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5 reasons to deploy an on-site telephone system - part 3

29 Nov 2014 12:49 PM -
Reason #3 - lower cost over time

This factor should resonate strongly among businesses that have been around for quite a few years. With legacy telephony, businesses typically had to buy a phone system from a vendor and be locked into a contract for TDM service from their incumbent telco.

As such, there wasn’t much discussion around other options for phone systems. You could always try to save money looking for a used or reconditioned system, but you’re still buying and owning. Whatever path you chose, the phone system was going to be an asset, just like all the other expensive hardware you owned to run your business. Underlying this is the simple pragmatism that governed most businesses then and now – over time, owning is always cheaper than renting. Of course, this presumes that ownership is desirable, and as mentioned earlier, owning a lot of hard assets has long been the mark of a successful business. That thinking may not apply to today’s software-based businesses, but pre-Internet, ownership carried cachet and allowed
you to maintain control over everyday operations.

Another aspect of ownership that needs to be noted is the fact that legacy phone systems – like most other hard assets a business would use – were built to last. Remember, TDM has barely evolved for decades, and when phone systems were purchased, it was understood they would be in use for a long time, typically 10 or more years. Today, 5 to 8 years is about the limit and even if the hardware holds up, the feature set is outdated.

As such, it’s no surprise that ownership here was never questioned. Not only were these phone systems highly durable, but the feature set was fixed, and no innovations were on the horizon. With this much certainty on the table, ownership will always be more attractive than leasing. Although this would entail a large upfront expenditure, the business could take comfort in the fact that the asset would be amortised well before end of life. While maintenance contracts are a fact of life, the business does not incur any additional costs, so given the long lifespan of a legacy phone system, this means many years of usage without any further Capex.

Things have changed a lot with IP, especially around the cost and nature of today’s phone systems. A key reason why the cost has dropped is that there’s more software than hardware, licenses unlock features, and the phones are not designed to last more than a few years. For this reason, leasing is a more attractive option than with legacy systems, but ownership still has its virtues.

In other words, the core benefits of ownership remain in place, but the rationale becomes different. The longer the lifespan, the more sense ownership makes, especially with something as well made as a legacy phone system. While this may no longer hold for VoIP phone systems, another aspect does support this position. Today’s phone systems may not merit long term ownership, but a key reason is that they’re much less costly than their predecessors. As such, the net investment in a VoIP phone system will be more manageable budget-wise, and given the expected long term benefits, ownership here makes just as much sense as it did with legacy telephony – but for different reasons.

With longevity in mind it is important to select a manufacturer that offers a roadmap for software enhancements and an upgrade path for legacy systems.