cloud providers such as RingCentral are continually innovating and updating our products. RingCentral rolls out quarterly updates to the solutions automatically, persistently enhancing functionality and usability. Investing back into the product means RingCentral confidently delivers a financially-backed 99.999% uptime SLA. This constant innovation also means businesses benefit from ever-evolving security measures. RingCentral’s seven layers of security help to safeguard architecture, processes, data, and personnel.

Advanced Features

On-premises PBX systems are more restrictive in terms of the functionality and potential customisation of the platform. With the cloud PBX alternative, businesses benefit from intuitive, intelligent features designed to improve the efficiency and productivity of their teams.

With a full-featured phone system, managers and users can benefit from features that range from traditional phone tools to more advance collaboration, monitoring, customisation and real-time analytics. With a cloud-based tool, teams can track real-time stats and measure performance, plan more effectively for peak times and record and analyse calls.

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Streamlining and Integrations

With several different software tools at play in addition to your integral communications platform, integrations have become a crucial part of our business processes. Most cloud-based communications platforms will offer in-built integrations with everyday business tools such as Google Workspace and Microsoft 365 to help users schedule meetings, calls, and manage their calendars.

If you choose RingCentral as your cloud communications vendor, you’ll have access to over 250 off-the-shelf integrations available to help you from the off. In addition to this, your cloud communications platform should give you the freedom to personalise your solution and customise the integrations you use via open APIs and SDKs.

These integrations allow you to connect your communications tools with your other chosen business applications, including productivity tools, project management, compliance, AI, or marketing automation and any integral CRM such as Salesforce.

Easier Data Access

While many businesses cite data control as a roadblock to adopting a cloud-based system, easier data access is a key driver for many wanting to get hold of their data whenever and wherever they need to.

Cloud PBX users can access the data they need as long as they have an internet connection and a secure username and password to log into the system. With a virtual PBX, data is stored securely in the cloud, but with on-premises PBX systems, accessing data on a daily basis, particularly remotely, is far more challenging.

As well as reducing the requirement for physical hardware, a cloud-based system, depending on your chosen vendor, usually also means servers are dispersed across different geographical locations. This can also help with your business continuity, with failover redundancy, meaning you minimise the risk of downtime.

Global Scope  

As the concept of ‘work’ becomes less of a place and more of a virtual environment, the needs of the average employee develop at a similar pace. This means businesses are looking for ways to empower their teams while delivering exceptional customer service.

Adopting a cloud-based communications strategy is the ultimate way to unlock the scalability and flexibility required for globalisation as it ensures your workforce can maintain the same quality audio experiences wherever they are based.

Being based in the cloud opens the opportunity for global availability. RingCentral provides cloud communications in over 100 countries, meaning businesses with multi-site locations across the globe can plan more easily for global expansion.

How to Set Up Cloud PBX

While switching from an on-premises PBX to a cloud counterpart is inexpensive in general, there are a few steps you can take for a smoother transition.

First, you’ll need to cancel your existing PBX service to settle any remaining bills to your provider and allow the vendor to reclaim any necessary hardware. It’s important to be upfront with your previous supplier so that you don’t stumble across and billing issues when your port your phone numbers across to the new system.


Before you set up your new cloud PBX system, it’s also worth conducting an audit of your internet and assessing your bandwidth before switching over to your cloud system to ensure it allows for the best quality of service possible once you’ve installed the new system. Be sure to also audit any hardware requirements and assess the need for any desk phone requirements in addition to those using softphones, and make sure that any headsets you choose are compatible with your new provider’s software.

Many vendors state that their set-up will only take a matter of hours or one single day, but make sure that your entire workforce knows about the switchover and what it will mean in terms of downtime. On switchover day, your chosen service provider should take care of setting up the new service, which should mean your employees will be back up and running very quickly.

Hosted PBX Use Cases 

There are many different reasons why businesses are taking to hosted PBX systems.

One major driver is the improved agility and innovation these systems allow. Driving mobility in the workforce is a key strategy for many businesses, both big and small, in the wake of the global pandemic, so adopting a communications service that allows accessibility from anywhere is a major selling point for cloud providers.

Cost is another key factor. Businesses wanting to drive down their fees or the TCO of their communications system should be looking to the cloud as a viable, cost-effective way to future-proof their business continuity.

Making a Decision 

Many businesses are under pressure to replace legacy systems with next-generation technology now more than ever.

With business technologies such as unified communications, team collaboration and tailored contact centre solutions available ‘as a service, business leaders have a no-brainer option for making their organisations more flexible, scalable, and cost-effective.

Being able to access multiple different communications capabilities all within one platform, delivered by a single provider, enables today’s mobile workforce to collaborate from anywhere.

Making the decision to switch to a cloud-based system could be the turning point to make your organisation more productive and efficient than ever before and prepare you for the business challenges of the future.

Start your journey to the cloud today and see your business take flight!

Originally published Mar 22, 2021, updated Jun 30, 2021


    Severine Hierso is a Director of Product Marketing at RingCentral, the leader in cloud communications solutions, and is passionate about creating value, differentiation and messaging, ensuring a better experience for customers and partners.

    She has gained extensive international product marketing, market research, sales enablement and business development experience across SaaS, telecommunications, video conferencing and technology sectors within companies such as Sony, Cisco, Cogeco Peer 1 and Dimension Data/NTT.

    Severine holds a Master’s degree in economics and her hobbies include long distance runs and travelling.

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