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A virtual PBX system can give small businesses a big voice for less

A virtual PBX system can give small companies many big-company phone features for a small monthly outlay, but it won't scale gracefully for medium-sized companies.

In 2008, Andre DeRosa launched Balanced Wind, a Chicago-based manufacturer of rooftop wind turbines, with three employees. Like many entrepreneurs, he had a conviction that his business wouldn't remain small for long. While many startups get by with cell phones, he wanted a phone system that reflected that big-company persona -- an automated system with a single number that could direct customers to the right person in his company, minus the big price tag.

DeRosa opted for a virtual private branch exchange system, a super-lightweight version of traditional, highly stable PBX systems. A virtual PBX is a variation on hosted PBX systems, which rely on Voice over Internet Protocol (VoIP).

"My problem was not that I didn't know about phone companies. It was that I was too familiar with them," DeRosa said. His previous company, a 600-employee bank that did not survive the recession, had a PBX system that worked well, he said. But he knew that even a used PBX system would run him $20,000, plus maintenance. A new system would cost considerably more.

"The last thing I wanted was to drop that kind of money on a phone system for a company that initially didn't need that robust infrastructure," he said.

Now with 17 employees located in Chicago, Hawaii, Vermont and Europe, and buoyed recently by the award of a federal grant, DeRosa pays a monthly fee to My1voice, a virtual PBX service owned by Protus IP Solutions Inc. in Ottawa, Ontario. The call-forwarding feature allows his scattered employees to forward their office lines to their mobile, home or other numbers. He doesn't pay extra to add or remove an employee from the system. When DeRosa travels to Europe, My1voice forwards his calls to his Skype account so he doesn't pay overseas phone charges. The company recently added voice transcription for no extra fee. And by not having expensive phone equipment in his office (or servers, which are also hosted), his insurance premiums went down.

"The benefit is that I got all the bells and whistles of the larger phone systems -- for $30 a month," DeRosa said. He pays his employees' cell phone bills, "but I would be doing that anyway."

'Cash is king': The benefits of a virtual PBX system

Cash is king, is the main thing. A lot of companies now just do not want to invest capital on hardware and would prefer paying a fixed monthly fee for phone systems.
Matt Brunkpresident, Telecomworx

Going with a virtual PBX system can be a huge cost saver, especially for small companies like Balanced Wind, and especially in an economic slump.

"Cash is king, is the main thing. A lot of companies now just do not want to invest capital on hardware and would prefer paying a fixed monthly fee for phone systems," said Matt Brunk, president of Telecomworx, a Washington, D.C.-area interconnect company specializing in unified communications.

A virtual PBX lays on top of a business's current plain old telephone service, using the lines the business already has, rather than an Internet connection, so phones continue to operate whether the business has Internet connectivity or not. Basically a sophisticated answering service, a virtual PBX manages inbound calls, routing them to phones already owned by the business, so the user is not required to buy a proprietary phone. The virtual PBX, cloud-based model makes a lot of sense for startups, independent contractors and mobile workers, said Brunk, whose firm has been in the VoIP and IP-PBX area for more than a decade.

Hosted PBM systems are virtually too big

Hosted PBX systems represent a bigger investment on the customer side. They require switching equipment, and some may also entail loading software onto each PC or laptop. Unlike the virtual systems, however, they can scale to accommodate a larger number of users than virtual PBX systems -- to a point. Packages tend to focus on 100 phones or less, with the emphasis on 20 phones or less.

"The larger the company, the larger the needs, and scaling up can get sticky," Brunk said, recounting a recent project Telecomworx did for a company that insisted on a hosted PBX system but would have been better off putting in its own IP-PBX system. "At the end of three years they would have owned it, as opposed to the end of three years right now, they get zero," he said.

Maintenance is also more of an issue for a larger company. Unlike startups with minimal office equipment, midsized businesses do have infrastructure (wiring, a router, a firewall, more sophisticated desk phones, Internet pipes). "Calling the 800 number doesn't always solve it," he said. "We make a lot of money servicing companies that subscribe to these services, and when something goes wrong, the subscription service at the other end says, 'It is not us.'"

Paul Kirvan, an independent disaster recovery and business continuity consultant who has analyzed hosted PBX systems for sister site, warned that companies should look closely at pricing plans. Hosted PBX systems tout the fact that they do not require equipment on-site except for phones and are largely maintenance-free, but that depends on the size of the deployment. He recommends that companies choose a vendor pricing package that is closest to the number of extensions that needs to be protected and has some room for expansion without a significant price penalty.

Let us know what you think about the story; email Linda Tucci, Senior News Writer.

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