Cloud PBX vs On-Premise: A Comprehensive Guide

2.2.2023 - 9 min. read

Cloud PBX vs On-Premise: A Comprehensive Guide

When choosing between cloud PBX and on-premise PBX, many Communication service providers (CSPs) face a dilemma. Either select a cloud PBX solution or host their own IPBX solution either on their servers or their clients. While both have their pros and cons, it can be challenging to determine which is the best fit for your organization's needs. To help CSPs make an informed decision, in this blog post, we will take a closer look at cloud PBX and on-premise PBX, and compare their key features, benefits, and drawbacks.

Understanding the Basics of Cloud PBX

The Advantages of a Cloud-Based Solution

Cloud PBX is a hosted, cloud-based telephony solution that enables businesses to make and receive and manage voice calls and faxes over the internet, rather than using more traditional telephone lines and systems. With cloud PBX, there is no need to purchase, install, or maintain on-site equipment, as all the hardware and software are hosted by the provider. This allows for a more flexible, scalable, and cost-effective solution for businesses of all sizes.

Some of the benefits of cloud PBX include:

  • Accessibility: With cloud PBX, businesses can make and receive calls from anywhere, using any device with an internet connection.
  • Scalability: As your CSP business grows, cloud PBX can easily scale up or down to accommodate your changing needs. Especially when like Cantoo, the cloud PBX is cloud agnostic and can be operated in different public clouds.
  • Cost savings: Since there is no need to purchase, install, or maintain on-site equipment, cloud PBX can often result in significant cost savings compared to on-premise PBX. Including the cost of employees needed to maintain this on-premise platform
  • Reliability: With cloud PBX, providers. like Cantoo is responsible for managing and maintaining the hardware and software, ensuring maximum uptime and reliability.
  • API Integration: Cloud PBX solutions are typically API-driven, which means, if they are made available to CSPs like at Cantoo, they can be integrated with a wide range of third-party applications and services. This allows communication service providers to create unique and tailored solutions for their customers, and to easily add new features and functionalities as needed.
  • Service Creation Flexibility: Cloud PBX solutions offer unparalleled flexibility in terms of service creation, allowing communication service providers to quickly and easily launch new telephony or video services to meet the changing needs of their customers.
  • Features and Updates: Cloud PBX solutions are designed to be updated regularly, with new features and functionalities added on an ongoing basis. This means that communication service providers can always be sure that their customers are using the latest and most advanced technologies.
  • Video: Cloud PBX solutions are equipped with advanced video conferencing and collaboration tools that allow CSPs to offer their customers the ability to communicate and collaborate in real-time, regardless of their location.

Despite these benefits, there are some potential drawbacks to consider, such as:

  • Dependence on internet connectivity: Since cloud PBX relies on the internet to function, it can be disrupted if the internet connection is slow or unavailable.
  • Security: As cloud PBX stores sensitive data in the cloud, businesses must ensure their provider, like Cantoo, has strong security measures in place to protect that data.

On-Premise PBX: A Closer Look

Some Benefits of an On-Site Solution

On-premise PBX is a telephone system that is installed and managed on a CSP or CSPs’ client's premises. This type of PBX requires CSPs or businesses to purchase, install, and maintain all the hardware and software necessary for the system to function. Some businesses choose on-premise PBX for greater control over their telephony system, or because they prefer to keep their platform in-house.

Some of the benefits of on-premise PBX include:

  • Control: With on-premise PBX, CSPs and businesses have complete control over their telephony system, and can customize it to meet their specific needs within the limit of the platform and their ability.
  • Security: Since on-premise PBX stores data on-site, businesses can be confident that their data is more immune to data leaks or intrusion. Although cloud services are usually more secure and protected than proprietary hosting means and less prone to physical disasters (fire, earthquake…).
  • Reliability: With on-premise PBX, businesses are not dependent on an internet connection for internal communications, and can ensure continued uptime and reliability independently of the internet connection.

However, there are also some potential drawbacks to consider, such as:

  • Maintenance and Upkeep: With on-premise PBX, CSPs, and businesses are responsible for maintaining and updating their hardware and software, which can be time-consuming and expensive.
  • Scalability: As your business grows, it may be more difficult to scale an on-premise PBX system and supporting hardware to accommodate your changing needs.
  • Cost: On-premise PBX can be a significant upfront investment, as CSPs or businesses must purchase all the necessary hardware and software, especially the hosting part.
  • API Integration: On-Premise PBX solutions are less flexible in terms of API integration, and may require significant development resources to integrate with other systems.
  • Service creation flexibility: On-Premise PBX solutions are more limited in their ability to quickly and easily launch new services, and may require significant time and resources to deploy and maintain.
  • Features and Updates: On-Premise PBX solutions may be less frequently updated, and may require significant time and resources to upgrade to the latest versions. Risk of service downtime during those updates is not zero either.
  • Video: On-Premise IPBX solutions may offer video capabilities, but these are often limited in terms of functionality and may not be as robust as those offered by cloud-based solutions.

Cloud PBX vs On-Premise: Use case Comparison for CSP clients

Case Studies of our CSP clients

A Growing Startup

A growing startup requires a reliable and scalable communication system. They have limited resources, and need a solution that requires minimal upfront investment and maintenance. Cloud PBX is the perfect solution for this startup, as it provides a scalable and flexible solution that can easily accommodate changes in their needs. Additionally, the cloud PBX provider takes care of all hardware, software, and maintenance, freeing up the IT department to focus on other tasks.

A Large Enterprise

A large enterprise has complex communication needs and requires a highly customizable and secure solution. On-premise PBX can be justified for this enterprise, as it provides the customization and control they need, while also cheap internal communications and high-security levels of security. Additionally, the on-premise solution can be tailored to meet their specific needs, and the IT department can take care of the maintenance and upkeep of the system.

Growing Retail Company

A rapidly expanding retail company found that its on-premise PBX system was becoming increasingly outdated and inflexible. They were also struggling to manage the system and keep up with the demands of their growing customer base. After conducting a thorough evaluation of its options, the company decided to make the switch to cloud PBX. With the new solution, they were able to take advantage of advanced features such as call forwarding, call routing, and IVR, and they were able to easily scale their system as their business grew.

A Busy Call Center

A call centre was struggling with its on-premise PBX system, which was prone to downtime and costly repairs. They needed a more reliable solution that would allow them to handle a high volume of calls and provide their customers with a high-quality experience. After considering both cloud PBX and on-premise solutions, they decided to go with the cloud PBX option. With this new solution, they were able to reduce downtime, increase efficiency, and provide their customers with a better experience.

A Fast-Paced Marketing Agency

A fast-paced marketing agency was using an on-premise PBX system that was becoming increasingly difficult to manage and maintain. They needed a more flexible and scalable solution that would allow them to keep pace with their rapidly growing business. After evaluating their options, they decided to go with a cloud PBX solution. With this new solution, they were able to take advantage of advanced features like call forwarding, call routing, and IVR, and they were able to easily scale their system as their business grew.

A shipping company vessel:

A shipping company operates vessels that are often far from shore for extended periods of time. The ship’s communication system is critical for ensuring the safety and well-being of its crew members, especially to ensure that internal communication is not dependant on the ship's Internet connectivity, so they need an on-premise solution that is highly reliable and secure.

On-Premise PBX is the ideal solution for this shipping company, as it provides the customization and control they need to ensure the highest level of security for their internal and external communications.

Deciding on the Right PBX Solution for Your Business

A Step-by-Step Guide for CSPs to Making the Right Choice

  1. Determine your needs and budget: Before making a decision, it's important to consider your business needs and budget. Ask yourself questions such as: How many clients and their employees will be using the PBX system? What are the main features you need, such as call forwarding, voicemail, and conference calling? How much are you willing to spend on a PBX system?
  2. Assess your existing infrastructure: If you already have an on-premise PBX system, consider whether it can be upgraded or if it makes more sense to switch to a cloud-based solution. If you're starting from scratch, think about the IT infrastructure you currently have in place and whether it can support a cloud PBX system.
  3. Consider scalability: As your CSPs business grows, you'll need a PBX system that can grow with you. A cloud-based PBX solution offers more scalability than an on-premise system, which means you can add more users and features as needed without having to make any major investments in hardware.
  4. Evaluate the cost: Cost is a major factor to consider when choosing between a cloud PBX and an on-premise PBX. An on-premise solution typically requires a higher upfront investment, but you'll own the hardware and will have to pay lower monthly fees. With a cloud PBX, you'll pay a monthly fee but won't have to worry about hardware upgrades or maintenance.
  5. Consider reliability and security: Both cloud PBX and on-premise PBX systems can be reliable, but cloud PBX solutions typically have built-in disaster recovery and redundancy features that ensure your telephony system is always up and running. Additionally, cloud PBX solutions offer robust security features, such as encryption and firewalls, to protect your business data.
  6. Evaluate the ease of use and administration: If you're not willing to invest further in your technical team, a cloud PBX solution may be the better option for you as it typically requires less IT expertise to set up and manage. On-premise PBX systems, on the other hand, require a dedicated IT staff to maintain and update the system.


In conclusion, the choice between Cloud PBX and On-Premise PBX solutions ultimately depends on the specific needs and goals of your business. By considering factors such as scalability, flexibility, cost, security, and technical expertise, you can make an informed decision that aligns with your business and your client’s business objectives and supports your growth.

As the future of telephony continues to evolve, it's important to stay ahead of the curve and embrace innovative solutions that will drive your business forward. For example, exploring the potential of integrating Artificial Intelligence and Machine Learning is not science fiction anymore and will impact routine tasks and enhance the customer experience. Besides the already stated differences, you need to consider those future market changes and whether your own IPBX solution will be able to integrate those services and stay relevant when those services will be marketed. Or if a Cloud PBX solution is the right choice for the future of your communication service provider business.

By keeping an open mind and staying attuned to the latest advancements in technology, you can choose the right PBX solution that will empower your business to thrive in an ever-changing digital landscape.

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