Cloud Telephony: The Essential Guide

Cloud telephony is an important part of cloud strategy for a modern business. Like other cloud services, cloud-based telephony promises to streamline and improve essential business processes. The business world has changed, particularly since 2020, and employees are now far less likely to be in the office. Business professionals today will spend time working from home, from client offices or cafes, and on the move. So why is their business phone still in the office?

A better solution is cloud telephony for business. It’s a market that is expected to grow by almost 18 percent in 2021 as more businesses make the switch. Switching from an on-premises PBX to a cloud telephony system offers greater flexibility for a workforce that is increasingly mobile, providing one number to reach them wherever they are. It also allows businesses to bundle telephony with the rest of their corporate communications and collaboration suite, which can cut costs and reduce the number of apps employees need to use.

Table of Contents


What is Cloud Telephony?

Cloud telephony takes the on-premises PBX (Private Branch Exchange) infrastructure that most businesses use to handle calls and moves it to a server in the cloud, so the exchange is no longer dependent on a physical location.

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Cloud telephony: How it works

Moving telephony to the cloud means your calls are routed through remote servers in your supplier’s data center, rather than on physical equipment in your office. Your entire telephony system, from SIP (Session Initiation Protocol) trunking and PRI (Primary Rate Interface) lines to routing and switching systems, will be handled in the cloud. This saves you having to buy, install and maintain those systems yourself.

These servers can be accessed via the internet, just like other types of cloud service, which provides freedom and flexibility. Calls are routed to a phone number as before, but instead of being attached to a physical handset or cell phone, the number is virtual. Companies typically port their DDI numbers to the cloud service, so there is no need for new phone numbers. When someone calls, the cloud telephony system routes the call according to predetermined rules, that could mean sending it to multiple devices at once – a desk phone and a cell phone, for example, or to a colleague, a pre-recorded message or whatever is appropriate.

Your users, whether they are staff or your customers and suppliers, will not notice any difference in how calls work. However, the cloud system makes it easy for you to scale the service, manage users and offer additional services, such as call recording and others which we will come to shortly.

One prominent cloud telephony service is Microsoft Phone System, which enables PBX capabilities in the cloud, to which Microsoft Teams connects. Companies can add it to their existing Microsoft Office 365 subscription and then use the Microsoft Teams application to make and receive calls from a desktop, laptop, smartphone or Teams-compatible desk phone. This option is appealing for many businesses because Teams can become a seamless digital workspace handling the company’s corporate communications services, including email, messaging and calls. Adding calls to Teams often simply extends the capability of a tool that they were using anyway.

Microsoft’s cloud telephony solution works right away for calls within your organization. However, to make external calls, you will need a Microsoft Calling Plan or Direct Routing. The former provides a bundle of minutes and can be useful for smaller firms, but international coverage is limited and multinational companies would need a separate plan for each country in which they operate, which requires coordination and management. They can also be expensive for larger organizations and customer support is limited.

The alternative is Direct Routing, which requires a third-party telephony provider to connect your incoming and outgoing external calls to Microsoft Teams via the provider’s cloud infrastructure. This offers a lot more flexibility, international coverage and lower rates than Microsoft’s Calling Plans.

Advantages of Cloud Telephony

We’ve touched on some of the advantages of cloud telephony briefly in the section above, but let’s look at them in more detail to get a better understanding of why so many businesses are adopting cloud telephony.

  1. Flexibility and mobility benefits
  2. The idea of uncoupling phones from a physical location has been around for long enough that many employees will have grown up with cell phones and everyone will be used to home phones that can be removed from the cradle and used anywhere. At work, however, it’s still standard for every employee to have a phone number linked to a specific handset on a particular desk. Employees no longer work like this, though. Hot-desking is the norm in many offices and employees increasingly work from home or another remote location. Phone numbers can be diverted to other locations but that is an extra task to manage. The Covid-19 pandemic closed many workplaces and highlighted the need for company phone systems to connect employees seamlessly wherever they are.

    Cloud telephony solves this problem because it isn’t tied to a physical phone extension in the office. A cloud system allows one number to reach an employee’s desk, cell phone or even their home phone. If they are on the move they can still use their cell phone to make free internal office calls from their work number. Even overseas, employees can use their cloud phone service as if they were in the office. This is good not only for controlling costs but also for providing a good experience for customers and third parties.

  3. Advanced features
  4. Adding new features to an on-premises telephony service can be a cumbersome process, and sometimes isn’t possible at all. Cloud telephony, in contrast, offers all manner of features that can be added and removed at will. Using services remotely is one of the most useful features, as described above, but there are plenty of others.

    Call management services give you the tools to monitor and track your calls so that you have an overview of your communications. Most providers let you drill down into this with advanced analytics. Call reporting, for example, tells you how often you are in touch with clients, how long you spend on calls, and so on. Call recording has obvious uses for quality control purposes in call centers but it can also be handy for recording meetings, so that everyone can refer back to important discussions later. Other features, such as multiple voicemail inboxes, make it easy for the business and employees to manage their calls.

    Some services include the ability to automate bulk SMS messages, schedule calls and handle post-call surveys. There is a huge range of options depending on your business needs, and many of these features were previously only financially viable for large corporations. Cloud telephony brings them to even the smallest startup.

  5. Cloud telephony and the potential for unified communications
  6. Office communications are becoming more integrated, which helps to improve efficiency. For example, if your employees can share and collaborate on a document from within the same platform then that saves them having to move and copy files, or getting confused between multiple versions. Integrating cloud telephony with existing communications tools can bring similar benefits.

    For example, being able to share contacts and an inbox can help a sales team to better coordinate on how they deal with prospects and existing clients. The ability for one platform, such as Microsoft Teams, to handle calling, messaging, video conferencing and desktop sharing, offers a simpler experience for employees.

  7. Scalability and resilience
  8. All businesses go through changes in size. Sometimes they have to recruit extensively to cope with rapid growth and at other times they need to lay people off. More often they simply have to manage one employee leaving and onboard a new joiner. Providing the equipment that new employees require takes time and resources, and having excess capacity can be costly too. With physical telecoms, as needs change, somebody has to find the time to disconnect or add a phone line. Cloud telephony makes this process far simpler. Businesses can scale their telephony provision up or down at the touch of a button.

    Cloud telephony services can increase resilience too. As many businesses know to their cost, an unexpected power cut or a maintenance worker digging in the wrong place outside can halt your telephony system at a stroke. Cloud systems very often use mobile communications as a backup, so that if the network detects that phones in the office are unreachable, calls will automatically be re-routed. This can often happen before the users are even aware that their phones are down.

    A similar thing applies when there are too many calls. If your business is swamped with calls, during an annual sales event, for example, then cloud telephony can automatically apply the rules you have set. That might mean diverting calls to another team or routing them to a third-party answering service.

  9. Cost and management benefits
  10. Cost is a major motivator for most cloud migrations, regardless of the service being migrated. Most businesses will find that they save money by moving to cloud telephony rather than maintaining their own phone system. Moving to the cloud means no expensive on-premises hardware to purchase. The provider takes care of the infrastructure and, because it’s their business, they will typically upgrade to newer, faster and more efficient equipment on a regular basis.

    Not having that hardware on-premises also means that you don’t have to maintain it. The cloud provider is responsible for maintaining and repairing equipment and they can frequently offer greater uptime than the customer could provide for themselves. Typically, they also bring greater expertise to the task, since they can afford to recruit specialists in every aspect of the service and keep them trained to a high level. Businesses that provide their own in-house services often have to rely on generalist IT staff, who have to know a little of everything.

    Switching to a cloud service allows IT staff to focus on more important tasks and may reduce staffing costs, for example by reducing the need to have someone on-call in case the telephony service breaks. A cloud service is typically simpler and easier to administrate, too. Instead of having to understand a range of physical equipment – and be on-site to make any necessary changes to it – a cloud service can be managed from an online interface that is easy to learn and accessible anywhere. That means less training for support staff and the ability to quickly find problems and implement required changes.

    Other cost savings come from the economies of scale that come from consolidating all your telecoms spend with one managed service provider, rather than having a different carrier in each region. Companies can also save because on-net calls between offices in different regions are free.

    Finally, it is important to consider security. Cloud telephony, like all cloud technologies, can be a target for criminals and hackers so it has to be kept secure. However, choosing the right provider – as we will see below – means that you can be sure that security and maintenance are handled by trained specialists. Once again, a company trying to provide a similar service in-house would probably have to rely on a generalist security person, rather than someone who specialises in securing cloud telephony.

The Limitations of Cloud Telephony

Although it seems like everyone is moving everything to the cloud, there are reasons why some businesses might prefer to manage services themselves. Cloud telephony is a great solution for pretty much any business but there are likely to be some with particular needs or specific obstacles.

Internet dependency

For example, cloud telephony increases your internet dependency. The service doesn’t require enormous capacity. Each phone line requires around 100 kbps of bandwidth, which a typical household connection would support quite easily. But that bandwidth can get eaten up by demanding processes, such as video streaming. Cloud telephony also requires a stable connection. Frequent outages or bandwidth contractions will lead to a frustrating experience for users. If you are somewhere with unreliable internet access, or where bandwidth is an issue, then cloud telephony is unlikely to be a good solution for you.

Software integration

Second, just like any other application, cloud telephony systems do not always connect seamlessly to other services. Microsoft Phone System requires users to have Teams, for example, so it’s of no use to companies that don’t. This isn’t a reason not to use cloud telephony, but it serves as another reminder to do your due diligence before choosing a provider. You will get the most benefit from a platform that integrates with your other key applications. It is also important to consider any planned changes that are coming. If your cloud telephony service needs to integrate with your CRM system, then it is important to know whether the CRM system is about to be replaced.

Hardware integration

Third, although a cloud telephony system means you don’t need to manage your own PBX hardware, you might still need to buy some equipment. For example, your handsets might need to be replaced to work with a cloud telephony system, or you might want to provide employees with headsets that link to their PC.

Migration complexity

Finally, migration to the cloud can be complex and this can be off-putting for some businesses. The larger the organization, the more difficult migration can be. There could be users at multiple sites, with different requirements and constraints. For example, a multinational corporation might have users in some territories who are subject to regulation about call recording. Meanwhile, users at head office might require a whole range of services – and training in how to use them – while warehouse staff need just the basics and will not want to be confused by unnecessary features.

However, this is an argument for choosing the right managed service provider and planning carefully. Any successful migration begins with a detailed planning process, during which all of the various user needs are mapped out and possible constraints and snags identified. The right partner will have seen all these scenarios – and many others – before, and they will be able to offer advice and examples of good practice.

How to Choose a Cloud Telephony Provider

As mentioned above, you can choose between Calling Plans and Direct Routing. You can manage Direct Routing yourself, but it is more common to work with a managed service provider to deliver it. How do you choose the right provider? This is an important question because you are choosing a partner that offers the right type of service for your needs.

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Service quality and reliability

Most likely, you will start by selecting the platform you want to use and then finding providers that can deliver it. Since call quality is an essential component of telephony, look for a provider that can offer a premium voice network. LoopUp’s network, for example, is built on 13 carefully-selected tier 1 carriers and all routings offer PESQ (Perceptual Evaluation of Speech Quality) scoring to indicate quality. The network has real-time carrier redundancy, too, with 99.995 percent availability. 

Diagram showing how LoopUp uses Direct Routing for cloud communications
LoopUp cloud communications diagram - microsoft teams direct routing

Industry expertise

Of course, you will want to check testimonials and certifications that demonstrate that the provider can deliver the service they are offering. Experience counts, so a company that has been delivering to its customers for a long time is an encouraging sign. Industry accreditations and standards, such as ISO 27001, are also worth looking for. Providers that offer Microsoft Phone System can become certified as Microsoft Gold Partners and Voice Partners too, both of which indicate a company that has a deep understanding of, and experience with, the product.

Level of service

Next, you need to decide what level of service you require. Like any cloud service, cloud telephony offers different levels of uptime. If your provider offers 99.9 percent uptime, for example, then that means around nine hours of downtime over a year. As you might expect, the more nines you ask for in uptime, the more costly the service provision.

As we’ve discussed, migration can be complex, so be sure that you establish how the process will work. Will the managed service provider you choose work with you during the migration? What kind of support options do they provide for any problems that arise during the migration and immediately afterwards? Not all providers fully manage the migration process. LoopUp offers a fully managed service including solution design, project planning, migration and onboarding. Microsoft certified specialists work in partnership with customers to design and plan the migration and support user training and adoption.

Customer support

Furthermore, support is an important requirement to keep in mind once the service is running, too. Does the provider offer 24/7 support? Do they guarantee a particular response time? If you are an international company then you will need to consider whether you need a company with global operations that can provide local support. An international office might require support at a time that is out-of-hours for your head office but they won’t want to wait for out-of-hours support.

Hopefully, this article will have made clear the benefits of cloud telephony. The challenges for companies that want to make the move are defining their needs and choosing the best solution – and managed services provider – to meet them. Taking the time to complete those steps will pay off in the long term, as you will have a telephony system that is cheaper, easier to manage, packed with advanced features and capable of being altered as your needs and business change.

Want to know more about how cloud telephony can benefit your company? Contact LoopUp today to discuss how we can support your cloud communication journey.

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