Hosted & Cloud Phone Systems for Business: Complete Guide

What Is a Hosted Phone System?

A hosted phone system is a business telephone system where the PBX — the Private Branch Exchange, which is the brain that routes calls, manages voicemail, and controls every feature — is hosted in the cloud rather than sitting as a physical box on your premises. Instead of buying, installing, and maintaining an on-site PBX like an Avaya IP Office or Panasonic NS700, you subscribe to a cloud-based platform that delivers the same functionality (and much more) over the internet.

The word "hosted" simply means the system is hosted somewhere else — specifically, in secure, redundant data centres managed by the provider. Your desk phones, softphones, and mobile apps connect to this cloud platform over your internet connection. All call routing, voicemail, auto-attendant menus, hunt groups, call recording, and advanced features are managed centrally in the cloud. There is no PBX hardware on your premises to maintain, repair, or replace.

You will also hear the terms "cloud phones," "cloud phone system," "cloud PBX," and "hosted VoIP." These all refer to the same thing. The terminology can be confusing, but the core concept is simple: your phone system lives in the cloud, not in your office. You access it over the internet, and someone else takes care of the infrastructure.

Hosted PBX vs Traditional PBX

A traditional PBX is a physical piece of hardware — a metal box, usually mounted in a server room or comms cabinet — that you purchase outright. It connects to the telephone network via ISDN lines or SIP trunks, and it requires regular maintenance, software updates, and occasional hardware repairs. When it reaches end of life (typically 8–12 years), you face a significant capital expenditure to replace it.

A hosted PBX eliminates all of that. The "PBX" still exists, but it is virtualised software running in a data centre. You do not own it, maintain it, or worry about it. The provider handles all updates, security patches, redundancy, and capacity planning. You simply pay a monthly subscription per user and get access to a feature set that far exceeds what any on-premise PBX can offer.

For businesses still running traditional PBX systems — particularly with the ISDN switch off forcing migration — hosted phones represent the most future-proof path forward. Rather than investing in another on-premise system that will eventually reach end of life, you move to a platform that is continuously updated and improved without any action required on your part.

Cloud PBX vs Hosted PBX vs Traditional PBX

This is one of the most common questions we hear from businesses researching their options: what is the difference between cloud PBX and hosted PBX? The answer is straightforward — there is no difference. Cloud PBX and hosted PBX are two names for exactly the same technology. Both mean that the PBX is located in a cloud data centre rather than on your premises. Some providers prefer the term "cloud PBX" because it sounds more modern; others use "hosted PBX" because it has been the industry term for longer. The features, the delivery model, and the technology are identical.

The real comparison is between cloud/hosted PBX and traditional on-premise PBX. Here is how they stack up:

If you are currently running an Avaya IP Office or Panasonic PBX and considering your options, our PBX to VoIP migration guide walks through the full process of moving from a traditional system to hosted VoIP, including what happens to your existing handsets, numbers, and call flows.

How Cloud Phones Work

Understanding how cloud phones work is simpler than most people expect. The technology is mature, reliable, and used by millions of businesses worldwide. Here is what happens behind the scenes when you make or receive a call on a hosted phone system.

Your desk phone — an IP phone that connects via an Ethernet cable to your network — registers with the cloud platform over the internet when it is powered on. It maintains a persistent connection to the cloud PBX, ready to make and receive calls at any time. Softphone applications on your computer or mobile phone work the same way — they register with the cloud platform over your internet or mobile data connection.

When someone calls your business number, the call arrives at the cloud platform in the data centre. The platform checks your call routing rules — auto-attendant menus, hunt groups, time-based routing, call queuing — and directs the call to the correct phone, group of phones, or voicemail. All of this happens in milliseconds, with no perceptible delay compared to a traditional phone system.

When you make an outgoing call, your phone sends the request to the cloud platform, which connects the call to the public telephone network via SIP trunks in the data centre. Your business caller ID is presented to the person you are calling, exactly as it would be with a traditional system.

What Hardware Do You Need?

The beauty of hosted phones is that the only hardware on your premises is the phones themselves. There is no PBX, no trunk cards, no expansion modules, no UPS for the phone system, and no dedicated comms cabinet. You need:

• IP desk phones — Modern IP phones from manufacturers like Yealink, Poly, or Cisco. These connect to your network via Ethernet and are powered via Power over Ethernet (PoE) from your network switch
• A reliable broadband connection — Each concurrent call uses approximately 100kbps of bandwidth. A standard fibre connection comfortably handles 20–30 simultaneous calls. Drakos Systems provides business broadband solutions if your current connection needs upgrading
• A network switch with PoE — To power the phones without separate power adapters. Most modern business switches include PoE

That is it. No server room equipment, no annual hardware maintenance, no engineer visits for software updates. The cloud platform handles everything else.

Features Included with Hosted Phone Systems

One of the biggest advantages of moving to a hosted phone system is the sheer breadth of features included as standard. Traditional PBX systems charge extra for features that are built into every hosted phone subscription. Here is what you get:

Mobile Apps (iOS and Android)

Every user gets a mobile app that turns their smartphone into a full extension of the business phone system. Make and receive calls using your business number from anywhere — at home, on the road, or abroad. The app includes access to the company directory, call transfer, voicemail, instant messaging, and presence status. Your personal mobile number is never exposed to customers.

Call Recording

Record all calls automatically or on demand. Recordings are stored securely in the cloud and accessible via a web portal. Essential for compliance, training, dispute resolution, and quality assurance. Our call recording guide covers the legal requirements and business benefits in detail.

Microsoft Teams Integration

If your business uses Microsoft Teams for collaboration, your hosted phone system can integrate directly. Make and receive external phone calls from within the Teams interface, combining your unified communications into a single platform. This eliminates the need for separate phone and Teams applications on your desktop.

CRM Integration and Screen Popping

Connect your phone system to your CRM — Salesforce, HubSpot, Zoho, Microsoft Dynamics, and many others. When a customer calls, their record automatically pops up on screen before you answer. Click-to-dial from within your CRM. All call activity is logged automatically. Read our screen popping and CRM integration guide for a full breakdown of how this works and which CRMs are supported.

Voicemail-to-Email

Voicemail messages are automatically transcribed and sent to your email inbox as audio attachments with text transcriptions. You can read or listen to your voicemails from anywhere without dialling into a voicemail system.

Auto-Attendant and IVR

Create professional automated greetings and menu systems that route callers to the right department or person. Multi-level menus, time-based routing (different greetings for office hours, lunch, evenings, weekends, and bank holidays), and overflow routing are all configurable via a simple web portal.

Hunt Groups and Call Queuing

Distribute incoming calls across teams using ring-all, round-robin, longest-idle, or skills-based routing. Call queuing holds callers in a queue with music and position announcements when all agents are busy, ensuring no call is ever missed.

Conference Calling and Video Meetings

Host audio conference calls with internal and external participants using dedicated conference bridges. Many hosted platforms also include built-in video conferencing with screen sharing, eliminating the need for separate video meeting subscriptions.

AI Transcription and Call Analytics

Modern hosted phone platforms include AI-powered call transcription that converts every call into searchable text. Call analytics dashboards show call volumes, wait times, missed calls, peak hours, and agent performance — giving management real-time visibility into how the business handles calls.

WhatsApp Business Integration

Receive and respond to WhatsApp messages from your business number directly within the phone system interface. Manage customer conversations across voice and WhatsApp from a single platform, with full conversation history and team collaboration.

Thousands of App Integrations

Beyond CRM integration, hosted phone systems connect to thousands of business applications — helpdesk software, accounting packages, marketing platforms, project management tools, and more. Automate workflows, log activities, and connect your phone system to the tools your team already uses every day.

Hosted Phones vs Traditional Phones: Cost Comparison

Cost is often the deciding factor for businesses evaluating hosted phones. The financial model is fundamentally different from traditional telephony, and in almost every scenario, hosted phones deliver significant savings over the lifetime of the system.

Traditional PBX Costs

A traditional on-premise PBX — whether Avaya IP Office, Panasonic NS700, or similar — involves substantial capital expenditure and ongoing costs:

• Hardware purchase: £3,000–£15,000+ depending on the number of users and features required. Larger systems with call centre functionality can exceed £25,000
• Installation: £500–£2,000 for on-site engineering, cabling, and configuration
• Annual maintenance contract: £500–£2,000 per year for software updates, remote support, and on-site engineer visits when hardware fails
• ISDN line rental: £15–£25 per channel per month (now being switched off — see our ISDN switch off guide)
• Expansion costs: Additional trunk cards (£300–£800), voicemail licences (£200–£500), and feature licences add up over time
• End-of-life replacement: After 8–12 years, the entire system needs replacing — another £5,000–£15,000+ capital expenditure

For a typical 20-user business, the total cost of ownership for a traditional PBX over 5 years — including purchase, installation, maintenance, line rental, and call charges — is typically £15,000–£30,000.

Hosted Phone System Costs

Hosted phones operate on a simple monthly subscription model with minimal upfront investment:

• Monthly subscription: £8–£15 per user per month, all features included. No tiered pricing, no feature add-ons, no hidden charges
• IP desk phones: £80–£200 per handset (one-time purchase). Alternatively, use free softphone apps on existing computers and mobiles at no cost
• Installation: Typically included or minimal — phones are pre-configured and plug into your network
• Maintenance: £0 — there is no on-premise hardware to maintain. The provider manages everything
• Updates: £0 — all software updates, new features, and security patches are included in the subscription
• Scaling: Add or remove users at any time. No hardware purchases required to grow

For the same 20-user business, the total cost of ownership for hosted phones over 5 years — including subscriptions, phones, and calls — is typically £10,000–£18,000. That is a saving of 30–50% compared to traditional PBX, with significantly better features and zero maintenance burden.

Why Northern Ireland Businesses Are Moving to Hosted Phones

Across Belfast, Lisburn, Bangor, Derry, Newry, Craigavon, and every corner of Northern Ireland, businesses are making the switch to hosted phone systems in record numbers. Several factors are driving this migration:

The ISDN Switch Off

The single biggest driver is the ISDN switch off in January 2027. Every ISDN30 and ISDN2e line in Northern Ireland will be permanently decommissioned. Businesses that currently rely on ISDN-connected PBX systems must migrate — and many are choosing to skip SIP trunking entirely and move straight to hosted phones rather than investing further in aging on-premise hardware.

Remote and Hybrid Working

The shift to remote and hybrid working is permanent for many NI businesses. Hosted phones make this seamless — staff can take calls from home, from a co-working space, or from their mobile phone using the same business number and the same features they have in the office. There is no VPN to configure, no remote worker licences to purchase, and no compromise on call quality or functionality.

Cost Savings

As outlined above, hosted phones are cheaper than traditional PBX for the vast majority of businesses. The elimination of maintenance contracts alone saves most NI businesses £500–£2,000 per year. When you add the savings on line rental, hardware repairs, and avoided capital expenditure, the financial case is compelling.

Modern Features

Businesses expect modern communication tools — mobile apps, video conferencing, instant messaging, CRM integration, call analytics. Traditional PBX systems either cannot deliver these features or require expensive add-on licences. Hosted phones include everything as standard.

Scalability

Northern Ireland's business landscape includes many growing companies that need phone systems that can scale with them. Adding users to a hosted phone system takes minutes and requires no hardware changes. Seasonal businesses can scale up for busy periods and scale back down afterwards, paying only for what they use.

Zero Maintenance

No more waiting for engineer visits when hardware fails. No more annual maintenance renewals. No more worrying about whether your PBX vendor still supports your model. The hosted phone provider manages all infrastructure, updates, and support — you just use the system.

Hosted Phone Systems for Different Business Sizes

Hosted phones scale from the smallest office to the largest contact centre. Here is what businesses of different sizes typically need and how hosted phones serve them:

Small Business (5–20 Users)

Small businesses across Northern Ireland — accountancy practices, solicitors, estate agents, dental surgeries, small retailers — are the sweet spot for hosted phones. At this size, the benefits are immediate and the migration is straightforward.

• Typical setup: 5–20 IP desk phones, mobile app for each user, single auto-attendant, 2–3 hunt groups, voicemail-to-email
• Monthly cost: £40–£300 per month total (£8–£15 per user)
• Key benefits: Professional image with auto-attendant, never miss calls with mobile app, no IT overhead, simple web portal for management
• Migration time: Typically completed in a single day including number porting

For small businesses currently running a Panasonic PBX, hosted phones are often the most cost-effective replacement. See our Panasonic PBX replacement guide for a detailed comparison.

Medium Business (20–100 Users)

Medium-sized businesses — professional services firms, multi-site retailers, hospitality groups, healthcare providers — need more sophisticated call handling and integration capabilities.

• Typical setup: 20–100 IP desk phones, mobile apps, multiple auto-attendants (one per department or site), call queuing, call recording, CRM integration, Microsoft Teams integration
• Monthly cost: £160–£1,500 per month total
• Key benefits: Multi-site connectivity (all sites on one system with free inter-site calls), advanced call routing, management reporting and analytics, CRM screen popping for customer-facing teams
• Migration time: 1–2 weeks including planning, configuration, number porting, and user training

Businesses in this bracket that are currently running Avaya IP Office systems should read our Avaya replacement guide for Northern Ireland to understand the full range of options.

Large Business and Contact Centres (100+ Users)

Large organisations and contact centres require enterprise-grade features, high availability, and detailed workforce management capabilities.

• Typical setup: 100+ users across multiple sites, contact centre functionality with skills-based routing, wallboards, real-time dashboards, workforce management, quality monitoring, AI transcription, omnichannel (voice, email, chat, WhatsApp, social media)
• Monthly cost: £1,000–£5,000+ per month depending on features and user count
• Key benefits: Enterprise reliability with 99.999% uptime SLAs, geographic redundancy, advanced analytics and AI, compliance recording, PCI DSS compliant payment handling
• Migration time: 4–8 weeks including detailed planning, phased rollout, integration development, and comprehensive training

What About Hosted Websites?

When people search for "hosted" services, they are not always looking for phone systems. The term "hosted" applies equally to websites, email, applications, and other IT services. If you have arrived here looking for information about hosted websites, here is a brief overview.

A hosted website is a website that is stored and served from a web hosting provider's servers rather than from hardware you own and manage yourself. Just as a hosted phone system moves your PBX to the cloud, a hosted website moves your web server to the cloud. The hosting provider manages the server infrastructure, security, backups, and uptime — you focus on your website content and your business.

Drakos Systems provides managed IT services that include website hosting and management for businesses across Northern Ireland. If you need reliable, secure hosting for your business website — with local support from a Belfast-based team — we can help. Our managed IT service covers website hosting, email hosting, domain management, SSL certificates, backups, and ongoing technical support.

Whether you need hosted phones, hosted websites, or both, having a single local provider who understands your business and manages all your technology makes life simpler and more efficient.

Choosing a Hosted Phone Provider in Northern Ireland

The hosted phone market is crowded, with dozens of providers competing for your business. Not all providers are equal, and choosing the wrong one can result in poor call quality, inadequate support, and a frustrating experience. Here is what to look for when selecting a hosted phone provider in Northern Ireland:

Local Support and On-Site Engineering

This is the single most important factor for NI businesses. Many hosted phone providers are UK-wide operations with no local presence in Northern Ireland. When something goes wrong or you need on-site assistance, you are relying on remote support from a call centre in England. Choose a provider with engineers based in Northern Ireland who can attend your premises when needed.

ISO 27001 Certification

Your phone system carries sensitive business communications. Ensure your provider holds ISO 27001 certification for information security management. This demonstrates that they have robust processes for protecting your data, managing access, and maintaining security across their platform.

Number Porting Expertise

Porting your existing Belfast 028 numbers and other business numbers to a new platform requires experience and attention to detail. A botched number port can leave your business without incoming calls for days. Choose a provider with a proven track record of successful number ports across Northern Ireland.

Broadband Assessment

A responsible provider will assess your broadband connection before recommending hosted phones. Call quality depends on having sufficient bandwidth, low latency, and a stable connection. If your current broadband is not suitable, the provider should be able to supply business-grade broadband as part of the solution.

Training and Adoption

The best phone system in the world is useless if your team does not know how to use it. Look for a provider that includes comprehensive training — not just a quick handover, but proper training sessions for administrators and end users, with follow-up support as people get comfortable with the new system.

Ongoing Management and Support

Your needs will change over time — new starters, leavers, office moves, new departments, changing call flows. Choose a provider that offers ongoing management and support, making changes quickly when you need them rather than leaving you to figure out a self-service portal on your own.

Frequently Asked Questions