What is a PBX system and how does it work?

Posted on: 2016-02-15 | Categories: VoIP VoIP Providers VoIP Services

A Private Branch Exchange (PBX) system is a private telephone network that hosts different communication channels, including Voice over IP, ISDN and analog services. PBX system users can execute internal and external communications within the network and can have the ability to utilize features like call recording, call queues, voicemails, call transfers and interactive voice menus. Organizations may choose to use a traditional, standard on-site PBX system or a virtual or hosted PBX server.

Traditional on-site PBX system

A traditional PBX system is a physical, on-site switching system that is hooked up to a public switched telephone system (PSTN). This system lets an enterprise share phone lines using extensions and routes incoming calls to the appropriate parties within the organization.

On-premise PBX systems do pose some constraints for businesses because they often have a maximum cap for external telephone lines and internal phone devices or extensions. This can make system changes more expensive in cost, in terms of hardware changes and IT labor costs. Traditional PBX systems are less equipped to adapt to company growth when compared to virtual, hosted PBX solutions.

Virtual PBX system

A hosted PBX system, also known as a virtual PBX, functions the same way as a traditional, on-premise PBX server in that it facilitates calls and communications in and out of an organization, but the system is managed virtually, usually by a third-party vendor, over the internet.

This eliminates the physical installation, operation and management that comes with on-site PBX systems. VoIP service providers are essentially hosting the PBX server. Virtual PBX systems give enterprises increased flexibility to make changes to their current communication lines and systems, in real-time.

On-site vs. hosted PBX: What’s the difference?

This is a common question that businesses face in considering the upgrade to hosted PBX, also known as VoIP. Each option has its own pros and cons. Most experts recommend that smaller businesses should opt for hosted services and larger organizations can manage on-premise systems. But this is by no means a hard and fast rule. If a small business needs the control and customizability of their own PBX server or a large organization simply prefers the hassle-free option of cloud VoIP, those alternatives can work well too.

If an enterprise can afford the investment, on-premise PBX systems are generally a better solution as they reduce the cost per call. Over the long-term, it is also be cheaper than continually paying external vendors for access to their services. It is an especially good choice if the organization handles large call volumes on a regular basis.

Nevertheless, on-site PBX does require time, financial resources and the availability of in-house expertise (alternatively the ability to hire experts and manage them). So, it is not surprising that more organizations are choosing the hosted IP PBX model instead.

To the end-user, a VoIP PBX system does not appear any different from a traditional PBX system. With both these systems, an employee can simply pick up the phone to make or receive calls. But what goes on behind the scenes to enable the call management functions is completely different. IP PBX servers are based on modern, digital standards and more aligned to the way the internet functions. They are more compatible with the way businesses function and employees work in today’s economic environment.

What is VoIP and what can it do for your business? If you’re looking for a hosted PBX system, VoIPstudio has the answers and can provide the solution for your company’s needs. We have a wide range of services that suit organizations of all sizes and in all business segments. VoIPstudio is the best at managing VoIP communications so companies can go about business in the most efficient way possible.