Hosted Telephony vs Premise Based PBX

Hosted Advantages

No need for an initial capital expenditure.
Easy to add or remove users. Simply changes the monthly cost.
Always on the latest software version
Phones at remote sites are extensions of the headquarters so you can act as one site
Technically minded customers can use web based programming tool to make changes.
Held in a secure data centre with diverse supplies of connectivity and electricity
Monthly price includes maintenance

Hosted Disadvantages

You pay for as long as you want to use the hosted system.
Call recording creates off site storage costs
If your internet goes down, you cannot make any calls. (Internal or external)
Features available are not as sophisticated as they are on a premise based PBX
One Size Fits All solution with not much customisation available
When it stops working it affects all handsets

Premise Based PBX Advantages

The telephone system is an asset.
The phones can be re-used if the main box needs replacing.
After the initial cost you will only pay for maintenance as long as you own the system
More control over security
PBX manufacturers are motivated to develop new features to beat competition.
High level of customisation
Good relationship with the installer/maintainer for changes/additions
Multiple types of lines can be connected for resilience (SIP, Analogue, ISDN)
If your data connection fails, your PBX is unaffected for internal calls
Database integration is excellent
Mobile phone integration is strong
Most failures are not total failures
Flexibility to switch maintenance provider

Premise Based PBX Disadvantages

Higher initial capital expenditure (so many lease)
Some software updates require a paid upgrade
Maintenance is an extra cost