What Are The Pros And Cons Of A Cloud-Based Phone System?

Smartphone Collage AH New 2019

As more and more states phase out traditional telephone systems, we look at why you should or shouldn’t be replacing yours with a cloud-based phone system

A cloud-based phone system is a phone system hosted by a provider. It’s a popular choice for small to medium businesses, as it’s generally cheaper and easier to scale than a self-hosted phone system.

In 2018, hosted VoIP sales made up 18.1% of the PBX market – up from just 3.6% in 2010. Benefits such as low maintenance, easy installation, and flexible packages are just some of the reasons why more businesses are choosing to invest in it.


But cloud-based phone systems aren’t without their drawbacks. Lack of customization and reliance on a strong internet connection are some of the reasons why some businesses opt to stick with a traditional phone system, or else choose a self-hosted option, such as an IP PBX.

Read on to discover the features and benefits that make a cloud-based phone system a great choice. We’ll also tell you what you need to be mindful of before you commit to signing on that dotted line.

The pros of a cloud-based phone system

Firstly, let’s take a closer look at the features offered by a cloud-based phone system.


Cloud-based phone system features

What features make a cloud-based phone system so great? According to data collected by Finances Online, find me follow me, call handling, and conference calling are the top features driving small businesses to purchase a cloud-based phone system. But what exactly are these features?

  • Find me follow me is an auto-direct funnel. It channels calls through a priority system until a call is answered. For example, calls are first sent to your desk phone extension, then your private mobile number, then to the receptionist
  • Call handling refers to the phone system’s auto-attendant, which directs callers to the right department. With an auto-attendant, employees spend less time directing calls to the right department and more time focusing on the task at hand
  • Conferencing calling is made possible thanks to technology called a conference bridge. This allows people using different devices in different offices to connect to the same phone call. Conference calls can be either audio or video

The features of cloud-based phone systems don’t stop there. There are a whole host of sophisticated add-ons that larger businesses can ask a provider to set up, including:

  • Call center integration – integrate your phone system with an offsite call center to assist with call overflow
  • Interactive Voice Response – use voice recognition to provide callers with automated answers to questions, or to collect identification data
  • Automatic call distribution – distributes calls to certain extensions based on pre-set criteria, such as phone number or time of day

Cloud-based phone system benefits

Now you know the range of features on offer, let’s have a look at the benefits of choosing a cloud-based phone system over a traditional phone system.

  • Unify your communications so you receive phone calls, emails, instant messages, video, and call center functionality to the same interface
  • Cheaper to install as all you require on premise is an internet connection and your handsets. From then onwards, it’s a simple case of paying around $25 to $40 per user per month
  • Low maintenance due to the fact that the majority of your phone system is hosted on the cloud. If there’s a problem or you want to make a change to your set up, just call your provider and they’ll sort it out for you
  • Work from anywhere thanks to the fact that your number and call data are stored on the cloud. With most providers offering a softphone app, you can set up your computer or mobile phone to receive work calls, and access your call data simply by logging in to your phone system from the app
  • Scalable – adding a new user is as simple as calling up your provider and having them configure another handset

What are the cons of a cloud-based phone system?

Of course, cloud-based phone systems aren’t for everyone.

You may find that you’ll jeopardize call quality by moving your phone system to the internet, especially if your broadband connection is notoriously unreliable, or you don’t have enough bandwidth to process large amounts of data at the same time.

Large businesses may find that the inability to customize the software to unique requirements prevents them from optimizing the way in which they take calls and process call data.


And because your phone system is hosted on a shared, third party server, security may not be as tight as if you hosted your phone system on your own server.

There also comes a point when paying for a phone system on a per user basis isn’t as cost-effective as installing, maintaining, and updating your own phone system.

Is a cloud-based phone system right for your business?

As previously mentioned, cloud-based phone systems are ideal for small to medium businesses. Just be careful that hosted telephone system suppliers don’t try to oversell you features that you don’t need.


The majority of small to medium businesses opt for packages that include an auto-attendant, conference calling, and call forwarding, then choose to upgrade their package as their needs change.

And remember that once your business reaches a large capacity, it may be worth investigating the costs of an on-premise solution to reduce costs in the long run.