The Pros and Cons of Cloud-Based Calling vs. On-Premises

Businesses rely on telecommunications to support clients, keep their staff connected, and to function on a daily basis. Two popular options are cloud-based calling and on-premises phone systems. The former is still a relatively new solution, while the latter has been the norm for a long while–so which is right for you? 


pros and cons of cloud-based calling


Cloud-Based Calling

Cloud-based calling is a phone system that utilizes the internet to transmit voice calls instead of traditional phone lines. This technology, also known as Voice over Internet Protocol (VoIP), is becoming increasingly popular in business communication solutions due to its scalability, flexibility, and cost-effectiveness.

Cloud-based calling works by using the internet to transmit voice calls through a service provider's servers. This means businesses can make and receive calls from anywhere with an internet connection, allowing for remote work, global collaboration, and improved communication efficiency.


  1. Scalability and Flexibility. One of the most significant advantages of cloud-based calling is its scalability and flexibility. Unlike traditional phone systems at a set location, which require businesses to purchase and install additional hardware as their communication needs grow, cloud-based calling allows businesses to easily add or remove phone lines as needed. This makes it a more cost-effective solution, especially for businesses that experience seasonal fluctuations or rapid growth.
  2. Cost-Effective. Cloud-based calling can be a cost-effective solution for businesses. With no need for expensive hardware installations, maintenance costs, or voice charges, companies can save on their phone system expenses. Additionally, most cloud-based calling providers offer subscription-based plans with a variety of features, allowing businesses to only pay for what they need.
  3. Easy Maintenance and Updates. With cloud-based calling, updates and maintenance are handled by the service provider, freeing up IT resources and reducing the risk of downtime or system failures. This means businesses can focus on their core operations without worrying about maintaining and updating their phone system.
  1. Advanced Features. Cloud-based calling providers often offer a range of features and tools that can enhance communication efficiency and productivity, such as messaging, call recording, voicemail transcription, and video conferencing. These features can help businesses streamline their communication workflows, improve collaboration, and, ultimately, achieve better results. 

Additionally, cloud-based calling providers are constantly innovating and updating their services to stay ahead of the competition and meet the evolving needs of businesses. This means that businesses can benefit from access to cutting-edge features and technologies without the need for costly hardware upgrades or installations.


  1. Internet Dependence. Cloud-based calling relies on a stable internet connection to work effectively. This means that if there are issues with the internet connection, voice quality can suffer, leading to dropped calls and delays. Businesses should ensure a reliable and stable internet connection before implementing a cloud-based calling solution. It should be noted, however, with the surge in softphone applications and mobile apps, users can still function.
  2. Security Concerns. Cloud-based calling services are vulnerable to security breaches like any other cloud-based service. This means that businesses must ensure they choose a reputable provider with a strong track record of security measures, including encryption, managing remote access, and the ability to restrict calls.
  3. Latency Issues. With cloud-based calling, there may be latency issues, resulting in delays or lags during calls. This can be due to a number of factors, such as the distance between the user and the server, internet congestion, and other network issues. These issues can be frustrating for users and can impact the quality of communication, which can be especially problematic for businesses where communication is crucial to success. While there are ways to mitigate latency issues, such as choosing a reliable service provider and ensuring a stable internet connection, it's important to be aware of this potential downside when considering a cloud-based phone system.


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On-Premises Calling

An on-premises phone system, or a Private Branch Exchange (PBX) system, is a traditional phone system installed and maintained on-site at a business's location. Unlike cloud-based calling, which uses the internet to transmit voice calls, on-premises phone systems use physical phone lines and hardware to transmit calls.

On-premises phone systems have been around for a long time and have been a popular choice for many businesses due to their reliability and desire to keep control on-site. However, as technology advances, businesses now have more options when it comes to phone systems. That said, let's go over the pros and cons of an on-premises phone system. 

On-premises phone systems typically require a larger upfront investment and require physical space, unlike cloud-based calling solutions, as businesses must purchase and support hardware and equipment on-site. 


  1. Greater Control. On-Premises phone systems allow businesses to have greater control over their entire communication infrastructure as everything is kept on-site. This means that businesses can manage and maintain their own hardware and software configurations, ensuring that their phone system is fully customized to their specific needs and preferences. With an On-Premises phone system, businesses have complete ownership over their phone system and can implement their own security measures, upgrades, and other modifications as needed. This level of control may be particularly appealing for businesses with strict compliance or regulatory requirements.
  2. Reliability: On-premises phone systems are not dependent on the Internet for transmission, which means they can provide a higher level of call quality and reliability. This is especially important for businesses that rely heavily on voice communication, such as call centers or customer service teams. However, on-premises systems can be brought down by power outages and other unexpected disasters without the ability to shift to support remote work.
  3. Security: On-premises phone systems are considered to be more secure than cloud-based systems since they are not accessible over the Internet. This allows businesses to have a sense of greater control over their communication security.
  4. No Ongoing Monthly Costs: With an on-premises phone system, businesses can avoid the ongoing monthly costs associated with cloud-based phone systems. Once the system is installed, businesses only need to pay for maintenance and upgrades.


  1. Higher Upfront Costs: On-premises phone systems typically require a larger upfront investment than cloud-based calling solutions, as businesses must purchase and support hardware and equipment on-site.  This can be a significant expense for small businesses or those with limited budgets.
  2. Limited Scalability: On-premises phone systems can be difficult to scale up or down as businesses grow or shrink. This can be a problem for businesses that need to add or remove phone lines or features quickly.
  3. Maintenance and Upgrades: On-premises phone systems require ongoing maintenance and upgrades, which can be expensive. Businesses must bear the cost of hardware upgrades, maintenance, and repairs, which can be a significant expense over time.
  4. Voice, Usage, and Unified Messaging Costs: With On-premises phone systems, there are costs related to connectivity and usage. In addition, there is spending on other features such as messaging, conferencing, and faxing. These are often included in cloud-based calling.
  5. Limited Mobility and Remote Work Capabilities: On-premises phone systems are designed to work within a business's physical location. This can be a problem for businesses with remote workers or employees needing to work from home. They may be unable to access the phone system, or the quality of their calls may be affected.


Which Solution is Right for Your Business?

After weighing the pros and cons of cloud-based calling and on-premises phone systems, the decision of which one is right for your business depends on your specific needs. While on-premises phone systems provide immediate access and security, they come with a higher upfront cost and limited scalability. On the other hand, cloud-based phone systems offer more flexibility and mobility, advanced features, and lower upfront costs.

For businesses looking to scale up or down quickly or those with remote workers, cloud-based phone systems are the better choice. They allow for greater flexibility and can be accessed from anywhere with an internet connection or via a cellular connection. Additionally, cloud-based phone systems offer advanced features that can increase productivity and streamline communication.

While on-premises phone systems may be suitable for some businesses, the benefits of cloud-based phone systems far outweigh the potential drawbacks. Fortunately, the right provider can help mitigate these concerns, particularly regarding security and reliability. 

While on-premises phone systems may be tried and true, cloud-based phone systems are the business solution of the future. If you're looking for a flexible solution to help your business stay competitive, a cloud-based phone system is the solution for you.


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