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Chapter 4: Cloud Phone Systems

Learn Whether Cloud-Based Phone Systems Are the Right Solution for Your Business

This is the final chapter of The Ultimate Guide to Small Business Phone Systems: Cloud phone systems. To learn more about multi-line phone systems, VoIP phone systems, and PBX phone systems, check out the previous chapters.

What Is a Cloud-Based Phone System?

A Cloud-based phone system is a VoIP phone system that is hosted on a secure server off-site. The server and phone system are accessed over the internet. A host PBX (private branch exchange) is an example of a Cloud-based phone system.

These systems offer the features of a complete phone system without the space requirements and equipment costs that often come with on-site setups. A Cloud PBX system can offer hold music, call transfers, automated assistants, conference calling, and more. They are also easier to scale, since there is no physical equipment to upgrade or install.

Keep reading to learn the answers to common questions about Cloud phone systems, understand the benefits and drawbacks of these systems, and determine whether this could be the solution your business needs.


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Do Cloud-based phone systems offer any special features?

In addition to the standard features you’d expect from any business phone system, Cloud-based systems can take advantage of their online nature to offer unique benefits to your business. One feature a Cloud-based service might offer that a traditional system can’t is a webphone. A webphone is a browser-based application that allows you to make calls right from any web browser.

Another useful feature of Cloud phone systems is CRM integration. The phone system can access your CRM (customer relationship manager) software and log any calls you make, which can give you more time for other tasks. Many of the advantages of Cloud based phone systems revolve around freeing up time and resources—two commodities that small businesses often lack.

An auto attendant is another great feature of cloud phone systems. These are automated voice messages that say, “press 1 for customer service, press 2 for sales,” and so on.

Like other voip phone systems, it’s really easy to obtain a toll-free number—or to obtain additional phone numbers—for your office. You can have unlimited inbound or outbound calls without worrying about bandwidth problems, as you may have with a cell phone service provider.

Cloud VoIP providers include RingCentral, Skype for Business, Grasshopper, Ooma Office, Business VoiceEdge, and Frontier Business cloud telephony.

What are the advantages of a Cloud phone system?

Cloud-based phone systems offer several major advantages over traditional, on-site setups:

man making a call on hosted voip


  1. Low Up-Front Cost—Because it’s hosted by a service provider, you don’t have to worry about maintenance and day-to-day upkeep of a Cloud based phone system. You also don’t need to worry about purchasing and installing equipment, which is one of the major hurdles of an on-site business phone system. Employees represent users in the communications software, but no new phone lines or desk phones need to be added to the office. This offers significant cost savings compared to older business phone systems.
  2. Ease of Use—Making changes and administering the phone system is easy thanks to management portals offered by service providers.
  3. Scalability—Scaling with a Cloud phone system is as easy as logging in and adding a user and phone. This is a major benefit for fast-growing small businesses. Any business with multiple employees and phone numbers will find this very useful. Each employee, whether inside or outside of the office, is simply a new user in the business communication software, and there is no need for additional hardware. This makes it a very scalable solution.
  4. Easy Remote Access—You’re not tied to any physical location with a Cloud phone system. All you need is a working internet connection and an IP phone or softphone. This is great not only for remote workers but also for businesses with multiple offices, since you  need only one administrator, rather than one for each site.
  5. Reliability—Thanks to what is known as geographic redundancy—having multiple servers in different physical locations that act as backups for each other—downtime with Cloud phone providers is extremely low. This is, of course, critically important for a business.

Are there any disadvantages to getting a Cloud phone service?

There are some drawbacks and things to consider before moving your phones to the Cloud:

  1. Lack of Control—You’re at the mercy of the hosting company and cloud service provider. If the service goes out or the host experiences server issues, your phones could stop working. Although reliability is generally excellent with Cloud-based phone systems, no provider can guarantee 100% uptime. It’s important to consider backup plans in the event of outage.
  2. Reliance on Internet Connection—You are depending on the reliability of your Internet Service Provider (ISP) for not only internet access but also phone access. If your ISP experiences issues, you run the risk of losing phone service.
  3. Different Equipment—Since Cloud-based phone systems are VoIP systems, you’ll need a different type of phone, called an IP phone, to use them. If you have a larger organization with lots of traditional phones, switching to the Cloud could represent a significant cost.

Compared to Other Business Phone Systems

Cloud phone systems, or in other words hosted VoIP phone services or hosted PBX systems, represent the most modern communications technology right now. You don’t have to worry about expensive upfront costs or having your IT people do SIP trunking. These virtual phone systems have no need of on-premise equipment. All that you need is an IP phone or a computer. So traditional PBX systems and analog phones are things of the past.

Most business phone service providers offer some type of cloud solution. However, your business may not need it if you only need a simple 2-line office phone or you only use your cell phone. The additional features that unify communications between employees are not needed by many small businesses.

Who can benefit from Cloud-based phone systems?

man calling with a voip phone


Small- and medium-sized businesses that lack the budgets to cover the installation and IT costs of an on-site system are in an especially good position to benefit from moving to the Cloud. Even if your business can afford to go the on-site route, it may make more sense to go with a Cloud-based solution and allocate those resources elsewhere.

On the other hand, if having complete control of your phone system and data is important, a Cloud solution is likely not a good fit. If your business deals with sensitive data, for example, you might not want your calls being routed through a hosting provider.