Getting started with cloud-based phone systems

Numerous businesses are switching onto a cloud-based phone system to elevate both their internal and external communication experience. 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

Cloud-Based Phone Systems: What are they?

When we talk about business telecommunications, we often think of phones on desks, headsets, and even rooms filled with agents taking calls. Sometimes we think of our hand phones or using a computer to make and receive phone calls. It used to take a lot of on site hardware and expensive software to make all these different things work together. Thanks to the evolution of the cloud this is not necessarily the case, anymore.

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 carry traffic for voice communications. When first developed, these systems simply replaced older telephone systems with networks and computers that were owned and hosted by businesses themselves, on-premise.

Today, you can combine cloud-based hosting with internet-based telephony services to get a cloud-based phone system.  These systems are another step for "Voice Over IP" services, which use the Internet to connect calls between different devices or endpoints. 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 business telecommunications solutions that are often called by other names, such as:

  • 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. Just as many residential telephone services are provided by Internet Service Providers, today, the digital transformation of businesses often includes the migration of telecommunications services to the cloud.

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:

  1. When you make a voice call, your voice is transmitted from your handset, either via WiFi or 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 the sends it to your office phone.cloud_1

Diagram 1: Cloud-based phone system

The journey of the voice signal does not seem long or complicated. In fact, there is quite a lot of technology involved in making it happen, even though it normally takes only a few milliseconds for your call to connect. Often business telephone systems are seen as big, scary, complex, expensive and unreliable pieces of equipment that businesses just have to ‘deal’ with. But this is certainly not the case for a cloud-based phone system.

Using the same network for your voice communications and you use for internet connectivity has a lot of benefits for businesses, including vastly reduced costs for hosting, managing and using those systems. 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.


Diagram 2: Differences between on-premise and cloud-based phone system.

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? 

It is especially crucial that you weigh both the benefits and costs of having a cloud-based phone system, and that you evaluate other benefits that migrating to a virtual phone system can bring to all parts of your business. Here are just a few key benefits that cloud-based phone systems offer.

  1. Connectivity
    • You can get connected to anyone, from anywhere you are.
    • As many employees are asked to work remotely, and customers increasingly move to shopping from the comfort of their homes,  a cloud-based phone system can help maintain these connections with ease.
    • You can control which mode of communication best applies to your business and your employees. Regardless of the device that you use, connectivity should not be compromised.
  2. Cost savings

    • Migration of costs related to telephony transition to 100% OpEx vs. CapEx, as infrastructure is hosted in the cloud, and the service becomes subscription-based (per user per month, for example).

    • The commercial model also supports easily scaling up or down in terms of capacity for users, while overall costs for making and receiving calls go down. Plus, one usually pays for what you actually use.

    • Reduced costs for manpower needed to implement and maintain dedicated or on-premise systems. Costs for a cloud-based phone system are kept low thanks to the ease of installation and low overhead costs.

  3. Efficiency

    • Time is of essence to every business. Instead of wasting time on sending certain messages and making sure the other person receives it, cloud phone systems often allow for call forwarding (to almost any other number), or even for transcription of voice messages to Short Message Service (SMS) or email.

    • This interoperability increases the likelihood that communications will be received, as well as improving collaboration.

  4. Flexibility

    • Cloud phone systems can provide more flexibility around which countries are supported, allowing you to pick and choose locations instead of taking 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 scale up or down quickly, with incremental cost increases or savings.

  5. Integrations

    Diagram 3: Integrate different tools from your fingertips.
    • 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 can help you centralize all the inbound channels your customers use to reach you, and that you use to collaborate with your coworkers. From video conferences, to phone calls, to text messaging, to conference calls, to file sharing - it seems like everything is becoming more connected. 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 for logging 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 differentiated customer experiences.

    • If you’re using a collaboration tool like Microsoft Teams you can also bring the ability to make and receive voice calls through your cloud phone system into that environment.

    • Even the simple use case of “click to call” a number embedded in a Microsoft Word document is an example of how the cloud phone system makes it easier than ever to communicate.

  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, we get why security is of importance.

    • There are a number of different aspects to managing security for cloud-based phone systems. The bottom line is that migrating to a cloud-based phone system can also help mitigate these 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.

    • You can read more about what we do at Toku to support security and anti-fraud measures in Toku Connect, as an example, here.

Do you need a cloud-based phone system?

To wrap this up, a cloud-based phone system can offer businesses many different benefits. There is not a one-size fits all solution hence, it is crucial to map out which aspects of your business can be enhanced or improved by using a cloud-based phone system.

Of course, our team here at Toku are happy to help you if you want to learn more.

Want to learn more about how a cloud phone system can help you improve your bottom line?

Contact Us

Subscribe To Our Blog

Let Us Know What You Thought about this Post.

Put your Comment Below.