If you are considering a new telephone system for your business, there is a good chance that somewhere in your research you are going to be encouraged to look at a cloud-based VoIP solution. Market research suggests that cloud VoIP or UCaaS (Unified Communications as a Service) market will rapidly expand over the next five years.

Why is the cloud appealing to the SMB market? One of the driving factors is capital expense. In the cloud VoIP model, you are spending less on telephony equipment. Your initial capital expense will include telephones, a power over ethernet data switch and possibly a router or edge device if needed. Depending on the provider, the implementation, installation and training is also subsidized over the life of the contract, also reducing the upfront cost. However, it comes at a higher monthly recurring cost. Usually the proposed cloud VoIP provider is trying to get you to look at 3 – 5-year return on investment. To get a more accurate picture of the true ROI, the analysis should be expanded out over the life of a premise-based VoIP system.  The estimated life of a premise-based VoIP system is 8 – 10 years if properly maintained.

I am going to share recent case studies of actual clients whom we provided with both a premise-based and cloud-based VoIP solution.

Case Study – 1 The customer is a 40-user non-profit organization.

Proposed Cloud Solution
40 users x $21.00 (cost per seat for a reputable National UCaaS provider we resell) $840.00
Internet Service w/ static IP $115.00
Total Monthly Recurring Cost- $955.00  
Capital expenditure for equipment, install & training- $6600.00
8 year total cost of ownership- $98,280.00
10 year total cost of ownership- $121,200.00   

Proposed Premise Solution
40 User Premise based IP communication platform
Capital expenditure for equipment, install & training- $17,000.00
Internet Service w/ static IP- $115.00
Monthly voice carrier- $180.00
Monthly support- $134.00
Total Monthly Recurring Cost- $429.00  
8-year total cost of ownership- $58,184.00    Savings vs cloud= $40,096.00
10-year total cost of ownership- $68,480.00   Savings vs cloud= $52,720.00

Case Study – 2 The customer is a 46-user medical provider with two offices and a centralized scheduling call center.

Proposed Cloud Solution
36 users x $21.00 (cost per seat for a reputable National UCaaS provider we resell) $756.00
10 call center users x $35.00 – $350.00
Internet Service w/ static IP $365
Total Monthly Recurring Cost- $1471.00  
Capital expenditure for equipment, install & training- $11,860
8 year total cost of ownership- $153,076.00
10 year total cost of ownership- $188,380.00   

Proposed Premise Solution
46 User Premise based IP communication platform (10 Agent Call Center Suite)
Capital expenditure for equipment, install & training- $27,800.00
Internet Service w/ static IP- $365.00
Monthly voice carrier- $414.00
Monthly support- $154.00
Total Monthly Recurring Cost- $933.00  
8-year total cost of ownership- $117,368.00    Savings vs cloud= $35,708.00
10-year total cost of ownership- $139,760.00   Savings vs cloud= $48,620.00
****All carrier estimates are configured without taxes and fees as they vary per provider.

The Unified Communication applications available today via premise or cloud-based VoIP systems can have a profound impact on your business productivity. Cloud based VoIP is a great solution for certain customers, however it is certainly worth exploring all of your options and long-term ROI to make a truly informed decision.

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