VoIP Resources VoIP Fundamentals Introduction to Business VoIP

Cloud Phone System Pros and Cons

by Kevin Bartley

We weigh the pros and cons of using a cloud phone system so that you can make an informed decision for your business.

Looking for a new business phone system? You’ve probably heard about cloud phone systems and wondered what they are and how they compare to a traditional business phone system. Wonder no more.

Let’s start with a definition. Cloud-based phone systems refer to VoIP (Voice over Internet Protocol) phone services. Rather than maintaining phone system software on a server (a.k.a. a private branch exchange or PBX) in your office, you purchase cloud phone system service over the Internet from a provider (a.k.a. hosted PBX) and pay on a subscription basis. Because your cloud phone provider manages the service remotely, updates occur automatically, resulting in enhanced system performance.

What exactly are the benefits of a cloud-based phone system for small businesses? And what are the drawbacks? Here's a look at the biggest pros and cons.

Cloud-based Phone System Pros

Cost Savings

Small businesses that switch to VoIP save between 30 to 50 percent, according to a study by Tech.co.

And a sizable number of cloud VoIP providers charge less per minute for international calls than leading landline phone services. No matter what your call volume and usage, it’s almost guaranteed that a cloud-based phone system will cost you less each month than a landline service.

Unlimited minutes packages are economical for call centers with high traffic, while Pay-As-You-Go pricing models can accommodate those businesses that use minutes sparingly. And hosted platforms don't require you to purchase expensive hardware that needs maintenance and installation, saving you quite a bit, as judging from the statistic cited above.

Geographic Flexibility

You don’t have to be next to your desk phone to make calls on a cloud-based system. You can work anywhere with an Internet connection. Just set up an IP phone, plug in your laptop, or use a softphone on your smartphone to make calls. This opens the door to work from home, on the go, or as a full-time remote employee.

Cloud-based phone services typically offer free phone apps that allow you to work from wherever you like. You can extension dial your team, call the public switched telephone network (PSTN), and use phone presence that tells you when your coworkers are occupied with calls, all without setting foot in the office.

Geographic flexibility is also a great tool for connecting your offices under one phone system. If you have offices in multiple locations, a cloud-based phone system can connect your entire company to the same phone service and have it managed by a single administrator from any location.

Business Features

Most cloud phone services come with advanced features to improve productivity and collaboration within your business. Auto attendant/virtual receptionist, call queues and ring groups can quickly route calls to improve customer satisfaction and provide a great impression.


Because the infrastructure of a cloud-based phone system can be backed up in multiple locations, most providers have a low amount of service downtime and very few disruptions. “Geographic redundancy” is the industry buzzword used for this decentralized setup. The word “redundant” is used to signify that all the different servers are a mirror replica of the others.

For example, if a service provider hosts servers in New York and San Diego, either of those servers can act as backups should an extraordinary event knock one of the servers out of commission. If the server in San Diego experiences a major power malfunction, the traffic will be routed through the server in New York.

If you're in the market for a reliable hosted VoIP system, ask the provider what the downtime of their service is to get a sense of how much these disruptions affect service. If they have good reliability and redundancy, the figure should be close to zero.

Hosted PBX

Cloud-based VoIP providers are hosted services that house all the phone system infrastructure offsite. Generally, all you need with cloud hosting services is an acceptable Internet connection and working IP phones.

This means you won't have to pay for maintenance of the equipment, mechanical malfunctions, or additional IT hours to keep your system up and running. All of these issues are dealt with offsite by your service provider.

Most VoIP cloud companies, like OnSIP, have a dedicated customer support team that can take your questions over the phone or via email. The smaller day-to-day issues you experience can be answered by knowledgeable professionals, most of whom are located in the U.S.


Because cloud VoIP systems are managed online, it’s easy to add new phone lines as your business grows. No more waiting around for a technician to physically come out to your office.

Cloud Phone System Cons

Phone and Router Purchases

Switching to a cloud-based phone system may require you to purchase equipment to get up and running. With a hosted cloud system, you may need to purchase IP phones if you don't already have them. These phones are typically priced in economy ranges and require an Ethernet port to operate, meaning you may need a larger router and more Ethernet outlets.

Outside Disruptions

If your Internet Service Provider (ISP) is fairly reliable and your cloud phone system has high redundancy, you won't have to worry about dropped calls and connections. But if you have an ISP that frequently drops your Internet service, it will critically disrupt your cloud-based phone system. Of course, if you find an acceptable ISP, the problem will be solved. The issue only becomes serious for those who are locked into subpar Internet providers through contracts.


Because VoIP systems rely on an internet connection, they may be more vulnerable to hacking and security breaches than traditional phone systems. The good news is that most VoIP providers, like OnSIP, offer security features such as encryption to protect your calls.

The Cloud VoIP Era

Cloud services are becoming increasingly popular for businesses of all stripes. Hosted VoIP solutions for small and medium-sized businesses, along with enterprise-grade options, give customers a new kind of flexibility and reliability when it comes to phone systems. If you think you might benefit from these platforms, it's never too late to make the switch. A cloud VoIP service can become a valuable communication tool for your business.

Learn more about VoIP Fundamentals