Cloud telephony – what the hell is it?

You may have heard terms like cloud computing, cloud services and software as a service. In plain language, they mean accessing technology products via the internet and paying a predictable recurring fee, rather than paying for expensive hardware and software which need to be upgraded every few years. Such services offer a lot of advantages of cost and convenience. And the type known as cloud telephony can be particularly useful for small and medium-sized businesses.

But while some cloud services, such as Salesforce.com’s hosted CRM application, are well known, cloud telephony is less so. A recent Fonality phone survey of Australian SMEs in fact found that only 32 percent of respondents had heard of the term. About 56 percent of survey respondents, however, had previously used some sort of voice over IP, or VoIP, to make business calls. That is a positive sign, because cloud telephony uses VoIP technology to deliver phone service from equipment owned and operated by the provider. It eliminates the need for businesses to buy their own equipment such as key systems or PABXs (private automatic branch exchanges). Calls are delivered to and from the business over IP connections such as the internet, rather than over traditional phone lines. Companies pay a monthly fee per user for the service, which includes inbound and outbound calling as well as powerful call-handling features.

From little things big things grow

These features let small companies seem like big ones. Auto receptionist, dial-by-name, music on hold and call forwarding, parking and screening are just the beginning. Collectively, these features give SMEs call handling capabilities formerly available only to large organisations. Although this benefit is hard to quantify, it may in fact represent the greatest advantage of cloud telephony. As such, it contradicts the common belief that VoIP is only about saving money. That belief is a relic of the era when the only form of VoIP most people encountered was cheap or free internet calling via Skype.

Unify the office with home and field workers

One of the most attractive aspects of the various call handling features is the ability they offer to unify physically separated staff. Because the service is delivered from the cloud, the location of the employees doesn’t matter. They can make and receive calls anywhere, whether at home, in internet cafés, in hotels while travelling, or in remote offices. Calls come in to a single number, and get routed to employees wherever they are. To callers, it seems as if they are all in one place.

Even more helpful is cloud telephony services’ ability to deliver calls to mobile numbers. This is especially important to SMEs, which often run their businesses almost exclusively from mobile phones. Because mobile numbers are clearly identifiable as such, this can give customers the impression that the company doesn’t have a real office. Cloud telephony, by contrast, gives businesses a landline number for all their calls. And it turns mobile phones into extensions of office phone systems.

Cloud telephony also lets employees communicate better among themselves as a single company. They can call each other by dialling extensions, or by using an onscreen click-to-call interface if they’re at their computers. They can transfer calls to one another the same way. In addition, they can also set up free conference calls on the spur of the moment. Traditional conference calls, by contrast, are expensive and inconvenient. They typically require reserving a conference bridge with an outside service, at a cost of many dollars per hour.

DIY telephony saves money

Yet another benefit of cloud telephony services is that they are easy to set up and use. A traditional purchased system requires someone with considerable technical skill to install and configure the equipment, and to make moves, adds and changes. Whether this is an in-house techie or outside expert, it can be expensive. But because cloud telephony runs on the provider’s equipment, there is no equipment to buy, and no staff or outside IT expertise to pay for.

A good example of this is Moss & Hooper, a specialised consulting firm with offices in Sydney, Melbourne, Brisbane and South Africa. Since replacing its existing PABX with Fonality’s Connect SME cloud telephony service, Moss & Hooper staff can now configure its system and move handsets by themselves. Those tasks formerly required an expensive outside IT service provider. The payoff in such situations thus is quantifiable: moving to a cloud service can cut ongoing operating expenses considerably.

And cloud telephony can cut equipment costs in more than one way. Although the most obvious savings come from the fact that no upfront expenditures for key or PABX systems are necessary, there are also less obvious savings. For example, various expenses and complications involving amortisation, compatibility, maintenance, obsolescence and warranties simply disappear. Traditional purchased systems become outdated the day they are installed. Cloud services, by contrast, keep their technology at state-of-the-art level, which means the right cloud telephony service can actually be the last phone system a small business need buy.

There are also savings on phone service itself. Delivering calls over the internet, as cloud telephony companies do, is more cost effective to the provider than leasing the traditional phone lines from the old-style telcos, and these savings are passed on to the customer. In addition, cloud telephony providers put their emphasis on selling features, not commodity phone service. Thus it is to their advantage to provide inbound and outbound calling at minimal cost. And because they handle lots of calls, they attain economies of scale on rates, which they extend to their customers. As such, they are the exact opposite of traditional phone companies, which are in the business of selling minutes. Thus it’s no surprise that the average customer moving from an old-style contract with a traditional phone company to a cloud telephony service can save as much as 60 percent on call costs and line rentals.

Gone are the days of shonky VoIP

Even though cloud phone service can save companies money, it doesn’t require a compromise in quality. For example, Traxion, an HR and business service provider based on the Gold Coast, needed to shift from a distributed workforce to a centralised office with field employees. And to provide management services such as virtual office and secretarial services, it needed a professional phone system that allowed it to, among other things, answer an incoming call in a client’s name. To meet these needs, it chose to use subscription-based Fonality Connect, at $39 per user per month, instead of buying an expensive PABX that would have cost $3,500 for hardware alone. And although founder and managing director Kate Baring was initially sceptical about how calls would sound, she soon found that quality was indistinguishable from that of traditional phone lines. Traxion is expecting to reduce its phone expenditure by 50 percent, Baring said.

Cloud telephony makes good business sense

Perhaps the most important thing to remember about cloud telephony is that it offers advantages no matter when it is adopted. A common misconception is that it only makes sense for companies to upgrade their phone systems at times of change: when growth or obsolescence makes the old one unusable, for example, or when building or moving to a new office. In reality, it’s not necessary to wait for big lifecycle events to get the benefits of cloud-based phone service, because the benefits are about more than just cutting costs. They’re at least as much about providing better service to customers and making staff more productive. And that makes good business sense any time.

–Mark Englaro is managing director Australia at Fonality

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