Outsource Your Phone System

Thursday Jun 5th 2008 by Gerry Blackwell
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We look at a company that found satisfaction, serious features and significant savings when it outsourced its phone system to a hosted PBX service.

Integrus Brand Solutions Inc., a marketing and promotions firm based near Toronto, Canada, is typical of a lot of small businesses. It lives by the phone. Voice communication is absolutely vital to most of its 50 or so employees.

Like a lot of small businesses, Integrus invested some years ago in an expensive PBX (Private Branch eXchange) phone system from Nortel Networks, and paid contractors to maintain and service it because the firm has no in-house telecom expertise.

When that system began to get a little long in the tooth and no longer offered all the latest features, Integrus started looking for a new solution. But when decision time came, Integrus made a bold departure.

Instead of buying a new on-premise phone system, the firm chose a hosted IP PBX service from Primus Telecommunications Canada. Capital investment required: zero. In-house technical expertise required: none.

Hosted IP PBX services – available from several regional and national providers in the U.S., including Primus – are a relatively new phenomenon, but for small businesses especially, they offer significant advantages.

Integrus pays $40 to $50 per month for each employee. The price includes IP phone sets (some are more expensive – hence the difference in monthly fees), local dial tone delivered over a dedicated T-1 line connected to Primus’s central office and rich IP PBX functionality.

The firm considered updating its Nortel Meridian PBX, but balked at the capital outlay required. It also wanted some features that only IP (Internet protocol) telephony could provide, such as unified messaging – voice mail delivered to an e-mail box – and softphones, software that turns a headset-equipped laptop into a phone that can be used anywhere as if it were attached to the PBX.

Integrus could have had these features with an IP-based on-premise system, but in the end, going with a hosted solution made more sense. In fact, it was a no-brainer.

Big Cost Savings

Justin Aniballi, advisor to the president of Integrus, compared the all-in cost of the Nortel solution that Bell Canada was offering, amortized over three years, to the cost of the Primus service for the same three years. The Primus solution was 25 percent cheaper.

“Plus we were looking at no capital outlay, easier implementation and the fact that it had all the VoIP features we wanted,” Aniballi said. “Mainly though it came down to a purely economic decision.”

We’ve written on this site in the past about small business/SOHO virtual PBX solutions, from providers such as Phone.com and GotVMail, that may sound similar. Like Primus Canada’s Hosted PBX service, they offer big-firm PBX functionality – auto attendant, voice mail, sophisticated call routing, etc. But they’re different in important respects. 

With the Phone.com-type solutions, you also need local phone lines. These services provide you with a telephone number, often toll-free, that callers can dial to reach your company. The service provider answers the number with an auto attendant, and forwards calls over the public switched telephone network (PSTN) to your local numbers, according to rules you establish.

One advantage is that you can continue to use your existing phones. But this solution really only works well for distributed businesses with employees or partners working in different locations – each of which must have a regular phone line. You also pay for incoming calls, either as part of a monthly bundle with “free” minutes, or separately by the minute.

Hosted IP PBX systems also intercept your incoming calls at their facilities. They then pass them to the appropriate extension at your premises either over a dedicated connection – as in the Integrus case – or over your high-speed Internet connection. You don’t need any regular phone lines and don’t pay for incoming calls.

You do have to commit to IP telephony, though, which may be scary for some small businesses. It was for Integrus at first.

“It’s a relatively new technology, and not considered by some to be robust enough for commercial use,” Aniballi observed. This is a perception that some would argue is now outdated, but it remains widely held. It didn’t stop Integrus in the end. “I’d had good experience with IP [at a previous employer],” he explained.

Going with a hosted IP PBX service in many cases also means investing in new IP-based phone sets, which can cost anywhere from $60 to $250 each. But Primus is unusual in including phones in the monthly fees.

Free Inter-office Long Distance

Hosted PBX solutions offer one enormous cost benefit, which in Integrus’s case delivered most of the economic advantage over on-premise solutions. Calling between a company’s offices is typically toll free because calls stay on the provider’s private IP network.

A large part of any multi-office company’s long distance bill is for calls between offices – about 50 percent on average in fact, said A.J. Byers, senior vice president of business services at Primus Canada. “So it’s just in the nature of hosted IP services that right away, you’re reducing your long distance [costs] by about 50 percent,” Byers said.

Integrus has three offices, the one near Toronto, one in Montreal and a new one in Vancouver which it was just in the process of opening up. “There was already a lot of calling between Montreal and Toronto,” Aniballi said. “And we were anticipating a high volume [of calls] to and from Vancouver.”

Avoiding those additional long distance charges was a big inducement to go with a hosted IP solution.

Direct cost savings were not the only significant benefits, though. Integrus now has one integrated phone system for all three offices. To call a colleague in another office, employees only have to dial the four-digit extension, as if they were in the same office. And a receptionist at headquarters can see all calls on the network on her computer screen and can transfer calls to one office to an employee in another.

The capability to collect voice mails as e-mails and for mobile workers to make calls from anywhere they have an Internet connection using the softphone feature also helps increase employee productivity, Aniballi said.

Host with the Most

At least some of these benefits would be available from any hosted IP PBX service, but not all are created equal. Primus Canada’s approach of using a dedicated connection between its data center and clients’ premises makes for more reliable voice connections, it said. (The company also offers a service for smaller offices that uses a less-expensive dedicated DSL connection instead of a full T-1.)

Voice traffic travels over the dedicated link as digital data from the phone sets at Integrus to the IP PBX at Primus, then out through digital-analog gateways on to the public switched telephone network (PSTN).

Other providers use the customer’s high-speed Internet connection to carry voice traffic, so phone calls share bandwidth with computer data and travel to the provider’s facility over the often congested public Internet. This is similar to the way consumer VoIP providers such as Vonage work. It makes it difficult to ensure high-quality voice connections, Primus said.

Vonage in fact also offers a hosted PBX service, which Integrus considered. “We didn’t have a high degree of confidence that Vonage understood the telephony needs of an enterprise,” Aniballi said of his firm’s decision. It preferred Primus in part precisely because it did offer greater reliability with a dedicated connection.

More Reliable

For Integrus, Primus engineered even more reliability by building in a fail-over mechanism that, in the event the voice line goes down, automatically transfers voice traffic onto a second T-1 the firm normally uses only for data.

Primus managed the entire implementation process. There were only “minor problems,” Aniballi said. The most vexing had to do with getting the auto attendant working the way the firm wanted. Those arose in part because of his own inexperience at designing IVR (interactive voice response) menu systems, he said.

The firm ran both the new system and the old Nortel/Bell Canada system in parallel for four weeks. “Primus wanted to make sure we didn’t run into any downtime [before cutting over to the new system],” Aniballi explained. “But, plus or minus a few hiccups, most of our people were off the Bell lines within a day or two.”

There was some slight resistance from employees to the idea of using supposedly less reliable IP telephone technology – some tended to be hyper-critical of the technology in the early going, and Aniballi figures the firm is still not getting everything it could out of the new system.

Bottom Line

But in this case, with this provider, a hosted IP PBX is delivering solid, reliable phone service, as well as substantial cost savings and productivity benefits. If you’re in the market for a new phone system but don’t have capital to invest or in-house IT or telecom expertise, and you want the advantages of IP telephony, this may be a good option for you.

Based in London, Canada, Gerry Blackwell has been writing about information technology and telecommunications for a variety of print and online publications since the 1980s.

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