You’ve probably heard your tech team talk about VoIP (Voice Over the Internet Protocol) before, but have you heard the term IP PBX?

These and other similar acronyms belong to a type of essential and innovative business communication system.

If you’re a business owner, you’ve probably done your own research looking for a business phone system.

In this article, we will cover everything you need to know about IP PBX systems. You’ll also learn why it’s the preferred communication technology for modern enterprises.

Read on to find out if an IP PBX is the right tool your business needs.

What is IP PBX?

IP PBX stands for “Internet Protocol Private Branch Exchange.” It’s basically a communication system that provides voice connectivity through desk phones within an organization. 

It handles outgoing and incoming calls across the telephone network while connecting it to the public switched telephone network (PSTN).

Let’s go back to basics by reviewing the two acronyms in the term; 

IP is a way to transmit data from server to server. It refers to using the internet as a transmission channel.

On the other hand, PBX implies an internal telephone network available on-premises or hosted in the cloud.

In sum, it’s a telephone network that uses the internet to send and receive calls.

Many PBX systems allow the use of open-source tools such as Linux in configuring them. Additionally, the cloud-based version lets you integrate it with other software tools.

A traditional PBX features two main elements: lines and stations

Lines are also called trunks and simply refer to connections to the global PSTN through a telephony provider.

Stations are telephones themselves or other end-user devices such as desktops, fax machines, or modems. 

How Does an IP PBX Work?

It works by converting analog voice signals to digital packets. It then directs these packets to a VoIP service provider to coordinate the initiation and termination of every call.

IP-based voice services use a Session Initiation Protocol or SIP. It refers to a universal protocol that is the default standard for VoIP phone solutions.

A PBX would typically use SIP trunking which exists to provide multiple voice channels simultaneously.

By design, the inner component of a PBX retains the familiar functions of voice calls, voicemail, and caller groups. 

On the other side, the outer component involves a VoIP provider giving a set of credentials for at least one SIP trunking account.

As soon as authentication happens, incoming calls are available for your PBX.

How Does an IP PBX Work?

Benefits of IP PBX Systems

Installing an IP PBX server for your business has several advantages. Here are some benefits of these modern systems.

1. Maximize cost savings and keep IT infrastructure to a minimum

Using an IP PBX system effectively ensures there are no dedicated phone lines to maintain. In addition, it consolidates voice and data networks into one and minimizes local and international call costs.

IP PBX systems are cheaper to maintain than analog alternatives, and you can have metered and non-metered trunking services depending on your needs.

2. Ease of maintenance

Moves, adds, and changes (MAC) are typically challenging to implement on traditional phone systems. However, IP-based phone solutions don’t require engaging an expensive tech expert. Instead, virtually any in-house staff can update systems within minutes.

Besides, you’ll get rid of all the wiring and bulky equipment that is needed for a traditional PBX to work.

3. Cloud-based reliability

The cloud is a reliable interface for various business functions. Connecting an existing PBX to the cloud greatly improves its efficiency and functionality.

Built-in redundancy is a hallmark of reliable VoIP services. It’s a way to ensure that your communications system will always be available even if one server fails or there’s any other issue.

4. Advanced features

An IP PBX phone system heavily depends on software. The software makes it possible to integrate other systems and extend the phone system’s functionality. 

Chat, CRM, and video conferencing are examples of functionalities you can layer onto IP PBX platforms.

5. Keep existing hardware and minimize change

Depending on the hardware you’re currently using to communicate, it’s possible to keep using the same hardware or a part of it just by adding a SIP address, password, and domain.

As your organization scales, growing the number of voice channels becomes easier while requiring minimal configuration.

6. Improved communication across locations

If you’re looking to store voice messages, maintain a directory, do international call routing and endpoint administration from one location, IP PBX solutions are an excellent choice. 

They remove the need for extra equipment and personnel at multiple remote locations.

IP PBX Limitations

Let’s now review some of the drawbacks to consider when switching to an IP PBX phone system.

1. Remote work restraints

If you’re using an on-site IP PBX system, likely, you can’t have agents working from home, even with the IP connectivity.

This is because they need to get access to the network by connecting to it. However, some providers allow you to do this just by installing an app on your remote employees’ devices.

2. Scalability is limited

You can only scale an IP PBX to the extent that users are available to take phone calls. Expanding your team beyond what your PBX can handle will precipitate challenges such as busy signals.

3. Technical know-how

If your IP PBX system is the on-premise variant, you’ll need the services of knowledgeable personnel to manage it.

These systems administrators should understand how to install and configure Linux-based operating systems. They’ll also need to be experienced in Asterisk or FreePBX software.

4. Some features come separately

Unified Communications as a Service (UcaaS) platforms include many useful features that IP PBX would need to integrate separately, making it less cost-effective to configure each of those features on an IP PBX individually.

Choosing Between IP PBX and VoIP for Your Business

The choice between IP PBX and VoIP systems is sometimes not as easy as you may think, so we’ll make a brief graphical comparison of these phone systems.

FunctionIP PBXVoIP
Initial cost$$$$$$$
Monthly fees$$$$$
Ease of useDifficultEasy
Calling featuresPSTN connectivityVoiceCall encryptionMobile device supportPSTN connectivityUnified communicationsVideo conferencingVoiceMobile device support
MaintenanceNetwork configurationOS updatesSoftware updatesNone
ReliabilitySingle calling pathBusy signals from outagesAutomatic call routingRedundant data centers
ScalabilityLimited to PBX capacityUnlimited
Remote WorkNoYes (desktop and mobile apps available)

The chart above shows that IP PBX is more inclined to offer value than a traditional analog phone system. VoIP, on the other hand, leverages a lower-priced offering for more features to attract users.

If your IT employees are already familiar with PBX phone systems, an IP PBX phone system solution is a significant investment to enhance your operational productivity across the board.

SIP trunks work without being attached to a specific location, meaning you can get one up and running in no time when changing your office location.

Summary & Takeaways

IP PBX systems are the next evolution of PBX systems. Companies looking for internal communication systems built on existing internet infrastructure will enjoy the numerous benefits of IP PBX systems. 

It’s possible to have IP PBX systems providing additional audio, video, and instant messaging functionality through the TCP/IP protocol stack.

Here are key elements to look for in any IP PBX solution you’re considering:

  • Conferencing – Conferencing helps keep travel expenses low. Your phone system should support more than three-way calling, that is true multi-party conferencing.
  • Mobility – If you have employees who mostly work away from the office, your PBX needs mobility features such as Find Me/Follow Me, fixed/mobile convergence, and remote IP extensions.
  • Reporting – Your PBX should at least provide basic call history features.
  • VoIP Messaging – Business phones should have voicemail as a standard feature. For instance, can you forward voicemail as attachment to email? Your IP phones should support visual voicemail.
  • VoIP Readiness – Legacy PSTN lines are fast becoming extinct as the world increasingly adopts VoIP. Your PBX should support IP trunks (service) and IP stations (phones). SIP is the default standard, so your phone system should support it.

Today’s workplace is not what it used to be. As a result, its engine typically runs on cutting-edge technologies that continue to redefine how we do everything. IP PBX is a solid case in point.