On Premise Phone Systems vs. Cloud Phone Systems

Updated: Apr 16, 2020

Many people wonder what's the difference between an on-premise phone system and a cloud based phone system. When you're considering upgrading your business phone system or implementing a new ERP (enterprise resource planning system) the most important aspect of your decision will be whether or not your system is on premise or hosted in the cloud. Cloud-based phone systems are growing in popularity, and almost all ERP provider have a cloud option. However, there are a few reasons a business may choose an on-premise system. How do you know which is right for you? Here are a few pros and cons of on-premise and cloud phone systems.

Understanding the differences between each type of phone system allows business owners to find the best business VoIP phone service for their needs.

Cloud Phone System vs. On-Premise Phone System

The most considerable difference between cloud based and on premise phone systems are the way they're set up.

Cloud based phone service is hosted on the service provider's server, and the end user logs in through a web portal. The service provider is responsible for system maintenance and expansion.

On premise phone service is set up at the end user's location, on their own servers. With an on-premise set up, the end user is responsible for maintenance and expansion of their system.

Another difference between cloud and on premise phone systems is pricing options. Cloud phone systems are typically a subscription model, while on premise is typically a on time fee depending on the size of the organization and features needed. On premise systems are considered a capital expenditure, while cloud based systems are operating expenses. Cloud based phone systems come with a lower upfront cost, which is partially why VoIP phon systems have grown so quickly.

Advantages and Disadvantages of Cloud ERPs

Advantages of Cloud Phone Systems: One of the most common issues with a new phone system is security. There is valuable information stored in your ERP; financial information, company trade secrets, etc.. Of course businesses are concerned with privacy. However, reputable business VoIP phone service providers like True Dial have extensive systems in place to protect your data and privacy. We encourage you to seek a third-party security audit to prove our protection.

Disadvantages of Cloud Phone Systems: Cloud phone systems increase your teams connection and productivity, however employees using mobile devices create a separate security risk. Businesses that adopt a cloud phone system with high connection/accessibility will have less flexibility. Organizations that need less customization would be fine with a standard package.

Cloud based phone systems are best for small to medium sized businesses looking for low start-up costs and ease of use.

Advantages and Disadvantages of On-Premise ERPs

Advantages of On premise phone systems: Many features included with cloud phone systems are also included in the on premise systems, but there are a few differences between the two configurations.

On premise systems are easier to customize since they're at your location/in your control. This allows businesses to adjust their configuration based on industry, size, and processes. On premise phone systems give more control to the end user, including security benefits.

Disadvantages of On Premise phone systems: On premise phone systems have higher costs to start up, and require the end user to perform maintenance, repairs, and expansion,

On premise phone systems are best for larger businesses with higher budgets, a larger need for customization, and data security.


Deciding whether a cloud based or on premise phone system is best for you depends on your business size, needs, and constraints. Cloud based phone systems are highly accessible for small businesses, although offer less customization. On premise phone systems have a higher upfront cost but are more customizable. Also on premise systems typically don't support mobile.

If you still aren't sure whether a cloud based or on premise phone system is best for your business, give us a call at 304-244-448. Get a free consultation and discover how we can help you determine your needs, and get you the best VoIP phone service for your situation.

Published: 03/05/2020

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