Introduction to Business Phone Systems

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Today, the majority of organisations depend on business phone systems with a variety of features. The Private Branch Exchange (PBX) systems form the central foundation of many such networks. For several years now, PBX systems have been in use by businesses with in-house switching systems, resembling telephone exchange systems, but on a smaller and more private scale. With this provision, a few external lines could be used by many users of the business. Consequently, this is a cost-cutting measure that also serves the purpose of facilitating internal communication.

Several types of PBX are currently available, which includes conventional systems and the more technologically-advanced, virtual exchanges. Primarily, they can be categorised into PBX and IP PBX. 

In this article, we introduce PBX and IP PBX. Their features and advantages are discussed to inform readers about the difference between these business telephone systems and how appropriate telecom systems can be found.


A few incoming phone lines are connected to a relatively higher number of extensions by a PBX, combining the individual handsets to form one whole network. A PBX permits several extensions to operate seamlessly through separate lines and performs an array of tasks to optimise the business phone network.  

For instance, a few of the incoming calls are mechanically routed to specific extensions that suit the client’s requirements. Moreover, with the PBX, it is also possible to connect handsets and external lines, permitting employees to make calls external to the system. It also establishes a direct connection of individual handsets to facilitate internal calls that do not go through the external telephone network.

The tasks mentioned are some of PBX’s essential functions, which have been performed since the inception of these systems; these can be traced back to the mid-20th century. With time, there has been advancement in telephone technology, which is also reflected in PBX systems. One such significant change is the development of the IP PBX.

IP PBX Business Phone Systems

Modern forms of communication, such as Skype, are facilitated by Voice over IP or VoIP technology. This technology has transformed the operation of business communications. 

Typically, Modern PBX systems’ designs work well with both VoIP and traditional telecommunications, and such technology is referred to as an IP PBX system. But the features of an IP PBX are not defined strictly. Essentially, it includes an array of VoIP-ready system types. In such a system, a piece of hardware is positioned on the organisation’s premises and resembles a server.  

Sometimes, the term may also be used to refer to a holistic telephone network of a business, which is equipped with a VoIP component. It could also refer to a virtual PBX, which also deals with VoIP communications. Generally, it functions as a software system within a computer system that is connected to the phone network of the organisation or service based on the cloud, which works similarly, but an external provider hosts it. 

It is possible to convert the conventional PBX systems and enable them to handle VoIP communications and their other designated communications. This is achieved in two ways. Firstly, the installation of VoIP-capable modules into the current system. In some cases, a separate module is used, which functions as an intermediary element between VoIP communications and conventional PBX communications, to translate one technology’s communications to the other. 

Which Organisations Need PBX?

For several years, companies considered a PBX system to be costly, and it was also challenging to maintain. Therefore, bigger businesses often leveraged this useful technology since it was cost-effective only when used on a large-scale. For the benefit of smaller companies, alternative systems that could be operated manually and on a smaller scale were established.  

However, with time, the quality of PBX systems improved, while their price declined. This process gained traction with the development of new types of systems that functioned as a virtual PBX. Therefore, even relatively small businesses now leverage PBX technology. PBX’s primary functions are useful for any business that has more than a handful of employees. Today, since the system and its maintenance is more affordable, it is logical for smaller companies to use it, as long as they have an adequate number of employees.

Moreover, businesses that possess old systems are now motivated to upgrade the ones they have due to the technology’s enhancement. As opposed to upgrading their current system to handle VoIP, companies are opting for modern IP PBX. Thus, apart from enjoying VoIP functionality, they can now use an array of absent features in their previous installation. In many cases, this shift also enables them to work with a low-maintenance system that is cost-effective when compared to their previous setup.  

Things to Take into Consideration When Choosing a PBX Business Phone Systems.

Companies must look at several key points before they select a PBX solution. The aim is to find one that aligns with their business needs and to determine the features that they must invest in, such as:


This is a fundamental consideration since any PBX is only equipped to handle a specific number of extensions as well as simultaneous phone calls. The objective is to ensure that the PBX you choose has adequate capacity in both these quarters to ensure your business’s seamless operation. 

VoIP Protocols: 

Several protocols are open source as well as proprietary, used by VoIP communications. The most common protocol is SIP, which is an open-source protocol. Hence, it is recommended to ensure that an IP PBX is compatible with SIP and is also equipped to deal with a few other protocols too.

On-Site or Hosted Solution: 

The initial costs of on-site solutions are slightly higher, and businesses may need to deal with periodic maintenance independently. On the other hand, the initial costs of hosted solutions are lower, and the service provider will handle the system’s maintenance. However, recurring costs will also be higher. Therefore, it is vital to determine what best fits your business requirements. 

Security Systems: 

If PBX is used in tandem with VoIP calling, the requirements are very specific, resulting in security systems issues, as their designs are not compatible with such needs. To avoid problems, it is necessary to opt for firewalls compatible with VoIP and SIP. Ideally, look for a PBX with an in-built firewall. 


Interactive Voice Response (IVR): 

In some PBX systems, IVR functionality is an added bonus, which comes with an automated greeting system to immediately respond to incoming calls with a pre-recorded message and includes several extensions and navigation alternatives. 

About Virtual and Hosted Telecoms Solutions

Since the 1990s, Virtual PBX officially became a part of the marketplace, and it works like a conventional PBX. The main difference between the two systems is that the former is a computerised, software-based system and does not function as dedicated hardware. There are currently three types of PBX that function as software: virtual PBX, hosted PBX, and cloud PBX.

Although there are minor differences between these systems, these names have been used interchangeably for years now. Hence, determining if there is a significant difference between them is challenging. In essence, they are all referred to in association with similar solutions. 

The company that launched the first real virtual PBX is known as Virtual PBX. Back then, the service was comparable to a hosted PBX. Since it was the first of its kind, it operated with several limitations, even in comparison to conventional PBX systems that were developed over a long period. It was only equipped to forward calls to the relevant handsets, both on-site and off-site.

Eventually, technological advancement brought about VoIP technology, and VoIP systems were equipped to remain connected with conventional phone networks. During this time, most virtual PBX providers were equipped to incorporate a Business Phone Systems to deal with outbound calls. During this period, “Hosted PBX” was established. Eventually, the term “cloud” began to take off in the tech world, and it was ultimately used even for PBX services rooted in cloud-based technology.

Commonly, these three phrases are used interchangeably. However, do note that the name in itself does not determine the features or functionalities offered by a provider. Instead, it is crucial to skim through the features to acquaint yourself with the technology and differentiate between various services. 

On-site and Off-site PBX: Crucial Decision

One important choice to make while opting for a PBX solution is to determine if an on-site system or one that is off-site works better for your company. Both these alternatives come with their own set of pros and cons. A few key considerations are:  


The initial factor that you must consider is the cost. As stated already, on-site PBX systems’ initial costs are higher, but they decline soon after. On the other hand, hosted solutions are inexpensive to set up in the majority of cases. However, recurring costs are higher due to the monthly service charges.  


In some ways, on-site solutions are more flexible as it is relatively easy to configure such technology, and they fit well with offices using Wide Area Networks (WANs). But, it is challenging to draw a comparison between the features of these two systems. Since there are many providers for both types of solutions, the features vary significantly for each system. You must ensure that the solution that you choose offers every feature that you require.  


Your business is responsible for maintaining an on-site system continuously. For this, you either need skilled employees to achieve this, or you have to use external services. On the other hand, your service provider will work to maintain your off-site solution, and the attributed costs are added to your subscription fees. In a few cases, such as during reconfiguration, your business will need to undertake maintenance duties.  

Traditional Phones or VoIP Business Phone Systems: 

Usually, hosted solutions are geared more towards VoIP communication, more so in comparison to conventional, analogue telephony. Typically, analogue handsets can be easily integrated with on-site solutions. Regardless of the kind of PBX you choose, the system will handle both communication types. However, if you largely depend on either conventional phones or VoIP, it is essential to consider the same.  

Security Considerations: 

A modern PBX system is always connected to the internet, regardless of where it is situated. Therefore, such systems do come with security vulnerabilities. To avoid service-attacks or theft or otherwise, a firewall is crucial, configuring the firewall in a way that does not interfere with VoIP is challenging. When you opt for a hosted solution, security problems are no longer your concern as your provider handles them. However, you must still ensure that the data connections remain secure. On the other hand, with an in-house PBX, the entire burden of maintaining safety is on you.

Do you have a question about business telephone systems? 

Teleproject UK is more than happy to discuss your requirements and tailor a system to meet your needs.

Schedule a callback, we’d love to help and advise.