What is a Virtual Phone System? A Complete Guide

A virtual phone system is communication software that transmits calls through data networks (basically the internet) rather than through traditional phone lines. Businesses can either purchase on-premises virtual phone systems or cloud-based virtual phone services, also known as a hosted VoIP phone systems.

For decades, on-premises solutions served as the default option for business phone systems. An on-premises (or “legacy”) system is one where your company purchases the system hardware — including servers, switches, etc. — and hosts it at your office location. You are then responsible for its upkeep, as well as any maintenance or updates.

Only hosted virtual phone systems offload the inherent risk of tech investment onto the provider while delivering greater agility, more advanced features, seamlessly scalability, and resilience to outages, natural disasters, and even pandemics. With less risk, greater flexibility, no end-of-life for the technology, and access to advanced reporting, automation, and mobility, enterprises are free to funnel their resources away from maintaining their technology and toward outperforming competitors.

What are the different types of business phone systems?

Today’s typical IT departments maintain less than half of their platforms on site, while the rest are in the cloud, including their communication platforms. This helps companies adapt and scale quickly and cost effectively to meet rising customer expectations and boost staff productivity. The number of businesses switching to cloud providers rose considerably during the pandemic as more company’s adopted to flexible work models but has recently started to revert to previous levels.

Here’s a quick rundown of how different types of business phone systems compare so you can see what makes sense for your business.

On-Premises

• Heavy upfront capex investment. Licensing fees and support and maintenance contracts.
• Certifications and technical training required to make changes.
• You handle your own security.
• Obsolescence leads to increasing incompatibility with modern features.
• Scaling requires additional hardware and time-consuming system configuration.
• Doesn’t support hybrid or flexible work environments; need to be in office to handle business communications.

On-Premises VoIP

• High upfront capex expenditure.
• Easier to customize, but still requires technical expertise and hardware configuration.
• You own the system, so security is up to you.
• Requires hardware and software updates, which you purchase and implement.
• On-site growth is easy, but adding locations requires another system.
• Inability to access the office cuts you off from essential business communications.

Hosted VoIP 

• Opex; low or no upfront expenditure. Predictable monthly subscription fee.
• Real-time changes made in online portal. No technical expertise necessary.
• The provider is responsible for security.
• The provider updates the system off-site, giving you automatic access to new voice features.
• Simple to scale. One system easily adds new locations or digital channels to communicate over.
• Remote access to communications is built in. Automatic failover to off-site numbers.

Hybrid Cloud

• Capex AND opex; company owns and maintains on-site hardware and pays monthly subscription to cloud service.
• Changes implemented via online portal.
• The provider handles security in the cloud.
• The state and age of your on-site system limits access to the latest features.
• Easy to scale on location. Multiple locations require an additional on-site system.
• Some remote access to phone functionality. If the on-site system is damaged, your phone service goes with it.

Start with the phone system you already have in place and ask yourself how it’s serving your needs. A few questions to ask as you evaluate your existing business phone system include:

• What’s it getting right?
• Where does it fall down on the job?
• What could be better? (Ask around for suggestions from other employees.)
• Does your system help your company meet its goals?
• What needs / requirements would a new system have to fill?
• Does your current system have the capabilities to easily scale with your business if adding new licenses, locations, or channels?
• Does most of your team use desk phones? Does your provider offer soft phone capabilities?
• Are you only looking for a virtual business phone system? Or are you after a comprehensive solution? (Like video, contact center, conferencing, chat, text/SMS, desktop integration, etc.)
• How important is mobility to your company? Is it must-have or like-to-have?

Criteria to Assess Virtual Business Phone Systems

Once you’ve decided on a virtual phone system, you should start researching providers. Throw a wide net and keep an open mind as you weigh your options.

Reviews

• Search for the top names on Hosted VoIP review sites.

Retention

• Once you’ve narrowed it down, look at retention levels. This indicates how happy customers are with their decision.

Pricing

• How affordable are the providers you’ve picked?
• How often do they change their rates?
• Do they lock you into a contract, or do they offer month-to-month service?

Features

• Are there startup or activation fees, or are features all-inclusive?
• Do they offer basics like auto-attendants, conference bridges, voicemail to email, Find Me/Follow Me, and call recording?
• How easy is it to manage and set them up?
• Do you receive new features as they become available?
• Are updates free or part of a service charge?

Security

• How secure are their communications?
• Do they use encryption and other security measures?

Quality of service and call quality

• What do customers consistently say about the providers’ call quality and the level of service they offer?

Onboarding and Training

• What will it take to get started with this provider?
• Do they offer training?
• Do they provide training materials like manuals and videos?

Support and Customer Care

• Is support included in the price, or is that extra?
• Do they offer tools to help determine if your network can handle their solution?
• What kind of support can you expect during setup?
• Are updates free or part of a service charge?
• Once you’re up and running, who will take care of you?

Redundancy

• What level of redundancy do they provide?
• How many datacenters host the solution?

Mobility

• Do they offer a mobility app?
• If yes, what voice features are available through it?
• Can you make calls on your mobile device using your business number?
• Does the mobile app cost extra?
• Is it available on iOS and Android?

Scalability

• Does the provider have experience with large deployments?
• How distributed is their customer base?
• How easy is it to add users and locations?

Reliability

• Do the providers publish their status and uptime?
• Is there a formal service level agreement (SLA) guaranteeing uptime?

Analytics

• Does the provider offer any kind of call analytics and usage reports that could yield insight into staffing and service decisions?

Understand the Requirements to Implement a Virtual Business Phone System

Before you make your final pick, press your possible vendors on deployment-phase challenges. Virtual phone system providers should be more than happy to answer these questions.

Timelines

• How long will deployment take?
• When is the go-live date?

Project Management

• Will you get your own project or account manager to oversee installation?
• If not, who should you contact with questions or concerns?

Training

• How is training handled?
• Is it remote or on-site?
• What resources, training videos and documentation are available?

Number Porting

• How long does it take?
• Are there extra charges?
• What happens in the meantime while the numbers are switched over?

Provisioning

• How difficult is it to program hardware like phones to function with the phone system?
• Does the vendor offer plug-and-play hardware or zero-touch provisioning tools?

Make the Right Choice

GoTo Connect leads the virtual phone system industry in customer support and reliability.

With hundreds of enterprise-grade features, complete control of its platform, and many datacenters distributed worldwide providing redundant service, GoTo Connect sets the pace for the Hosted VoIP industry.

With mobile and desktop applications, GoTo Connect helps maintain professionalism regardless of where your flexible workforce is: at the desk, on the road, or at home.