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Private Branch Exchange (PBX) - also Private Automatic Branch Exchange.
Customer premise switch is a smaller kind of the telephone company's central office switch that provides control and connection between station (telephones) sets within an organization, and can provide many features and functions such as hold, transfer, conference, call accounting, hunt groups, least cost routing of calls, toll restriction of calls by user, voicemail, etc. Usually used for companies with greater than 50-100 users.
PBX is simply the acronym most widely used in business today for the office telephone system. Usually the only thing the end user ever sees is the telephone set on his or her desk. Usually a PBX and associated wiring, phones and options is one of the first major purchases a business makes, and today these systems are evolving everyday to use new communication channels like VoIP and wireless options.
In a typical office environment, the PBX system connects multiple incoming phone lines to multiple telephone extensions, and possible other outside offices. Basic PBX switches do little more than cross-connect these lines.
Usually, the PBX device is a piece of hardware that hangs on a wall or mounts in a rack in a backroom or closet. Some type of patch panel is included that allows connection to both internal and external telephone wires. Usually called a Demarc point, in telephony, the demarcation point is the point at which the telephone company network ends and connects with the wiring at the customer premises. A demarc is also referred to as the demarcation point, DMARC, MPOE, or minimum point of entry.
Additional PBX functionality is provided through software. In this type of system, an administrator through personal computer controls system operation, can add users, user permissions or mailboxes and may add adapter cards or add-on modules to provide connectivity, expandability or new features. Contact OPC.
Callers that want to reach someone in the company place their calls from any type of telephone. The call is routed through the Public Switched Telephone Network (PSTN) to company-specific lines either digital or analog connectivity leased on a monthly basis from a telephone company. The more connections the greater the number of lines or bandwidth required to complete inbound and outbound calls.
The PBX system answers the call with a pre-recorded IVR greeting, plays a menu of connection options to the caller like address book, and then routes the call when a selection is made to the appropriate employee extension or to a holding queue (ACD queue or hunt group) for a department, such as sales team or customer support.
In installations where the company wants calls answered by a person instead of a machine, the calls are first routed to a live operator or receptionist who then transfers the call to the proper department or extension manually. If the operator is unavailable on another call or off shift the system may take over the routing instead of a line ringing to nowhere.
Calls transferred to an extension will ring at a particular phone, usually a desk phone somewhere in the office. If the extension owner picks up the phone the call is connected. If not, the call is usually transferred to the intended user’s voice mail or given options for further call handling, processing or transfer options.
When callers know what department they want but don't have the name or extension number for a particular individual, they usually have the option to be sent to a holding queue to wait for the next available agent (employee) to take the live call, or given a company phonebook of extensions to select from a voice recording.
Low-end systems do not offer any type of holding queue or company phonebook, and callers must know who they want to speak with before they call. Other low-end systems send callers to a "hunt group" - a list of phone numbers to try and find someone available. Hunt groups usually have the drawback that every extension number must be tried, in the same order each time, in an attempt to find an employee that can take the call. In such cases, the first extension on the hunt list usually gets swamped with calls while other extensions are used only when there is a heavy load. Other disadvantages of hunt groups is the time it takes to try each extension, finding one that isn't busy, and then have someone ready to pick up the phone when it rings.
In circular hunting, the calls are distributed "round-robin". If a call is delivered to line 1, the next call goes to 2, the next to 3. When the end of the hunt group is reached, the hunting starts over at the first line. Lines are only skipped if they are still busy on a previous call. In linear hunting, calls are always delivered to the lowest-numbered available line. This is also referred to as busy/no-answer call forwarding. Calls are always delivered to the first line, unless it is busy - then the second, third, and remaining lines are considered in succession. In most-idle hunting, calls are always delivered to whichever line has been idle the longest. This considers the length of time that the call taker has been busy versus available. This is typically used in call centers where the calls are being answered by people, to distribute the load evenly.
More Advanced PBX systems use a variety of method to guarantee that calls to a holding queue are answered more effectively. The most prevalent approach is through the use of Automatic Call Distribution (ACD) queues. This stands for "Automated Call Distributor," and is oftentimes referred to as "the queue." When a customer calls the Help Desk, the customer is accepted in the ACD and then the ACD forwards the call to the first available agent in a first-come, first-serve order.
A system with ACD queuing keeps track of which employees are already taking calls and how long it has been since each person finished prior calls. Incoming calls are put into the queue waiting for the next available employee and then routed automatically to the employee that has been off the phone the longest.
ACD queuing evenly distributes calls to employees while insuring a minimum wait time for each caller on hold. The ACD queue feature can add considerably to the cost of the PBX system but is often a major factor in customer satisfaction or caller fulfillment. The advantages of true, fast ACD queuing cannot be understated in high call volume environments.
As system price rises, functions are added. Some additional features can be provided through software and firmware upgrades inside the basic PBX hardware. For other major feature upgrades, entire systems or add-on hardware telephony modules are required.
Of on site PBX Equipment
PBX hardware (PBX phones) is a mature technology that offers many benefits for the right type of application. As a minimum, multiple extensions in a single office can share the cost of incoming phone lines. It is not necessary to pay for a separate phone line for each extension.
Capital costs for the equipment can be amortized and depreciated over time. Even though system management and maintenance continues to add cost after installation, today's systems are more robust and easier to manage than they have been in the past. Incoming calls are typically free or very low cost. In more expensive systems, some level of system expansion is allowed for scalability. Businesses that can reliably predict their needs can usually find a cost-effective system. As features and functionality continue to be added, a PBX device can add productivity to an office environment. Almost any feature that can be imagined for telecommunications can usually be found somewhere among the many vendors and offerings in this space - as long as customers are willing to pay the associated price.
Contact OPC.
The biggest problems with standard PBX systems revolve around costs, flexibility and adaptability.
Costs can be high in two areas. First, the up-front cost for getting a system up and running can be very high. Industry averages show that the typical cost for a PBX system start from $395 to $2,500 per seat (user), including the cost of the equipment, administration software, installation, and wiring. At the lower end of the spectrum, the equipment may offer limited features and limited expansion.
Higher priced systems include advanced functionality, such as skills-based call routing, Automatic Call Distribution (ACD), and other features that may make you system easier to setup and use. Many smaller businesses find at first that they can’t afford the cost of a PBX system either new or used and so continue to take calls on individual phone lines, without establishing a central business identity. This issue is changing with the advent of newer VoIP systems. These systems cost more initially than old school PBX systems per seat, but the long range savings in communication costs will make up for the initial cost. You also will be able to get parts for newer systems that why we advise against getting older used systems unless there is an extra box of replacement parts included.
The most important cost issue is ongoing maintenance and support contracts. PBX equipment continues to add functionality, there is an increasing need for highly trained support people to maintain the hardware and software, roll out system upgrades, and manage system use.
Ongoing support and maintenance costs are predicted to run at about 2% of the cost of the equipment each month. For example, a $20,000 PBX switch, which would provide service to 10 to 40 employees, depending on system features, typically can add up to $400 per month for PBX administration and System maintenance. Also be sure to find out the learning curve associated with these systems software back-end and user nightmares.
As with many devices based on hardware and software interactions, the other major problem with PBX equipment has to work around some of their limitations.
The biggest problem in this area is growing the system when you grow. PBX hardware is limited in its capability to add internal and external lines and to support larger groups of users. There is usually limiting expansion ability. Manufacturers have a Kmart, Sears and Neiman Marcus mindset. Usually this means you can only expand to a certain size then the entire system gets switched out.
Low-end systems are especially difficult in this regard, often forcing small businesses to overbuy in order to have enough capacity for the business they hope one day to have, or to pay only for current needs, knowing that they may have to throw away their new equipment when the business grows without out any trade in value. A recent survey indicates that successful small businesses will have to buy new PBX equipment every 24 months in order to accommodate new business growth.
Features that can be added are often significantly more expensive as add-ons than when they are included in the original purchase. While almost any PBX feature can be bought, many times important features can not be added to an existing system, forcing businesses to pay for new systems in order to get needed flexibility.
PBX equipment is designed around the idea that users or employees are located inside a centrally located office. Today's mobile environment and telecommuting concepts have created problems with this old business model. Gradually more, business users want to receive calls on cellular phones when they travel transferred to alternate phones when they work in a different office or on home telephones when they telecommute. Routing calls from PBX architecture, inside a pre-wired office is easy, but sending calls out to a different phone or network is much trickier. While forwarding calls back out to the telephone network can be completed, the implementation is often limited compared to call forwarding and follow-me call routing alternatives within the local office environment of the PBX’s domain.
Companies today may want to have a completely distributed workforce in order to save the costs associated with an office. It is difficult and expensive to make standard PBX equipment work for these distributed environments. The "virtual office" concept may work for many companies, ranging from start-up businesses that is not ready or does not need to establish a central place of business to large service organizations that employ telecommuters as a matter of staffing requirements to lower overall costs or meet some Federal mandate.Licensing costs for PBX equipment ranges from a low $395 up to $2,500 per user, depending on the features set and functionality provided in the PBX system. Higher end systems offer more advanced features, such as Automatic Call Distribution (ACD), overflow queues, and skills-based call routing. In addition, these systems are usually more expandable, with space to add expansion modules within certain scalability limits. Up-front costs include costs for the PBX system, installation, setup, telephones, training and internal wiring.
Ongoing costs for these installations include the cost of leased phone lines, system support, maintenance, and per-minute charges for inbound calls. Typically, inbound calls are delivered at little or no cost for "local" numbers, and a charge of 3 to 15 cents per minute for incoming "toll-free" calls.
Toll-free calls are paid for by the business receiving the inbound calls. Costs for incoming business telephone lines vary widely, but can fall between $10 and $20 per month, not including, private phone exchanges, wireless SAT connections, taxes and other government-mandated levy’s and surcharges.
On site PBX equipment allows shared use of phone lines across multiple extensions, cost investigation requires a calculation of the average number of extensions that should be associated per incoming line. Features like line sharing that is added may increase the cost per line.
Average system pricing estimates one incoming line for every four extensions, but high-use environments might need more lines. At the beginning of use, System maintenance and support can be safely estimated as being about 2% per month of the initial system outlay. These costs cover in-house or outsourced personnel to upgrade, administer the PBX and any updates the system.
The following is cost examples for standard on site PBX systems:
Average costs for in house PBX system ownership. See newly announced SpitFire SPBX available now for better pricing than older PBX's!
Notes on the figures:
Example uses one incoming phone line per every four extensions (non VoIP), rounded up to the nearest neighbor. Uses average per-seat cost between $500 and $2,500, or $1,250 per seat for system and installation. Other assumptions see preceding paragraphs.
No toll-free number available for customer use. The above figures make the notion that the businesses want callers to pay for inbound local or long distance calls to connect to them, rather than publishing toll-free numbers.
The typical rate per minute for a toll-free call can run from 3 cents to a high of 15 cents. The number of minutes used on each plan will vary widely between businesses, but is relative to the number of employees receiving calls since more incoming calls usually equates to more employees to answer the telephones, and possibly this translates into more business or sales being realized.
Some companies prefer to remove call cost from consideration for inbound customers, and provide toll-free calls to their business locations. For these companies, additional costs must be calculated.
This table below estimates 250 inbound toll-free minutes per month per employee.
The number is way too low for busy call centers, but about right for an average service or product centered business. Companies with higher toll-free number use will typically get better rates for their minutes used; we'll use 8 cents per minute for a 5-user company and 5 cents per minute for a 40-user call center. With this methodology, we can predict new annual costs for this type of use:
Typical costs when including toll-free service
From these tables, you can see adding toll-free service costs a minimum of $100 per month for the smaller company and a minimum of $500 per month for the larger operation. Whether the value provided for toll free convenience to its customers is worth the extra expense depends on the company and its type of business. Contact OPC.
A hosted PBX system delivers PBX functionality as a service, available over the Public Service Telephone Network (PSTN) and/or the internet. Instead of buying PBX equipment, users contract for PBX services from a hosted PBX service provider, a particular type of Application Service Provider (ASP).
The central functions of a hosted PBX service are similar to those of hardware PBX systems installed at the user's premises. The main difference is that hosted PBX customers don't buy, install, or maintain any PBX equipment. Instead, the PBX equipment is kept by the service provider, who then shares access to the system among many users (customers). As with premise-based PBX systems, key functions that can be provided by a basic hosted PBX include:
Not all functions are available from every hosted PBX services, just as they are not always available from every PBX manufacturers provided by equipment product vendors.
You need to determine what functions best suit company needs and arrange for the feature required as a service. Least effective feature in a hosted system is real-time Automatic Call Distribution (ACD), efficient hunt groups, flexible company directories, call transfers between extensions (or to an operator or an ACD queue), and real-time system monitoring.
There are a host of other functions that are more advanced and needed in specific situations that only a few providers have been able to make available in Hosted PBX’s.
One function of on site PBX equipment that is not part of most hosted PBX services is sharing incoming lines among multiple companies. One drawback is it’s necessary for each employee who answers a phone in a company that uses a hosted PBX service to have his or her own dedicated phone line, no sharing.
This disadvantage is offset by the abilities of hosted PBX systems to handle far more capacity than “customer premise equipment” (CPE) and to scale as company needs change. But it may not make up for additional dedicated lines and if it’s possible to add more lines in the interchange. Customer Premises Equipment is defined as “Any equipment provided by the customer at their premises”.
CPE systems typically have a smaller number of incoming lines than user extensions. When traffic is high, these PBX systems can ring busy.
Hosted PBX service usually has a lot more swappable lines and can handle a much higher number of calls using lines from other companies within its backend.
Hardware PBX buyers often are on a budget and buy small systems that can't be upgraded as the company grows. Hosted PBX services may have no capital outlay or down payment, and extensions can be added or deleted as need change. Hosted PBX customers pay only for what they need. You might get asked to buy additional seats before you need them as a cost savings measure, but there is no Guarantee a hosted service will be in business at that future date. Make sure your funds are held in escrow.
Incoming business calls in a hosted PBX, are answered on the service provider's hosted PBX equipment. Because the cost of this equipment is shared over many company subscribers, hosted systems can have several of the most complete and feature-rich systems available.
Calls are routed over the Public Switched Telephone Network (PSTN) to the hosted PBX system from any phone. The hosted system answers the calls with a recorded greeting (MOA) message on answer, plays a menu of connection (IVR) options to the callers, and then routes the call to appropriate employee extension or to a holding queue using ACD queue or hunt group for a department, such as customer support or sales lines.
As the call is routed from the hosted PBX equipment, an outgoing call is made over the PSTN to the specific phone number of the employee that the caller is trying to reach. This hides the actual phone number and ID from the caller behind the hosted system.
In an on site PBX system, each extension in the system is associated with a specific telephone, usually a desk phone somewhere in the office or actual line number.
Each extension is associated with a particular person in a hosted system. This person can take the call on any phone, anywhere in the world. Employees typically can manage their own extensions, and enter any phone number - or even a list of phone numbers in systems with follow-me calling - where they can be reached.
Employees are allowed to work anywhere - in the main office, a branch office, mobile, or from a home office - and transparently receive business calls as though they were in the main office location.
At this time this ability to allow distributed employees to access the PBX feature set is the single biggest difference between hosted PBX systems and premise-based equipment. In the future video conferencing will become an integral part of this communication landscape.
An incoming call to a company employing a hosted PBX service is made up of two separate calls (branch) over the PSTN. The first (incoming) branch (sometimes called leg) occurs when the call is answered by the hosted PBX equipment. The second (outgoing) branch happens when the call is routed out of the PBX system and picked up by an extension owner or mobile device. Calls to voice mail or kept on hold are made up of only the incoming branch. Per-minute charges for incoming phone calls have to account for both of these call "branches," although some vendors are now offering "single- branch" billing plans for which only the incoming branch is billed.
Callers that know the extension number of the employee they want to reach simply enter that number and the system places a call to the phone number(s) that the employee has currently designated as the place where he wants to receive calls. Usually, the employee can change this designation at any time and work from an alternate location.
When callers know what department they want but don't have the name or extension number for a particular individual, they usually have the option to be sent to a holding queue to wait for the next available agent (employee) to take the call. Many low-end systems do not offer any type of holding queue, and callers must know who they want to speak with before they call. Other low-end systems send callers to a "hunt group" - a list of phone numbers to try and find someone available. Hunt groups usually have the drawback that every phone number must be tried, in the same order each time, in an attempt to find an employee that can take the call. In such cases, the first extension on the hunt list usually gets swamped with calls while other extensions are used only when there is a heavy load. Another disadvantage of hunt groups is the time it takes to try each extension to find one that isn't busy and has someone ready to pick up the phone.
Higher-end hosted PBX systems employ a variety of techniques to assure that calls to a holding queue are answered more efficiently. The most prevalent approach is through the use of Automatic Call Distribution (ACD) queues. A system with ACD queuing keeps track of which employees are already taking calls and how long it has been since each person finished prior calls. Incoming calls are put into the queue waiting for the next available employee and are routed automatically to the employee that has been off the phone the longest. ACD queuing evenly distributes calls to employees while insuring a minimum wait time for each caller on hold. ACD queuing typically adds little or no cost to the deployment of a hosted PBX, as the hosting company either has this technology in its systems or it does not. However, most hosted PBX providers claim they have ACD queuing when all the really have is hunt groups, sometimes modified to randomize calls but not really ACD queuing. Serious businesses usually need the advantages of true ACD queuing, whether in premise-based equipment or in a hosted PBX.
There are a wide variety of other advantages that a hosted system has over premise equipment. The most important of these benefits is the ability to route calls to any phone, anywhere in the world, rather than just to phones wired directly to the PBX inside an office environment. This and other major advantages of a hosted PBX system are discussed in detail elsewhere, and include much lower entry cost, lower support costs, ease of management, greater flexibility, and dramatically improved scalability.
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