Cloud-Based Phone Systems 101

As the years go by, more and more businesses are switching to a cloud-based phone system.

The benefits are clear. Not only does a cloud-based system elevate both internal and external communication experiences through added functionality, but the cloud also offers added security and streamlines processes. 

If you have thought about making the switch from hosting your own business phone services “on-premise” to managing these services in the cloud, this post will help you understand: 

• What cloud-based phone systems are 
• How these systems work, in plain English 
• The potential benefits of using cloud-based business telephony services 

What are cloud-based systems? 

When we talk about business telecommunications, we often think of phones on desks and headsets. We even think of rooms filled with people taking calls. Though we all now know that we can use our mobiles and computers to take calls, we are still largely used to requiring on-site hardware and expensive software to make communications work.

Thanks to the evolution of the cloud this is not necessarily the case, anymore. Data can be stored in the cloud. 

Traditional telephony systems are built on top of a dedicated network of wires and switches, which are often referred to as the Public Switched Telephone Network (PSTN).

Voice over Internet Protocol (VoIP) telephone systems use the internet to allow for voice communications. 

Today, you can combine cloud-based hosting with internet-based telephony services to get a cloud-based phone system. These systems are a step beyond “Voice Over IP” services, which use the Internet to connect calls between different devices or endpoints. Think of Zoom or Skype for consumer-based examples of this. A cloud-based phone system is one that is hosted and maintained in a remote data centre instead of on-premise. 

Cloud phone systems are often called by other names. These include: 

• VoIP systems 
• Hosted phone systems 
• IP phone systems 
• IP PBX 

With the growth of cloud-based infrastructure services (think of vendors like Amazon Web Services, or Microsoft Azure), many companies are switching to telephone systems that are hosted virtually, rather than on site. Following the rise of remote working after the impact of the Coronavirus, even more companies are expected to make the switch.

How do cloud-based phone systems work? 

Let’s follow the journey of a voice call as it’s made by a cloud-based phone system: 

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1. When you make a voice call, your voice is transmitted from your handset, either via WiFi or via cables to your router. 
2. From here, the voice signal travels through the internet, connecting to your cloud phone system which is often hosted in a data center managed by the business or run on top of a vendor like AWS. 
3. Once your voice signal is received by the cloud phone system, it is processed and then sent back over the internet to the PSTN which connects your call to the outside world. 
4. Likewise, when someone from outside calls your office phone number, that signal is transmitted over the PSTN to the cloud phone system, which converts the signal to one that can travel over the internet, and sends it to your office router, which then sends it to your office phone. 

The journey of the voice signal does not seem long or complicated (it takes only a few milliseconds to connect a call), yet there is quite a lot of technology involved in making it happen. 

Using the same network for your voice communications and internet connectivity has a lot of benefits for businesses. Not only does it make everything more streamlined, but it reduces the risk of things going “down.” Down-time from using old on-premise equipment can have a major impact on a business. Moving to the cloud means protecting your business in emergencies. 

It also means vastly reduced costs for hosting, managing and using those systems but we’ll talk more about that in a second.  

Technicalities of a cloud-based phone system 

Most on-premise phone systems use a technology called circuit switching. Circuit switching requires a physical connection between both devices. This connectivity used to be provided by a country’s very own PSTN. 

The PSTN uses a protocol called ISDN (Integrated Services Digital Network). ISDN has long been the primary standard for delivering telephony services. The problem here is that ISDN does not scale efficiently. In order to carry all the calls they need to make, many businesses need multiple ISDN lines running to and from their premises. Each of these lines are limited in their capacity to ‘carry’ voice calls. 

On the other hand, a cloud phone system uses a technology called VoIP (Voice over Internet Protocol). VoIP uses packet switching rather than physical circuit switching to make and receive voice calls. 

Instead of using telephone lines, VoIP uses SIP (Session Initiation Protocol) trunks. SIP trunks work with your broadband line and create ‘virtual’ telephone lines, rather than the physical ones that come with the aforementioned ISDN and circuit switching. 

This makes scaling up or scaling down to meet the needs of any business’s call volumes much easier than with PSTN and ISDN. Businesses can now have multiple virtual lines (SIP Trunks) and handle many more calls in and out at a much lower cost than with PSTN services.   

How does a cloud-based phone system elevate your business?

As well as the benefits mentioned so far, using a cloud-based phone system has some truly transformative benefits for a business. 

1. Connectivity

• Get connected to anyone, at anytime from wherever you are. 
• As many employees are asked to work remotely, a cloud-based phone system scales accordingly and helps maintain connections with ease. 
• Regardless of the device that you use, connectivity will not be compromised and team communications will remain streamlined. 

2. Cost savings

• Pay for what you use. Because infrastructure is hosted in the cloud, the service becomes subscription-based. For example, it might be based on per user per month. 
• This model easily supports scaling up or down in terms of capacity for users, but ensures that overall costs for making and receiving calls go down.
• Reduced costs for manpower – there is no need to implement or maintain dedicated or on-premise systems, which lowers overhead costs.

3. Efficiency

• Time is of essence to every business. Instead of wasting time on sending messages and worrying whether the other person receives it, cloud phone systems often allow for call forwarding to almost any other number. They also allow for the transcription of voice messages to Short Message Service (SMS) or email. 
• This improves both external and internal communications which can have a direct impact on business leads and profits, as well as saving time. 

4. Flexibility

• Pick and choose which countries you want to include in your systems, rather than paying for them all. Cloud-based phone systems provide more flexibility around which countries are supported. You don’t have to take an “all-in-one” package that forces you to spend more than you need to. 
• In addition, if you increase the number of office locations, or want to change the countries you need to make calls to or receive calls from, cloud phone systems help you easily and quickly scale up or down quickly. 

5. Integrations

• Perhaps the most significant benefit a cloud-based phone system offers is the ability to connect and share information with other business services and tools that you use every day. 
• Cloud-based phone systems allow you to centralise all the inbound channels your customers use to reach you, as well as those that  you use to collaborate with your coworkers. From video conferences, to phone calls, to text messaging, to conference calls, to file sharing – integrations improve efficiency and just makes sense. Why not bring your phone system into the mix? 
• Many cloud phone systems can directly integrate with Customer Relationship Management (CRM) systems like Hubspot or virtually any other database-driven service. Most integrations allow you to log all calls to and from customers directly in these systems. This makes it easier to gather real-time feedback about the way your customers engage with your business. 
• When coupled with business process automation tools there are nearly infinite possibilities to create and advance customer experiences with this. 
• If you’re using a collaboration tool like Microsoft Teams you can also make and receive voice calls through your cloud phone system within Teams. 

6. Centralised security

• You may have concerns about whether or not hosting a phone system in the cloud is secure. With increasing focus on data privacy and the ongoing war against phishers and scams, security is of utmost importance 
• There are a number of different mechanisms in place to manage and strengthen security for all cloud-based phone systems. The bottom line is that migrating to a cloud-based phone system can also actually mitigate security risks. If you work with a vendor who specializes in offering these services, they will take care of properly configuring the system, keeping it up-to-date with security patches, upgrades, and with monitoring of the service to minimize or eliminate risks.