Today's business world depends greatly on effective communication. The increasing demand for sophisticated business telephone systems has stimulated the development of new technologies, such as the PBX phone system, which ultimately leads to hosted IP telephony. When considering potential business phone systems, PBX and VoIP are the prime choices. Deciding between the two implies considering the essential dissimilarities between the two and the specific benefits each can bring to the business.

Whether the business is considering a hosted, virtual approach or an in-house telephone system, both the VoIP and the PBX brings substantial benefits to an organisation. However, choosing the best involves a thorough understanding of both systems.

The hosted VoIP is an Internet-based business phone system and it provides coverage over the business technological equipment, by managing all the activities the telephone system needs to operate. The system operates through the business network, by using a reduced amount of bandwidth to conduct all activities. In return, the company benefits from large financial practicalities as a result of expanding, along with reduced costs and business focus. The IP equipment consists of routers, MPLS switches and Ethernet switches; once the telephone is plugged in, all signalling, calls and services are managed by the IP server, which is located on the provider's premises. Based on the use of the hosted voice telephony, there are monthly charges and bonus packages which save even more expenses.

The PBX business phone system is defined as a secure telephone network within an organisation and its main capacity is linking internal business telephones into one system, while also enabling the connection with Public Switched Telephone Network. The system involves a large number of outside lines which enable calls between different businesses. Some of the disadvantages of the PBX phone systems are the extra expenses involved and lack of advanced services such as call queuing, call recording and IVR Menu Systems. The PBX phone system is a very basic and high-priced business telephony service, which does not provide the sophisticated features of a hosted business VoIP. However, there have been improvements to the PBX technology, such as a hosted version which is an improved form of the office-based business telephone system.

The most used form of PBX business phone system is the IP-PBX. This equipment for this system is resided on the user's premises, rather than at the provider's location like the hosted VoIP. The functionality is based on the regular PBX phone system; the difference is that the IP-PBX is a software-based system and uses LAN to transmit the signal from the IP to the PBX server. PSTN systems and SIP Trunk enable the connection with VOIP Phone  businesses. IP-PBX providers usually manage all calls and enable all a wide range of features, such as call switching, routing and queuing or unified communication at lower costs than the traditional PBX.

To help decide which business telephone system would best benefit the company, criterions such as long-term performance, costs and disadvantages need to be considered. An IP-PBX phone system requires hardware and a server housing the necessary elements which enable the connection to the providers and IP telephones. The hosted VoIP however requires only the telephone equipment, as the server is located on the supplier's premises; this is why sometimes, a router is considered to maximise the practicality. As a result, the installation and maintenance costs for the hosted VoIP system are lower because of the lack of equipment. Also, low expenses are involved in monthly costs and facilities used, as new features and enhanced software versions are provided by the supplier. Another advantage is the possibility of adding further lines.

On the other hand, as the IP-PBX system requires a lot of hardware equipment, there are maintenance and installation costs involved. A main benefit is the low costs involved for using the services and there is also the possibility of applying SIP Trunking with the VoIP provider for lower calling costs. The costs involved for server and the software applications only can add up to £2-£3k, which means that as the IP-PBX is concerned, the hardware costs will be considerably over-priced. The price and long-term expenses should not outdo the essential features. The purpose of a business telephone system should concern the company requirements and improve its profitability. An important consideration is that the maintenance and servicing for the hosted VoIP will be ensured by the supplier, whereas the IP-PBX requires independent services and will add to extra expenses in the long-run.