What Is Cloud Telephony, How Does It Work & Benefits

Over 87% of startups use cloud telephony for their calls and messaging. As more mid-sized businesses and enterprises implement the technology, it’s time to answer the question on everybody’s mind: “Why?”.

In this article, we’ll explore cloud telephony in more detail, explaining how it works step by step, how it compares to traditional landlines, and how to choose the best solution for your business.

Key Takeaways:

Cloud telephony systems run on the provider’s cloud and make calls over the Internet, allowing you to save money on infrastructure and call rates.
Compared to traditional PBX, cloud phones are highly scalable, easily customizable, and offer access to numerous advanced features and integrations.
Cloud calling is perfect for international operations with a global workforce, as it allows employees to work from their devices anywhere in the world.

What Is Cloud Telephony?

Cloud telephony, sometimes referred to as hosted VoIP or a softphone, is a type of Unified Communications as a Service (UCaaS) platform that allows businesses to make and receive calls and text messages over the Internet.

As its name suggests, cloud calling’s unique value proposition is that it’s entirely hosted in the cloud. This empowers companies to decentralize their operations and offer services around the world with a partial or fully remote workforce.

Due to its software-centric design, cloud telephony is easily scalable and modifiable. This lets you integrate it with third-party tools to unite and streamline processes in a single solution with near-limitless room for growth.

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Cloud Telephony Vs. Traditional PBX: An Overview

The most important decision when setting up a call center is which type of technology you base it on. And this usually comes down between cloud telephony systems, or traditional PBX landlines. Below, you’ll find a comparison of the two solutions.

Comparison

Cloud Telephony

Traditional PBX

Infrastructure

Hosted in the cloud, no physical hardware required.

On-premises hardware and equipment needed.

Scalability

Highly scalable, easy to add/remove users and features.

Limited by physical hardware capacity.

Cost Structure

Subscription-based, lower upfront costs, pay-as-you-go.

High upfront capital expenditure for equipment.

Maintenance

Managed by the service provider with minimal IT involvement.

Requires in-house IT staff for maintenance and updates.

Flexibility

Accessible from anywhere with an internet connection.

Limited to the physical location of the PBX system.

Features

Advanced features like IVR, call recording, and analytics.

Basic calling features and additional features may require extra modules.

Upgrades

Automatic updates and upgrades are provided by the provider.

Manual upgrades are needed, often involving downtime.

Reliability

High reliability with redundancy and disaster recovery.

Depending on local infrastructure, potential single points of failure.

Integrations

Easily integrates with other cloud-based services (CRM, email).

Limited integration capabilities, often complex

Mobility

Supports remote work and mobile access.

Typically limited to an office environment.

Call Quality

Dependent on internet quality, generally high with good connection.

Generally high, dependent on internal network quality.

Security

Managed security, data encryption, and compliance by provider.

In-house security management has the potential for higher control but also higher risk if not managed properly.

Disaster Recovery

Built-in disaster recovery and business continuity plans.

Requires additional planning and resources.

Installation Time

Quick setup, typically within days.

Longer setup time, could take weeks or months.

Customization

High level of customization through software.

Customization is possible but often requires hardware changes.

How Does Cloud Telephony Work?

When discussing how cloud telephony works, there are three aspects we need to address: the overall operations of the system, the VoIP calling itself, and client-based call center management.

Overall Operations: The system is hosted on the service provider’s cloud, which removes the need for physical on-location infrastructure. Users only submit requests, and service providers handle everything from system updates and data back-ups to call routing.
VoIP Calling: The system uses VoIP desk phones or smart devices to pick up your analog voice and convert it into digital signals. These are broken down into packets and sent over the Internet to the receiver, where they’re turned back into audible sounds.
Call Center Management: Despite running on the service provider’s cloud, telephony software offers a client-based app interface the allows users to set up automations, view analytics, install 3rd party integrations, request new numbers, and initiate calls.

Why Is Cloud Telephony Important for Business?

Cloud telephony systems naturally play a key role in business communications. However, their impact on your company’s overall operations is bigger than you might think. Some of its most important use cases include:

Easily Scalable Call Center Operations: Cloud-based business phone systems aren’t limited by physical constrictions. This lets users increase or downsize their team sizes and telephone numbers as required quickly and easily.
Affordable International Outreach: Thanks to its use of the Internet, cloud telephony can offer affordable call and SMS rates, lowering overall phone expenses by up to 75% and allowing for efficient international growth.
Efficient and Customizable Processes: Thanks to its software-based modular design, cloud telephony systems can leverage advanced features and integrate with 3rd party tools to automate processes and save time on routine tasks—including those built on open source software to automate processes and save time on routine tasks.
Access to the Global Talent Pool: Since cloud phone service can work on any smartphone, tablet, or computer with a microphone and an internet connection, companies can work with the best experts worldwide, regardless of location.
Increased ROI: Cloud telephony systems are cheap to set up and maintain, only requiring monthly/annual subscription payments. Meanwhile, the time savings and improvements to customer experience can significantly boost ROI.

Benefits of Cloud Telephony

The business advantages of cloud telephony outlined above are the result of multiple benefits that cloud phone service offers. Here’s what you can do:

Save Time: Free yourself of the need for time-consuming installations and maintenance. Automate routine tasks with advanced features.
Lower Costs: Save money on expensive local infrastructure, pricy call rates, bloated team compositions, and lost time due to inefficient processes.
Increase Mobility: Empower agents with remote-friendly software so they can do their best work anytime and anywhere in the world.

Scale Up Quickly: Request new numbers and seats with only a few clicks and start growing your operations within a week with intuitive onboarding.
Integrate 3rd Party Tools: Unite your tech stack within a single solution via Open API or native integrations with popular CRM, Helpdesk, and BI systems.
Leverage Advanced Features: Streamline your workflows with 75+ advanced AI-powered features for nearly all aspects of your operations.
Efficiently Analyze Performance: Access everything you need to know about your performance and call statistics to make predictions and optimize strategy.

How to Choose the Right Cloud Telephony Solution for You?

There are several aspects you should consider when looking for your next cloud telephony. These include:

#1: Call Center Type:

The type of call center software you choose can vary greatly. In addition to the features and integrations included, the solution type also influences deployment time and pricing.

For example, you can get cloud-based software like CloudTalk up and running for just $25 per user/month in a day.

#2: Use Cases:

Different providers specialize in solutions based on business size or specific use cases. For example, a solution focused on SMB customer support will likely be cheaper but have fewer features and international numbers.

On the other hand, a provider primarily selling to outbound, enterprise-size call centers will be much more expensive but offer numerous features, integrations, international numbers, and high call quality.

#3: Users and Features:

How many agents you onboard naturally influences the price of your solution. However, many providers have a minimum/maximum number of users on their pricing plans, which can cause issues when selecting the correct plan.

For example, if you have only a few agents but need high-tier features, you may need to buy add-ons or more licenses than you need. Similarly, if you have a lot of agents but low feature requirements, you still might get stuck with a more expensive plan.

#4: Number Selection:

The amount, type, and geographical location of numbers a VoIP provider can offer greatly depends on their connections within the industry, including local providers, regulators, etc.

As such, it’s best practice to not only look at the numbers you want to port right away but also think into the future and consider your expansion plans (international numbers) or possible initiatives (toll-free numbers).