What is VoIP and Why are Companies Making the Switch?

Voice over Internet Protocol (VoIP) was developed in order to provide access to voice communication around the world without the need for phone lines. In most places, voice communication is quite costly. Consider making a phone call to a person living in a country half the globe away. The first thing you think of in this case is your phone bill! VoIP solves this problem and many others by routing calls over the Internet.

The number of companies adopting VoIP as their main communication mechanism is increasing exponentially.

But why are companies switching to VoIP?

An InformationWeek Research study carried out on 280 companies currently using or planning to use VoIP yielded some important information about this growing trend. (Note that in the survey, multiple responses were allowed.)

Here are the top reasons why companies want to adopt VoIP:
  • Lower telecommunications costs 66%
  • Desire to merge voice and data networks 43%
  • Obtain a platform for one-stop communications in two or more areas 41%
  • Increase collaboration benefits in two or more areas 36%
  • Ease of management 31%
  • Scalability 24%

VoIP Facts

VoIP stands for Voice over Internet Protocol, or put simply phone service sent over the internet as digital data instead of the old school circuit switched public telephone system. For most people Skype is probably the most common form of VoIP we are familiar with but it is so much more than that.

New business owners used to have to invest in extremely expensive, cumbersome and bug ridden phone systems that made launching a startup more stressful and cost restrictive. VoIP changes all that and can dramatically reduce business phone bills and much more. In fact VoIP has been recognized as being so beneficial that as far back as 2008 80% of a PBX lines being installed worldwide were VoIP. Even the U.S. government decided to switch its 63,000 Social Security staff to a VoIP phone system.

However, not all VoIP is the same. Businesses can choose between on-site VoIP equipment or a VoIP hosted PBX. With a hosted PBX system, all hardware and software is located in a data center. Another term for this is cloud computing. It is becoming very popular for small businesses especially since there is no equipment or software to maintain and all upgrades and backups are taken care of by the provider. This hosted model can provide more versatility and less hassle.

What Other Advantages Does VoIP Offer for SMB’s?

1. Agility

With VoIP phones that you can just pick up and go which makes it easy to move premises and diversify staff in different locations while driving overhead down and profit margins up.

2. Scalability

VoIP and hosted PBX phone systems mean easy and cost effective scalability.When you add a new employee just order a new VoIP phone. Similarly, if you are downsizing you can just remove the VoIP phones from your network anytime.

3. Privacy & Security

VoIP can mean more security and easier encryption, plus location privacy. In fact, this has led some foreign countries to outlaw it.

4. Enhanced Routing & Call Management

Dozens of phone system features and options enable entrepreneurs to streamline their businesses and boost productivity by getting more done in less time, and maximizing profits. This also means ensuring business continuity no matter what natural disasters come your way. With VoIP, calls are routed over the Internet and that means that even if the phones lines are down, or  your Internet is down, your calls can be routed anywhere you want including your cell phone or an answering service on the other side of the world.

5. Cost Savings

This really speaks for itself from reducing set up costs to call costs and monthly billing and more. Most companies see a savings of 40-60% off of their phone bill just by switching to a VoIP PBX.

So is VoIP for You?

Only you can decide whether it’s the right choice but one thing is clear and that is only those enterprises which demand and harness the biggest profit spreads and are best prepared to adapt on the fly will survive and thrive.

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