Increasingly, the businesses I work with have moved, or have begun planning a move, to cloud-based telephony services to replace their on-premises systems.

Cloud-based telephony is an on-demand computing model allowing users to tap into a shared pool of configurable computing resources — such as applications, networks, servers, storage and services — that can be rapidly provisioned and released with minimal management effort or service-provider interaction.

This is an area right in my wheelhouse, since I work with customers on collaboration solutions for CDW. This jump to the cloud for telephony has been on an upswing for about the last 18 months.

The advantages are enticing: lower communications expenses, the ability to redirect IT staff from routine daily work to more innovative tasks and easy connectivity for employees regardless of their locations or devices. After all, work is viewed these days as an activity, not a location.

Although the advantages may be appealing, migrating to cloud telephony requires more than merely replacing conventional PBX-based systems with third-party Voice-over-IP services. Most important, companies must dive deeply into cost analytics to determine if current outlays for services compare to the expense of various levels of services available through the cloud.

Cloud-based telephony offers companies advanced functionality that in the past would have cost hundreds of thousands of dollars to develop and maintain. For instance, the process of building, customizing and maintaining enterprisewide video conferencing systems or corporate call centers with links to multiple back-end systems is an expensive and time-consuming endeavor. By moving to a cloud-based carrier, companies can have access to these services while paying a monthly usage fee and avoiding huge upfront equipment investments.

Changed Cost Mindset

Interestingly enough, the aforementioned recurring cost poses a hurdle for some corporate managers trying to decide whether to keep the on-premises telecom system or move to the cloud. People regularly tell me: “We are looking to buy a new phone system. We are looking at an on-premises system, and we are looking at the cloud. But it scares us that the cost with the cloud goes on forever.”

True, you pay that monthly fee for as long as you want the service. Too often, however, corporate managers don’t factor in the “tough to calculate” items, such as the time to develop and maintain on-premises systems, as well as recurring upgrade costs.

Decision-makers typically look for costs within phone bills as an easy indicator of ROI. While a company might pay $5,000 a month for communications services, this is not a clear indicator of all costs associated with developing and maintaining an on-premises business communication system.

What IT and telecom managers need are tools or procedures to help them walk through a simple financial analysis to quantify how much their time is worth. It helps to consider: How many hours do staff members spend managing the phone system? What is the cadence of phone system upgrades? Is it every year, every 18 months, every five years? What brands are used and what are the unique vendor costs associated with them?

A Little Help

Here’s something my team and I work on with companies. We sift through the hidden costs related to development, maintenance and upgrades of telephony systems. Typically, I find that once managers have a clear view of the true total cost of operation, the concern about the recurring monthly fee becomes less of a hurdle — or goes away altogether.

I’ve found that typically this is a C-suite discussion rather than one within the IT department proper. Why? Because in many organizations, it’s the CEOs, chief financial officers, CIOs, chief technology officers and vice presidents of marketing who think about these technology total-cost-of-ownership issues relative to other business costs and budgets.

At Your Own Pace

Managers also wonder about the technological issues associated with moving telephony to the cloud. The benefit here is that when a company is ready to move to a cloud or hosted solution, it sometimes doesn’t need to change the phones on users’ desks. Instead, it’s just the brains of the system that need to be relocated. Think about an on-premises phone system. It’s running on servers in an IT closet or data center. In the cloud, the phone is still on the desk, but the server in the IT closet is now located in a separate location and reached via the internet.

If a company needs new phones, this can be done incrementally, so all of the old phones need not be replaced at once. For instance, one organization that moved its business communications to the cloud had 12 office locations. The manager wanted to be at each location to help direct the cutover to the cloud. He wanted to move one facility per week to the cloud. That’s possible.

With the cloud, you can be as flexible as you want. Plus, if users need new features or if an employee has to be added to or deleted from the system, administrators can log on to a web portal and simply “turn on” those new features for the employee — almost like flipping a light switch.

As you decide whether a move makes sense for your organization, consider also that more integration options will become available. For example, in the future, bots (software code designed to automate tasks) will make human interaction with the phone system quicker and more efficient. We are seeing advanced functions such as links to major customer resource management systems become increasingly popular. It’s a pretty exciting and dynamic time for telephony.

Discover how businesses use cloud telephony in the real world in this BizTech article.

Read this article to learn about the security implications of moving collaboration to the cloud.