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10 Smart Questions About Hosted VoIP

The VoIP decision shouldn't be based on technology, but on how it will affect your business. Small businesses should ask themselves these 10 questions before making the leap to voice over IP and choosing hosted VoIP versus a do-it-yourself implementation

Before Bob Halper, CFO of Janou Pakter, decided to change his company's voice and Internet services, he used to compare his cranky, expensive in-house phone system to the one used by Alexander Graham Bell. For the New York executive search firm with branch offices in Paris, Milan, and Los Angeles, the phone system is truly mission critical, with recruiters using it to help place creative design people all over the world.

Like many small businesses, Janou Pakter doesn't have a dedicated IT staffer. So as CFO, Halper looks after all things financial and administrative, and that includes the phone system. As a nonprofessional, Halper ended up with contracts with four different companies for local and long-distance voice, data, and Internet services. "I would pull my hair out if I had to deal with them, and unfortunately, I had to deal with them," Halper says. He wanted a new phone system that could save the company money, provide predictable monthly costs, and leave some hair on his head.

Thousands of small and midsize businesses are facing the same decision -- what to do about their voice and data services. And a growing number of them are looking at voice over IP (VoIP, also known as IP telephony) to consolidate their voice and Internet connections on one network. But sorting through the hype, the options, the service providers, and the hardware vendors -- and deciding how and when to move to VoIP -- can be a minefield for any business.

VoIP was initially promoted as a low-cost alternative to traditional calls traveling over the public switched network. The idea was that voice packets could move over the Internet at much lower cost. In the early days, though, while the price may have been good, the quality was often bad. In the last two years, however, VoIP services have come of age. Businesses of all sizes are happily transmitting voice, data, and Internet traffic on the same network. And Internet telephony increasingly is being integrated with applications used by businesses to increase productivity and access to information.

Smaller companies interested in VoIP have two main options: do it themselves or outsource the system to a "hosted" VoIP provider. In typical VoIP setups, companies buy and manage their own VoIP equipment and services. A hosted voice provider, on the other hand, operates a client company's voice, data, and Internet services on the host's own network and houses the equipment in its data center, with nothing but IP phones located in the customer's offices.

After considering its options, Janou Pakter went with M5 Networks, a hosted VoIP provider based in New York. Hosted service is the answer for a growing number of small and midsize businesses, but it's not for everyone. If your company is intrigued by VoIP and trying to decide between an in-house installation and going with an outsourced solution, the following pages pose 10 key points to consider before making the decision.

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