Purchasing VoIP for Small Businesses – A Study of 362 SMBs

VoIP soft­ware is not a new line of tech­no­logy, with the release of the first offi­cial commer­cial Internet phone, VocalTec, in 1995. Today there are VoIP mobile apps, VoIP phones and you can find VoIP func­tio­n­a­lity in various web appli­ca­tions, such as Mikogo. Most import­antly, VoIP systems are no longer limited to large enter­prises with many small busi­nesses opting for VoIP phones over landlines.

There is certainly a growing shift towards VoIP systems for busi­nesses of all sizes, due to its afforda­bi­lity and relia­bi­lity. So as a small busi­ness, what must you consider when swit­ching to VoIP phones?

We spoke with Daniel Harris, Market Rese­arch Asso­ciate from Soft­ware Advice, who recently conducted an in-depth study and analysis of 362 busi­nesses concer­ning their needs in regards to VoIP systems.

Key Findings by Software Advice:

  • Over half of those surveyed were evalua­ting VoIP systems for the workplace.
  • Small busi­nesses put a premium on both relia­bi­lity and scala­bi­lity when evalua­ting VoIP solutions.
  • Small busi­nesses are over­whel­mingly inte­rested in hosted rather than on-premise solutions.

Interview with Software Advice about VoIP

1. According to your findings, 57% of survey respondents started looking into VoIP systems in 2014. Did this figure exceed expectations?

Many of the buyers who contact us are small busi­nesses. Such busi­nesses have been slower to adopt VoIP tech­no­logy than enter­prises, most of which began to migrate to SIP trun­king in the first decade of the 21st century in order to save on internal calling between branch loca­tions. Addi­tio­nally, a number of our buyers work for start-ups that are imple­men­ting a phone system for the first time. 13% of our buyers, for instance, were running their busi­nesses using cell phones. These buyers most likely work in growing orga­niz­a­tions that have begun to run into pain points with virtual number solu­tions, which are desi­gned for very small busi­nesses and self-employed entrepreneurs.

Note: SIP trun­king is a network service that replaces tradi­tional local and long distance voice service for users of VoIP systems, allowing them to connect calls to and from the tradi­tional phone network with VoIP-based extensions.

2. Why the large shift in businesses moving from landlines to VoIP systems?

Seven­teen percent of our buyers cited lack of relia­bi­lity as the primary reason why they were swit­ching to VoIP. This concern with relia­bi­lity indi­cates that such buyers were running into end-of-life issues with PBX systems desi­gned for analog or TDM trun­king. Parts for such systems must be purchased second-hand from sources such as eBay, and there are few tech­ni­cians who can even service them. The unst­ruc­tured data I evaluated from our buyers contained many comp­laints about end-of-life problems with legacy PBX systems.

Note: TDM trun­king is an older form of digital voice and media service that sends infor­ma­tion over the tradi­tional phone network as opposed to the Internet – it was the domi­nant form of busi­ness voice service before VoIP.
A Private Branch Exchange (PBX) system is a phone system that uses a connec­tion to the tradi­tional phone network (PSTN) and/or the Internet in order to deliver voice service to exten­sions in a corpo­rate directory. 

Switching to VoIP for Business Survey

3. What applications and functionality do small businesses want most from a VoIP system?

Small busi­nesses are concerned above all with relia­bi­lity – func­tio­n­a­lity is a secon­dary concern. Requests for specific features were much rarer than calls for relia­bi­lity and effec­tive support in the unst­ruc­tured data. That said, most small busi­nesses are looking for basic PBX func­tio­n­a­lity from their phone systems. Exten­sions for indi­vi­dual employees and depart­ments were requested at a far higher rate than any other feature. Our buyers were also seeking auto atten­dants that can route inbound calls to exten­sions auto­ma­ti­cally using voice menus, thereby elimi­na­ting the need for a recep­tio­nist to route inco­ming calls. Beyond such basic PBX func­tions, we saw a huge demand for confe­ren­cing appli­ca­tions. This was an inte­res­ting finding, as many PBX systems desi­gned for small busi­nesses don’t offer confe­ren­cing. A number of small busi­ness VoIP systems limit confe­ren­cing to three-way calling. Small busi­ness VoIP systems that offer video­con­fe­ren­cing are even rarer. Small busi­nesses should there­fore consider best-of-breed solu­tions for their confe­ren­cing needs.

VoIP Functionalities which businesses want - survey

4. Why are some businesses reluctant to implement VoIP systems? What are the pain points?

Enter­prise VoIP deploy­ments can be incredibly complex and frequently involve consul­ting firms, channel part­ners and multiple IT teams. Small busi­ness deploy­ments are much simpler as the networks over which voice traffic will travel are expo­nen­ti­ally less complex. The problems that small busi­nesses run into gene­rally involve subop­timal connec­tions to the public internet (e.g. a DSL connec­tion) or miscon­fi­gured fire­walls. While quality has tradi­tio­nally been a concern, our recent survey of decision-makers involved in the selec­tion of SIP trun­king provi­ders showed that quality problems are very rare. Only 1 respon­dent out of 208 reported being dissa­tis­fied with call quality.

“Seven­teen percent of our buyers cited lack of relia­bi­lity as the primary reason why they were swit­ching to VoIP.”

5. Transition phases are expected with new technology. How can businesses best switch to VoIP with minimal hassle?

If a busi­ness really wants to ensure a hassle-free cutover in a matter of hours, they should look for a VoIP provider with a repu­ta­tion for quality support. Plug-and-play deploy­ments can be hassle-free for orga­niz­a­tions with know­led­ge­able IT personnel on staff, but smaller orga­niz­a­tions may want to bring in a consul­tant if they choose to go the plug-and-play route. Many provi­ders offer exten­sive support during the instal­la­tion phase in parti­cular. If you choose an on-premise system, local resel­lers will gene­rally assist with deploy­ment as well as custo­miz­a­tion of the system (inclu­ding custom soft­ware integrations).

Note: “Plug-and-play” refers to a hosted VoIP provider that sends out IP phones capable of conta­c­ting the provider’s network to down­load confi­gu­ra­tion settings auto­ma­ti­cally, as opposed to an on-premise solu­tion that requires an IT team to confi­gure phones to work as exten­sions of the IP PBX.

“Lack of IT resources didn’t scare (busi­nesses) away. Only 6 percent of the buyers in our sample had IT job titles.”

6. Not all small businesses have a dedicated IT person or team. Do your findings suggest only IT companies implement VoIP?

Only 6 percent of the buyers in our sample had IT job titles. Since orga­niz­a­tions with on-staff IT would no doubt task such personnel with evalua­ting VoIP solu­tions, we can conclude that very few of the busi­nesses in our sample had any IT personnel to help with deploy­ment. However, this lack of IT resources didn’t scare them away from the substan­tial cost savings that can be achieved with VoIP tech­no­logy. In a recent survey that we ran, we found that only 14 percent of busi­nesses without full-time IT on staff ran into networ­king issues with VoIP tech­no­logy, even with multiple sites in their voice networks. This finding suggests that it’s emin­ently feasible for busi­nesses without IT personnel to deploy VoIP tech­no­logy successfully.

Job Title of VoIP Survey Respondents

7. VoIP services can be divided into two categories: on-premise or web-based solutions. What is the preference by small businesses?

Seventy-seven percent of the buyers we spoke with wanted hosted systems. None of the buyers in our sample speci­fi­cally requested on-premise systems, almost certainly because most of them were small busi­ness buyers who can’t afford the luxury of on-premise data centers. Hosted solu­tions make a lot of sense for small busi­nesses since they elimi­nate the work of mana­ging and secu­ring the PBX system. The provider will keep the system updated and assist with configuration.

VoIP Business Survey - Preference for Web-Based

8. For companies that need multiple phone extensions in one office, how can VoIP systems serve their needs?

A busi­ness that needs exten­sions will also need some kind of PBX system, as the whole func­tion of such systems is to divide inco­ming connec­tions to the Public Swit­ched Tele­phone Network (PSTN) and/or the public Internet in order to provide dial tone for employee exten­sions. Busi­nesses with 2 or fewer employees can get by without PBX systems, but above this cut-off direc­tory func­tio­n­a­lity becomes crucial. PBXs desi­gned for VoIP service as well as hosted PBX solu­tions accessed over the public Internet are now far cheaper to purchase and main­tain than tradi­tional PBXs desi­gned for analog and TDM voice services.

In Conclusion:

The results from the Soft­ware Advice survey on VoIP for small busi­nesses suggests a strong trend towards VoIP solu­tions. More than half of those who were surveyed were looking into VoIP for their busi­ness in 2014, and it was the web-based hosted solu­tions which led the race for the number one choice of VoIP solu­tion. Inte­res­tingly, relia­bi­lity was the stron­gest reason for swit­ching to a VoIP system, even over the cost bene­fits – this is perhaps due to many small busi­nesses curr­ently relying on cell phones.

I think that just about covers the main thoughts about VoIP for small busi­nesses. Thanks for taking the time to speak to us, Daniel!

Discus­sion: Have you recently imple­mented a VoIP phone system at your work­place? Please share your expe­ri­ence in a comment below.
Or if you have any other ques­tions regar­ding VoIP systems for small busi­nesses and the above survey, leave a comment below for Daniel and the Soft­ware Advice team.

Note: the above survey results, chart data and other statis­tics were sourced from a report published by Soft­ware Advice, which included a random sample of 362 small-busi­ness buyers (with reve­nues of under $100 million) 

About Daniel Harris:


Daniel Harris is a Market Rese­arch Asso­ciate with Soft­ware Advice who focuses on VoIP tech­no­logy as well as broader issues in IP commu­ni­ca­tion solu­tions for busi­nesses. He holds a PhD in English Language and Lite­ra­ture from the Univer­sity of Chicago. Daniel joined Soft­ware Advice in 2014.

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