10 Smart Questions About Hosted VoIP

8. How much capital you can lay out for equipment?

Most smaller companies are capital- and resource-constrained, and any way to spread out the cost is a good thing for them. "There isn't just one kind of [small business] out there," says Yankee Group's Hilton. "For some, skipping the capital expenses and going to a hosted model is the answer."

Even within the hosted VoIP market, which offers generally lower up-front costs than doing it yourself, providers may offer several ways to reduce up-front costs of buying or leasing the necessary IP phones. If your business doesn't want to buy individual phones that can easily cost $300 apiece, some providers may spread out the cost by bundling the phones in with the monthly service fee. In some cases, the equipment may owned by the provider, which further reduces means up-front costs but may increase monthly fees.

To get the benefits of VoIP, your business doesn't necessarily even have to get new IP phones. Verizon Communications, for example, offers two "hybrid" VoIP services, Hosted IP Centrex and IP Flex T1, that let businesses use their existing phones, while Verizon manages the IP-based service in its network. Cbeyond has engineered its service to allow the use of analog, digital, or IP phones.

9. What is your business-continuity plan in case of an outage?
One of the big advantages of a hosted VoIP service is business continuity in case of an outage -- the phone equipment isn't on the customer's premises. Even so, in the planning phases, a major point of discussion should be what kind of backup system the service provider has in place.

While many businesses don't put a plan in place before an outage happens, New Yorkers are particularly sensitized to the outage issue. Whether it's a terrorist attack, a blackout, or a steam pipe explosion that takes down power and water, businesses need a plan to keep running.

When Adam Eiseman at Lloyd Group talks to potential customers about his outsourced IT services, he uses a water-main break, not a terrorist attack, as an example of the advantages of outsourcing. "If you plan for that, you plan for just about any event," he says. "Your customers will have sympathy for you in a major disaster, but if you have a water main break outside your building, customers will be sympathetic for about five minutes," he says. Eiseman looks at M5 as his solution for that water-main break because his phone system isn't in-house, and employees can use soft phones from their computers no matter where they're working.

10. Is it really time for a change?
"Most SMBs have an 'if it ain't broke, don't fix it' attitude toward their phone systems," Yankee Group's Hilton says of small businesses. Unlike large enterprises that may be on a routine technology-refresh schedule, smaller companies don't invest in technology just because it's cool. If the existing equipment is still on a maintenance contract or has some life in it, the company may wait until it's entirely broken before making a change.

In the past, small and midsize businesses might hang on to the same phone system for 15 years. But VoIP seems to be compelling enough to alter that equation. Lower prices, higher quality, and more features and have driven the average life cycle of a phone system in a small to midsize business down to about seven years.

So, when weighing your options for your telephone system, think about whether you want to wait until phone service problems interrupt business as usual, or whether it's time to be proactive and take advantage of high-tech options that didn't exist 10 years ago.

Kate Gerwig has covered the telecommunications industry for more than 15 years as a writer, editor, and industry analyst. Her work has appeared in a wide variety of publications, including tele.com magazine and InternetWeek, where she received an American Business Press Jesse H. Neal award for her telecom coverage. She was principal analyst of telecom services at Current Analysis from 2001 through 2005.