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. 

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.

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.

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.

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 Harris­MARKET RESEARCH ASSOCIATE
SOFTWARE ADVICE

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.