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Have you ever said or thought something like "I've already watched an hour of this movie; I might as well finish it, even though I don't really like it" or "If I don't complete this class I paid for, I won't get my money's worth"? Both are examples of a common logical fallacy about sunk costs. In each case, the costs involved - i.e., the time spent watching the movie and the fees paid for the course - are already gone and cannot be recovered, regardless of what you do.
Much of the time, the sunk cost fallacy is harmless. However, it can produce major losses if it ends up influencing corporate decisions, such as whether or not to upgrade an aging private branch exchange (PBX) system. Sticking with a PBX because of the enormous amounts of money and labor already invested in it is a risky escalation of commitment. It's impossible to regain the capital expenditures and maintenance fees associated with the PBX, making an upgrade to a business VoIP platform a sensible decision.
We realize that changing something as central as your phone system can feel intimidating, even if the advantages seem clear from afar. For that reason, we've put together a list of the hidden costs of a legacy PBX that will likely continue to accumulate if an organization renews its commitment to out-of-date infrastructure.
Hosted VoIP and on-premises PBXes account for calls differently. In VoIP, calls are just treated as data packets traversing an IP network, while a traditional PBX tallies them up as minutes. The reason is that time is essentially rented on dedicated circuit-switched PSTN lines (hence the high charges for long distance), while packet-switched infrastructure can more easily accommodate multiple users and distribute the costs.
The difference matters because service providers will charge extra for any minutes beyond a predefined threshold or that qualify as long distance. These costs can pile up as more workers telecommute and travel. Hosted VoIP solutions make life easier with packages allowing unlimited station-to-station calling, which eliminates some calls typically billed as long distance, as well as the option for bundled long-distance service.
Soldiering on with a legacy PBX means implicitly accepting its distinctive technical limitations. For example, the maximum number of users is determined by the system's hardware. Adding new lines is often not covered by the original service contract and requires expensive on-site assistance from the vendor itself.
This setup is a major drag on company growth, one that prevents you from quickly responding to changing business requirements. The good news is hosted VoIP supports on-demand additions of new users through a convenient portal, saving you time and money and enabling scalability to thousands of endpoints.
It's difficult enough maintaining a single-site PBX before you factor in the added complexities of scaling it to secondary sites such as remote and branch offices (RBOs). The same technical limits of the point above also apply here, along with some new ones pertaining to compatibility and ongoing maintenance.
For starters, you may have to pay extra for moves, adds and changes (aka M/A/Cs), as well as for equipment relocations and software upgrades. Additional hardware may be needed to safely interconnect different sites, but it comes with the added burden of ensuring interoperability and acceptable call quality and application performance.
In contrast, business VoIP is much more cohesive and flexible. A typical plan will cover many of the costs associated with ongoing site upgrades and maintenance. Plus, hosted VoIP providers can help future-proof your RBOs by implementing software-defined wide area networks that support superior performance from demanding apps like HD voice and video. Seamless integrations with apps like CRM further extend the advantages of VoIP as the best solution for a growing organization.
Purchasing almost any piece of IT equipment saddles you with a depreciating asset that, at some point, will become obsolete and need to be either replaced or exchanged. Some purchases are more painful in this regard than others. A PBX costs a lot upfront and over the long term, which can limit your flexibility to make other investments (e.g., much-needed IT upgrades) across your organization.
With hosted VoIP, you can sharply reduce what you pay for a phone system. Costs are conveniently rolled into an all-in-one plan instead of segmented out in individual expenses that can complicate your company budgeting. You can also change your plan and update your hardware and software to stay current.
Don't escalate your commitment to your PBX; no matter how much it has cost you already, that doesn't justify keeping it around. Try hosted VoIP from Telesystem to eliminate these hidden costs and set your organization up for sustainable success.