In our previous blog we highlighted some areas where the total cost of ownership warranted some research into both a premise and cloud telephone system. In part 2, we will highlight some areas where the cloud my be more advantageous for the customer

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 5-user accounting organization.
Proposed Cloud Solution
5 users x $23.00 (cost per seat for a reputable National UCaaS provider we resell) $115.00 </span
Internet Service w/ static IP $139.00
Total Monthly Recurring Cost- $254.00  
Capital expenditure for equipment, install & training- $1300.00
8 year total cost of ownership- $25,684.00

Proposed Premise Solution
5 User Premise based IP communication platform
Capital expenditure for equipment, install & training- $7,700.00
FiOS Internet Service w/ static IP- $139.00
Monthly voice carrier- $80.00
Monthly support- $50.00
Total Monthly Recurring Cost- $269.00  
8-year total cost of ownership- $33,524.00    Savings with cloud= $7840.00

Case Study – 2 The customer is a 10-user medical billing company.
Proposed Cloud Solution
10 users x $21.00 (cost per seat for a reputable National UCaaS provider we resell) $210.00
FiOS Internet Service w/ static IP $139.00
Total Monthly Recurring Cost- $349.00  
Capital expenditure for equipment, install & training- $2100.00
8 year total cost of ownership- $35,604.00

Proposed Premise Solution
10 User Premise based IP communication platform (10 Agent Call Center Suite)
Capital expenditure for equipment, install & training- $9,900.00
FiOS Internet Service w/ static IP- $139.00
Monthly voice carrier- $120.00
Monthly support- $70.00
Total Monthly Recurring Cost- $933.00  
8-year total cost of ownership- $41,484.00    Savings with cloud= $5880.00

****All carrier estimates are configured without taxes and fee’s as they vary per provider.

Although the savings are negligible over the 8-year ROI. There is less capital outlay and little exposure for a natural disaster (water, lightening, etc.). However, we recommend that you look for a cloud provider that also allows you to transition to a premise-based system. if your organization were to grow and your cloud provider of choice allows you to transition to a premise-based system. Once you reach the threshold where the ROI determines that a premise based is more advantageous for your business, you can make a seamless transition. All telephones should migrate, and the system operation will be identical so that the user will notice no difference once the migration is complete.

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