Perks of Cloud-based PBX over On-Premises PBX

The private branch exchange (PBX) is a business telephone system that is owned and operated by an organization to switch calls between users on local lines. It enables two or more users to intercommunicate within and outside the organization without requiring separate external lines that connect each user to the telephone company’s main office. PBX can be mainly categorized into two types, i.e., on-premises PBX and cloud-based PBX.

On-premises PBX, also known as on-site/traditional PBX, refers to the system where the server needed to operate the network, commonly termed as the PBX box, is physically deployed at the organization’s site. On-premises PBX uses copper-based telephone landlines that enter an organization’s premises, where they are connected to a PBX box, which contains switches that distribute calls among different telephones in an organization. 

Cloud-based PBX, also known as hosted/virtual PBX, refers to the system where the server is located off-site from the organization’s premises, and the users access the virtual phone system via the public or private internet. The hosted server is built in a data center and managed by a reliable third-party service provider.

On-premises PBX systems have been around for years now while the cloud-based systems started offering services recently. This article focuses on enlisting the benefits of moving to a cloud based-PBX rather than an on-premise PBX.


Cloud-based PBX is efficiently cost-effective because it allows organizations to avoid the high costs of in-house installations and regular maintenance. On-premises systems offer larger upfront costs because typically organizations have to buy and install costly hardware equipment including appliances, servers, interface cards and licensing, etc. Cloud-based PBX systems have a lower upfront cost because almost all of the hardware is hosted by the virtual service provider, typically organizations only need to align appliances with the service. 


In cloud-based PBX, a hosted service provider performs the system updates, which eases the task of server maintenance. The upkeep of an on-premises PBX is the responsibility of the organization as the physical box containing all the functionalities of the system is within the premises. Thus, the server’s maintenance and upgrade are carried out manually by the skilled on-site IT staff, which takes away IT resources from other important projects or tasks. In cloud-based PBX systems, servers are remotely updated as they are managed by the hosted service provider. New software updates are easy to roll out in a cloud-based PBX system without requiring an IT administrator to make server changes.


Cloud-based PBX systems give organizations the flexibility to get the latest features without dealing with complex hardware updates. On-premises PBX systems have their proprietary phones that cannot be configured with a different operating system, i.e., phones are only usable with systems from the same vendor. Whereas, organizations can easily integrate and switch their existing telephonic hardware with the cloud-based PBX.


Scalability is a significant reason to switch to the cloud-based PBX system. Typically, an on-premises PBX system constrains a certain maximum number of internal devices to a certain maximum number of external telephone lines. Thus, scaling with on-premises PBX systems requires adding additional servers and moving equipment. In contrast, cloud-based PBX allows organizations to have a phone system that is scalable alongside the organization’s growth. It is a straightforward and easy process to add or remove users in a cloud-based PBX.

Bottom Line

Cloud-based PBX is the newest system in the PBX technology that has transformed and revolutionized the telecommunications industry. The system offers effective cost and maintenance solutions and has a degree of flexibility and scalability that cannot be matched by the on-premises PBX systems. 

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