Prem PBX vs Cloud PBX: The Ultimate Showdown

From Matthew Look, President at Techmode

I’ll begin by acknowledging my bias: I’m a big fan of cloud solutions for various reasons, which I’ll delve into shortly. However, for the sake of this article, I’ll endeavor to set aside personal preferences and offer an impartial comparison.

Let’s start with a brief overview of each solution and how it operates. A premise-based PBX is exactly what it sounds like. In the backroom of your office, you’ll find a box (the PBX), essentially a computer, that manages all your phones and connects to incoming phone lines from your provider. Whether you’re making a call or dialing HR, this PBX computer handles it all. This setup has remained consistent for over 50 years and has proven to be reliable, provided your building has power and the PBX doesn’t encounter hardware or software issues. Here are some advantages of a Prem PBX:

  • Prem PBX is often cheaper to maintain and less costly overall.
  • It excels at providing basic communication affordably.
  • Internal calls work reliably, regardless of your internet connection.
  • If you prefer capital expenses, this solution suits you.

Now, let’s shift to the cloud PBX. A cloud PBX typically only has phones (or a PC app for softphones) on-site. Everything else is hosted in the cloud. For the sake of this discussion, we’ll ignore distinctions like private cloud vs. multi-tenant cloud. In a cloud PBX setup, every call, even those to your nearby coworker, is managed by the cloud PBX. This reliance on the internet does present a single point of failure. If your internet connection goes down, your phone system goes with it. But in today’s cloud-centric world, if your internet is out, chances are many other office functions are affected too. Here are some advantages of a Cloud PBX:

  • Location becomes irrelevant. With an internet connection, you’re operational from anywhere.
  • Cloud systems offer multiple usage options like PC softphones, mobile apps, and physical phones, all without the complexity of a premise system.
  • Maintenance-free: No need to worry about upgrades or security patches, as these are typically handled by the cloud provider.
  • Predictable budgeting with a consistent monthly invoice.

Let’s now discuss the evolution away from premise-based PBX systems toward SIP Trunking. In the past, homes and businesses relied on dedicated phone lines, typically copper wires, ensuring reliability even during power outages. These copper lines, some laid over a century ago, are now experiencing various forms of decay. Consequently, providers are moving away from them, aiming to transition entirely to internet-based solutions, leveraging the newer fiber optic infrastructure replacing the old copper lines. Thus, traditional copper POTS lines or PRI’s are being replaced by internet-based SIP trunking.

You might wonder why this transition matters. The significance lies in the fact that even with a premise-based system, reliability isn’t guaranteed since it still relies on the internet to provide the necessary trunking for both incoming and outgoing calls. This underscores the importance of recognizing that even a premise-based system ultimately depends on the internet for its trunking needs.

While every business has unique requirements that may sway the decision towards one solution or the other, this article aims to provide a general overview applicable to most businesses. For specific industry-related queries, consulting with experienced companies like Techmode, who deal with both PBX types, is advisable. Remember, there’s no one-size-fits-all solution, so maintaining open communication with a trusted provider is crucial.

If your business primarily focuses on basic calls without future enhancements like call centers or webchat, a Prem PBX might suffice. However, for those seeking convenience, reliability, and scalability to address evolving business needs, the Cloud PBX is often worth the investment.

Please click here to read my personal thoughts on hosted vs prem. 

My Personal Opinion

I made it abundantly clear from the outset that I have a strong bias towards cloud systems, and I’d like to take a moment to delve into why. I assure you, it’ll be worth your time.


There are numerous reasons why I favor cloud systems over on-premise solutions, both from a consumer standpoint and as a business owner.


On-premise systems often fall into neglect. They tend to operate smoothly, becoming out of sight and out of mind, until they encounter a problem. When they do fail, it becomes a high-priority issue for your business, potentially resulting in days of downtime. Finding someone to address the issue is just the beginning; sourcing obsolete PBX hardware parts can be a challenge. If the outage involves your processor, do you have a backup? If not, expect further delays. And if your software version isn’t supported anymore, brace yourself for an emergency upgrade at a hefty price. In contrast, cloud systems typically feature redundant software and hardware, enabling automatic failover in the event of a hardware failure, often without any noticeable impact on end users.


Having spent many years in the enterprise sector building redundant, survivable solutions striving for 99.999% uptime, I’ve seen businesses invest millions to safeguard their call centers against power outages, fires, tornadoes, and hardware failures. Now, with cloud solutions, those redundancies are readily available as part of the package. If your building is destroyed by fire, no problem. The cloud PBX doesn’t care where you are. Whether you work from home, your cellphone, or a temporary space, business operations can continue uninterrupted.


As a PBX provider, I adore cloud solutions because they are much easier to support, allowing us to deliver a higher level of service to our clients. A decade ago, if a client needed support or an upgrade, we’d have to dispatch a technician onsite, often resulting in delays of at least a day, if not longer. With the cloud, technicians can diagnose issues, conduct test calls, and resolve problems remotely, exponentially increasing our service capacity. Instead of handling just a couple of service calls a day, we can now manage twenty or more, enabling us to provide faster and superior service.


With cloud systems, adding additional features and users is a breeze, typically just requiring a simple monthly charge. Contrast this with on-premise systems, where adding remote users can be a monumental headache. It often involves complex configurations with IT teams to allow remote access through firewalls, a process fraught with challenges and potential breakdowns. Switching to the cloud eliminates this hassle; we simply flip a switch, send a welcome email to the user, and they’re up and running. It eradicates all the aforementioned headaches and can usually be completed in just a few clicks.

About the Author

As the President of Techmode, Matthew Look has over 25 years of experience in the business telecommunications industry. After founding Techmode in 2003, Matthew continues to stay on the cutting edge of business communications technology, and helping businesses make the best decisions in their telecommunications solutions.