As a business grows, so does the need to ensure a reliable internal and external communication system. Private branch exchange (PBX) is just one option, but a growing number of companies are coming to rely on it as a communications solution. As of now, most setups are on-premise. However, it’s projected that cloud-based PBX will continue to gain traction in the coming years.
For some businesses, a PBX setup is second nature. For others, there might be better solutions for some companies. In this article, we walk you through what PBX is, how PBX compares to voice-over-internet-protocol (VoIP), and the pros and cons of choosing it as a communications solution.
What is PBX?
A PBX is designed to handle an organization’s internal and external calling. In the past, PBX setups required manually managed physical switches and cables, but, today, many companies use software or entirely cloud-based solutions.
Types of PBX
There are different PBX systems to use, each with advantages and disadvantages:
- Traditional PBX: This is a typical setup that involves an on-premises physical setup of switches and cables, which enable an organization to route incoming and outgoing calls. While some may prefer these traditional setups, it is intensive as the wiring must connect each user to the PBX system. The potential time and expense required may make this a better fit for an enterprise-level company with a flexible budget.
- Cloud (hosted) PBX: This type of PBX is a system hosted by a third-party provider located off-site. Because the business’s communication setup is strictly digital, eliminating the need for physical on-site equipment. This solution is more cost-effective, which makes it ideal for smaller businesses.
- Virtual PBX: Instead of physical wires, virtual PBX relies on digital servers that run on software. It is a hardware-free solution that can be operated on-site or in the cloud. Its setup is similar to traditional PBX and yet is conveniently modern.
- Hybrid PBX: As the name suggests, this type of PBX setup combines traditional and digital elements. It is an excellent choice for organizations planning to move from an entirely physical, on-premise system to a virtual phone, bridging the gap and giving the organization time to adjust.
As communication evolves alongside digital technology, PBX systems based in the cloud and using the Internet are preferred increasingly, not just for their convenience but also for their relative cost.
How does PBX work?
PBXs are ultimately responsible for routing calls, both internal and external. In-house communication, for example, may involve dialing an extension to reach a specific department or team member. Outbound calling, meanwhile, could require pressing a specific button before being allowed to dial a client or vendor.
In a traditional PBX system, these communications required cables and switches, and organization members needed a physical setup directly connected to the company’s system. However, using virtual connections, businesses can simulate traditional PBX without relying on a complex, in-person setup. Systems can add team members or shift between in-house and third-party communications without potentially costly or time-consuming hardware installations.
PBX vs. VoIP
VoIP is a cloud-based communication tool that has also enjoyed rising popularity. VoIP lets you make and receive calls or texts through broadband Internet instead of phone lines. The best VoIP services for small businesses offer competitive pricing, various features including toll-free numbers and video conferencing, and high customer satisfaction ratings. While some may think of PBX and VoIP as two entirely unconnected and therefore competitive communication technologies, this isn’t precisely accurate.
For example, IP PBX is sometimes called “VoIP PBX” because it uses an IP to send voice calls or data. In addition to calling, IP PBX is used for video conferencing, voicemail-to-email, or other cloud-based communication methods.
The ultimate difference between PBX and VoIP will come down to whether a company opts for a traditional, physical type of PBX that gets set up entirely on-premise. Rather than being entirely different from VoIP, Cloud-based PBX could be viewed as related to VoIP, especially if it involves an exclusively cloud-based phone system.
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Advantages of PBX
PBX remains a popular communications solution for businesses due to a few unique advantages that come with its use. These positive attributes are broken down in the chart below.
Disadvantages of PBX
While PBX has many positive attributes, a few issues could cause a business to reconsider using it as the foundation for its phone system. Below are a few examples.
The takeaway
PBX will likely continue to grow in use. Thanks in large part to the rise in Internet-based communication, companies may seek out hosted PBX as an alternative to traditional landline or on-premise setups.
For smaller businesses, a virtual PBX system is ideal for both cost and convenience. Choose the best solution according to budget and aim for services that favor scalability. Also, consider digital PBX providers that offer additional communication options, such as video conferencing and internet faxing, as well as useful integrations.
About the contributors
Toni Matthews-El specializes in writing about small business products and services. In recent years, she’s focused heavily on reviewing cloud-based communication and collaboration solutions for publications that include US News & World Report and Forbes. Toni is a Wilmington University graduate with a Master of Science in Management and Administration of Justice.
EDITORIAL DISCLOSURE: The advice, opinions, or rankings contained in this article are solely those of the Fortune Recommends™ editorial team. This content has not been reviewed or endorsed by any of our affiliate partners or other third parties.
