Cloud-based phone systems use Voice over Internet Protocol—VoIP, for short—to transmit voice calls over the internet instead of over traditional phone lines. A VoIP phone system converts voice calls into digital data packets and routes those packets through a cloud-based private business exchange before then converting them back to a voice signal at the receiving end.

With traditional phone systems, companies deal with on-premises hardware and ongoing maintenance. But the pain points don't end there—costly phone system equipment such as private branch exchanges (PBXs) can eat up valuable office real estate. Cloud-based phone systems, on the other hand, only require an internet connection to operate. And because they are software-based and in the cloud, they are easy to set up and simple to manage and use.

A cloud-based system also offers portability, scalability and flexibility in a single package. Moving to another floor—or another office entirely—is no problem. Entire departments can be added to the system in minutes. Managing feature access for different departments or users is practically effortless.

All you need to unlock any of these cloud-based features is a fast internet connection. It could be broadband, Ethernet, or even your cellphone's 4G LTE or 5G wireless connection.

Cloud-based phone systems are no different from any other cloud solution: Their biggest boon is that the shift to the cloud shifts the burden of managing and maintaining a secure, scalable, agile calling system from IT to the service provider, effectively freeing up IT teams to focus on higher-value business goals. When IT teams don't have to worry about maintaining legacy hardware or untangling complex software and can manage the phone system like they would a mobile app, they can devote their time and energy to other priority projects.

While these resource benefits affect the bottom line, the most significant advantage comes from moving from a capital expense model to an operating expense (opex) model: Instead of a heavy one-time investment in an on-premises phone system that'll one day be outdated, the pricing model for cloud-based phone systems is based on a predictable, monthly per-user subscription basis.

From a functionality standpoint, a cloud-based system often provides the agility and mobility that most legacy systems can't. If you're in the customer success or sales departments or even the C-suite, missing a client call isn't an option. Your system needs to connect to whatever device you're on, wherever you are, whenever someone's calling you. Most cloud-based solutions allow multiple devices to ring simultaneously.

Cloud-based solutions are scalable, too. As remote work becomes the new normal, employees must be able to access their calling services via their laptop, mobile devices or tablets. The mobility and scalability that a cloud solution provides are also valuable to businesses affected by seasonal spikes in call volume.

But, as with any other cloud solution, a cloud-based phone system also comes with inherent challenges.

For one, cloud-based systems are entirely reliant on an internet connection. But more importantly, while cloud-based phone systems are secure, they are not infallible. Because they are connected to the internet, they are vulnerable to malware and other vicious cyber attacks. Protecting these systems is essential.

When evaluating whether a cloud-based phone system is the right fit for your organization, you need to look beyond the bottom line and consider intangible costs, customer satisfaction and employee efficiency. You'll want to look for a solution that offers reduced maintenance fees, less time required to support the new system and increased bandwidth for your IT staff. And if your new system makes customer communications easier, then happier customers will likely translate into more revenue.

See how Verizon Virtual Communications Express provides enterprise-grade business communications right out of the box.