Hosted Solutions For SMB

23 Jan 2011

It's good to be a small business. That may be true for lots of reasons, but I am referring to the current telecom environment. The choices for telecommunications solutions have never been greater, more powerful, or so reasonably priced. It's a buyers market too! VoIP technologies eliminate geographical limitations, so service providers across the country are vying for Main Street business. But selecting a provider isn't simple - not only are they difficult to compare, but offer wildly different approaches to voice and unified communications.

Hosted voice services have been on the market for about eight years. The services basically run $30-$50/month/user and typically involve key features geared at SMB users. Most services offer unlimited calling in the US and Canada, voice mail, and a variety of advanced features available through a web portal. The providers generally do not include the actual bandwidth required - that is businesses will need to obtain quality, high-speed broadband separately in order to use a hosted voice service.

Hosted voice solutions offer SMB users a number of key compelling advantages:

  • Minimal upfront costs: Most providers bundle everything into a monthly fee - the initial purchase of the phones themselves being the most common exception. Some providers, though not as many as you might assume, include the phones in the monthly fee.

  • Scalability: Hosted solutions tend to be highly scalable to accommodate business growth. Just add phones, and more phones often leads to a bigger discount. The only major caveat here is bandwidth requirements also increase with additional concurrent users.

  • Multi-Site: Hosted services don't really care where you are. That means its easy to add extensions at other locations including remote offices and homes. Softphones on a laptop means phone service can be available anywhere you can connect - coffee shops, hotels, airports, even foreign countries.

  • Rich Features: Generally speaking, the bigger the phone system, the bigger the feature set. And hosted voice systems are typically pretty large - serving 1000s of users. The available features just can't compare to typical small business products. It can be a highly cost effective way for a small business to obtain broad sophisticated features such as mobile phone integration, conference services, call recording, transcription services, call center features, and advanced reporting.

  • No commitment: Although some providers have a minimal commitment (one year or less), that's nothing compared to three to five year depreciation schedule of a phone system or even a two year contract on cell phones. Small businesses are nimble - they can grow (or shrink) quickly, move, and change requirements. Hosted offers a fairly reasonable degree of flexibility.

These are the reasons why hosted voice is gaining in popularity. The sector is growing and many expect significant growth to continue over the next few years. Cloud services are more popular than ever, broadband bandwidth has never been more ubiquitous or cheaper, and hosted voice is no longer unproven. There are no shortage of service providers; it seems like you can't throw a dead cat without hitting at least four hosted voice providers. At UCStrategies, we just took a hard look at Fonality, Vocalocity, 8x8, RingCentral, and Aptela. All of which offer nationwide services at competitive rates.

As mentioned, comparing hosted voice providers can be tricky. Here are some helpful tips to avoid some common pitfalls that can interfere with a positive hosted voice experience.

  • On Premise Equipment: Most hosted voice providers don't want to deal with onsite matters - their entire sales, implementation, and support service is performed remotely and reportedly this generally works. It is one of the factors that keeps hosted service prices so attractive. However, the phone meets the ear on-site - the proverbial last yard. I recommend involving local resources (contractors, resellers, consultants) in any hosted voice plans. The service providers tend to downplay this helpful tip for fear of over-complicating things. A decent switched 100 Mbps (minimum) LAN is required. Power over Ethernet (POE) is highly recommended versus the default approach of local power bricks at each phone. This probably means new network switches - and the Cat-5 cabling better be compliant as POE uses all the wires (standard Ethernet does not). A UPS is recommended on the POE switch, and a VoIP prioritization solution are also recommended to reduce potential problems with congestion.

  • Network Connectivity: Most service providers advocate that customers should obtain access through the public Internet. This is generally the weakest link. Poor quality Internet bandwidth, or insufficient bandwidth will make hosted voice intolerable. Work closely with your hosted voice provider and local IT resources to verify the Internet WAN service is sufficient Some hosted providers offer private network solutions directly to their site - this is highly encouraged and virtually eliminates quality of service issues.

  • Unified Communications: The requirement for "voice" or "telephony" is quickly being replaced by the requirement for "unified communications" (UC) which is used to represent broader communication tools and capabilities. There is a tremendous amount of confusion and marketing hype around "unified communications," but at its core it is a solution that not only includes traditional voice, but features such as presence, IM, video, collaboration, messaging, broader tools for mobility, and integration hooks with other applications. The degree to which hosted voice providers are addressing unified communications varies widely; particularly around mobility. Ask detailed questions of the providers to understand their feature capabilities in this area. For example, some providers offer smartphone clients for popular cell phones, but don't assume the features of these clients are consistent among the offerings.

In addition to the hosted voice model, I should mention two other hosted alternatives worthy of consideration. The emerging virtual number space and a pure Skype solution.

Virtual numbers are similar to hosted service, but don't include dialtone. The cloud service essentially forwards calls to other numbers which could be regular analog phones, VoIP phones, cell phones, even home phones. Virtual number providers such as Ringio, Google Voice,, and offer some unique benefits. Most hosted providers also offer virtual number services, but not all virtual number service are created equal. Most likely over the next few years, these services will consolidate. Virtual numbers, illustrate how many of the features are now independent of the phone; so much that an actual phone isn't even needed any more. They are great way to complement basic phones or cell phones with more powerful business features such as unified messaging, conferencing, recording, etc. See my earlier post The Other Voice Channels.

Skype is in a category by itself. There is nothing quite like it and if you think you know Skype, but haven't checked them out for a few years, you probably don't. First off, be sure to look at Skype for Business - which involves a Skype Manager account. This allows central administration of multiple accounts - the biggest pitfall of many consumer services. A business needs to control its numbers to minimize customer turnover resulting from inevitable employee turnover. Skype has numerous services including SkypeIn, SkypeOut, mobile integration, robust video conferencing, and a feature rich desktop client. Skype Connect allows for interconnection of the Skype network to a phone system. Skype's portfolio is so broad that it can be used in lieu of a phone system. However, despite ongoing ease of use improvements, don't consider this path unless you are comfortable with the technology. Skype is a bit more complex than the other alternatives and offers the least amount of assistance or support.

Hosted voice can make a lot of sense. The providers will all look similar at first, but they actually vary quite a bit. It takes quite a bit of effort to compare providers, far more than it should. In fact, proper due diligence can be more work than buying a phone system. But if you have the patience to work though the research and evaluations then the benefits can be enormous.

Dave Michels, Principal of Verge1, has a personal telecom blog at


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