20 Things to Know About Hosted Phone Systems
To determine if a hosted phone system is the right path for your business, check out the points below.
- They are internet dependent. In most cases, hosted voice solutions rely on your internet connection (except in those scenarios where the service provider is quoting a direct connection). Voice quality is impacted by the bandwidth (including variables like latency and jitter). If your business uses a high-latency internet service like cable or DSL, and you expect toll-quality voice, you need to avoid hosted phone service except in a really low volume environment (1 or maybe 2 simultaneous calls). In a hosted environment, where your business uses straight internet, your voice calls are competing for bandwidth with Office 365, YouTube, Internet surfing, streaming music, Facebook, LinkedIn, etc. There is no prioritization of voice packets on the public internet.
- They have a subscription model. Hosted phone systems have a MRR (monthly recurring revenue) model. This is the exact opposite acquisition model from a capital investment. In a hosted model, there is no such thing as “ownership”. Telecom taxes and fees are astronomically high- 30%+ taxes and fees on top of your quoted MRR (monthly recurring revenue) is what you need to expect. Moving to cloud exposes a larger monthly payment that is hit by that 30%. Factor that into your financial decision, or you’re in for a rude awakening.
- Disaster Recovery is available. One of the perceived benefits of hosted phone systems is the inherent disaster recovery opportunity of taking your desk phone to another place outside of your business, plugging it into an internet connection and it works. Consider whether that’s a reasonable disaster recovery plan for your business or if forwarding your calls to a cellphone is more practical. I can’t tell you how many businesses we meet that went with VoIP for this very reason and that 10 years later never took that phone home for disaster recovery.
- Additional dial-tone expenses are possible. As you evaluate hosted voice solutions, don’t forget to factor in other dial-tone expenses like fax lines, credit card lines, alarm lines, elevator lines, etcetera. Most hosted providers will not support this functionality so you have to provide this dial-tone from another carrier. In many cases these analog lines can be upwards of $100 each per month.
- Customization is available. The hosted model is a multi-tenant cloud offering. By definition, it commoditizes your voice experience. If your business has unique needs related to functionality or reporting, make sure the hosted provider can meet your needs. As an example, call detail reporting and granular call center reporting are often not provided on a hosted voice offering without moving into a higher end call center licensing model.
- Will forced upgrades affect your business? This one is simple…when you are a tenant on a large phone system, when it’s time to upgrade your user interface, you have the benefit of being along for the ride. Staying current on software levels is a great idea, but some level of control around timing for user adoption purposes would be nice.
- Beware of random phone manufacturers. Ironically, the emergence of VoIP has, in some cases, commoditized the phone hardware itself. We now see SIP phones manufactured by companies like Snom, Polycom, Yealink to name a few; however, as odd as it seems, those companies do not sell a phone system. This has created very cheap options for phones, but has led to scenarios where SIP translations are different between products and results can vary. In many hosted scenarios, this commoditized phone hardware creates confusion over ownership of issues. For example, if your company uses a subscription-based hosted voice service, but your company bought polycom phones, who is responsible for triage and fixing issues related to the phone experience?
- Understand feature sets. Hosted solutions can boast a robust feature set related to mobility, call recording, Outlook integration, etc….just make sure you understand what is and is not included in your “profile”. Advanced and even some standard features are extra, specifically as it relates to any sort of call center functionality (formal or informal).
- Toll free and international calls can incur an expense. While a lot of hosted solutions provide unlimited long distance, that typically doesn’t apply to inbound toll free and International calling. If these variables apply to your business be sure to understand financial implications. We saw one provider that had “unlimited long distance”, but charged $.05/min for inbound toll-free. If your company has tens of thousands of toll free minutes each month and you’re used to paying $.01/min, that’s not an insignificant increase in expense.
- Identify install fees and upfront costs. It’s not just about the MRR. Most hosted providers do have upfront expenses you need to consider and factor into your decision related to costs for the phone handsets (if not included in the monthly payment), installation fees, training fees, etc. As smart as these systems are, they still aren’t “plug and play”. Some level of intelligence has to be programmed into these hosted systems. Do yourself a favor and ask the question “Who is doing that and what does it cost?”
- Consider the value of a local partner. Hosted phone system deployments are very different than traditional phone systems; technically and from a human resource perspective. In most cases, hosted phone systems are deployed with remote assistance only, meaning all project management and programming is done remotely and all onsite labor is your responsibility. Is that the experience you want? Who is doing that, what does it cost and do you have the internal competencies and resources to do that?
- Training is crucial to success. This is an area often over looked. Is putting a new phone on the desk the most important thing? Or is using the features and functionality, positively impacting the profitability of the business and serving your customers the most important thing? If it’s the latter, what assurances do you have that your employees will adopt the new technology? What does training look like?
- Understand the cost of ownership. Hosted solutions have a significantly higher cost of ownership over time, and your business has very little control over those costs. For example: We met with a small, single location financial advising firm with eight phones last week. They had been on a hosted phone system for 10 years. They had paid a premium of $60,000+ over that time frame to have their voice experience in the cloud. It’s important to understand the investment you are making and the benefits that come with it. In this case, they were not aware of the premium they paid each month and were under the impression hosted was “less expensive”. Nope. Never the case. If your company is going hosted because it’s cheaper, you need to evaluate cost of ownership over time.
- Investigate the need for Call Center functionality. Be very careful you understand your business needs and the expense you are willing to invest each month if moving into a hosted call center. There are unique and important variables in this space, including intricate and granular reporting, call and screen recording, disaster recovery and business continuity strategies, workforce management and workforce optimization tools, gamification, e-learning and coaching, multi-media and Omni-channel opportunities, toll free calling, long distance, power-dialing, CRM integration, speech analytics, etc. But keep in mind, hosted is a subscription, multi-tenant service. Customizing that experience and delivering enhanced feature sets like this can be significant for your business, but can come at a significant investment. We’ve seen MRR for hosted ACD systems anywhere from $50 to $200+/user per month.
- Reporting & Diagnostic Tools. Most hosted solutions come with little or no reporting or diagnostic tools. And if your hosted system does have reporting, it may not get as in depth or come in a format you can utilize. Being left without diagnostic tools, leaves network issues to the customer with no way to look deeper into the network.
- Weigh the investment options. While it is reasonable to want to avoid capital investments into phone systems, it should be noted that hosted phone systems are ONLY an operating expense and there is never an ownership option. To the contrary, on-premise deployments could initially be set up as OpEx and could then be capitalized in the event the business needs change.
- Fully understand the implementation process. Hosted providers can miss steps in the implementation process including good discovery of business needs or network related issues that may cause voice quality issues. If your business is investing in new technology for the purpose of solving business problems, but your service provider never asked about your business, you may have a disconnect. Likewise, if your provider does not run a network assessment on your data network prior to implementing a voice over IP solution, you may run into some unexpected issues.
- Determine if (and what) labor is included. Hosted providers typically do not include any level of professional services for hardware warranties, software assurance/support, etc. Consider the following scenarios –
– If a phone (hardware) doesn’t work or breaks, how do you get support?
– If you have a software problem, what happens?
– If your phones don’t have dial-tone, what do you do?
– If you forgot how to use a feature, what do you do?
– If Outlook upgrades their software, how does that affect your integration features? What do you do?
- Support for analog devices should be determined. If your business has a lot of analog phones, like a school, hotel or hospital, be sure to have a plan for supporting those phones. Most hosted phone providers try to use some form of analog gateway, which is unreliable at best or they attempt to change those phones from analog to IP. The infrastructure implications with changing a lot of analog phones to IP phones can be significant. Additionally, if paging is used for business functionality, make sure you have a plan for supporting that application as most hosted voice services do not include overhead paging.
- Consider virtual server environments. Many businesses are investing in private virtual environments for their business, either located on premise or in a data center, or both, leveraging HyperV or VMWare. A hosted, multi-tenant phone system is a completely different path. Consider consistency in business continuity and disaster recovery between your voice applications and other critical business systems.
If you are ready to learn even more about hosted phone systems, contact the Unified Technologies team today and let’s get started.