VoIP Resources VoIP Fundamentals VoIP Glossary

What Is a Cloud Phone System?

by Nicole Hayward

A cloud phone system is a Voice over IP (VoIP) based business telephone platform that is hosted by a third-party provider. Here's a full explanation.

What Is a Cloud Phone System?

A cloud phone system is a Voice over IP (VoIP) based business telephone platform that is hosted by a third-party provider such as OnSIP. Cloud phone systems typically offer advanced security and telephony features such as: extension dialing, auto attendants, and conference bridges.

Before the Cloud Phone System, in a Nutshell

Business phone systems have been around for a long time — predating the Internet, even. At a minimum, phone systems typically enable a business to have a main phone number with extensions to reach employees. Since phone systems became VoIP-based in the mid-90’s, companies have been able to run their own by installing telephony software on a server and connecting phones to the server over their IP network.

But for a small or medium sized business, running your own phone system requires IT overhead such as: purchasing SIP trunking service or PRIs to connect the phone system to the Public Switched Telephone Network, maintenance, security measures, and custom configuration. (For more information about on-premise phone systems, read our blog on SMB VoIP System Options.)

To alleviate this IT overhead, cloud phone system providers such as OnSIP began hosting phone system software for businesses to purchase over the Internet. Cloud phone systems (a.k.a. Cloud VoIP, Hosted VoIP, and Hosted PBX) free companies from IT overhead and offer many more benefits.

What Are the Benefits of a Cloud Phone System?

Low Cost

The primary benefit to choosing a cloud phone system over hosting your own is a reduction in time and money spent on running a phone system. It’s a lot like choosing a hosted email service, such as Gmail, instead of creating your own. Not only can you skip purchasing the server(s) to host the phone system (and the SIP trunking or PRI service to connect it), you can skip all the time spent on configuration, upgrades, and security.

Higher Security

Believe it or not, VoIP hacking is a prevalent if you’re not careful with your phone system. If they can, VoIP hackers will take control of phone systems to make calls on your dime. Reputable cloud phone system providers are focused on running a secure service so you don’t have to.

Ease of Use

Cloud phone system providers offer administrative portals so that making changes (e.g. adding a phone for a new hire) can be done by any designated team member, with a few clicks. This is much more efficient for businesses than relying on a specific IT resource for complex configurations.

Advanced Features & Integrations

To stay competitive and relevant, cloud phone system providers focus on building calling features that help people communicate in a work environment. For example, a hosted phone system provider might offer a softphone that you can log into from anywhere, an integration with your CRM for automated logging, or a click-to-call app so you can initiate calls with a click. Choosing the right cloud phone system for your business can help streamline processes and save the company resources.

Scalability & Remote Working

Finally, a cloud phone system will allow your phone system to scale with your business and support remote workers. Because the service is hosted on the Internet, remote employees can register their phones from anywhere. Today, over 4 million people work remotely on a daily basis across the country. Businesses without a hosted phone solution often instead reimburse employee cell phone and home phone bills, which adds up.

How to Choose a Cloud Phone System

Choosing the right cloud phone system depends on your business size, needs, and budget. It’s also advisable that you check to ensure the provider is reputable. 

Because comparing VoIP providers can be a bit tasky, we made it easier with the VoIP Researcher’s Guide: Top Questions to Ask Hosted VoIP Providers. Feel free to download it now — and, of course, give us a call with any questions!


Learn more about VoIP Fundamentals