Phone Systems Buyer's Guide

How to select the right size phone system, what features to look for, and how much you should expect to pay.

Phone systems introduction
A phone system is one of the most important purchases your business can make. The telephone is often the easiest way to reach your customers, clients, and partners. It should also be the easiest way for them to reach you. You do not want your important business callers to be routed incorrectly, disconnected, or faced with a bewildering array of automated options.

There are many factors to consider when buying a telephone system. For example, you need to get enough capacity for your current needs while planning for growth. You will want to ensure compatibility with other equipment you already own or may need such as voicemail, messaging on-hold, headsets, or conferencing equipment. And you will need to choose a phone system that supports all the features your business requires.

Managing all of those factors while keeping costs down can be a huge challenge, but BuyerZone.com can help. This Buyer's Guide will help you understand the types of decisions you need to make, how to choose a phone system, and how to find a phone system dealer.

Types of business phone systems
There are three major types of business phone systems on the market today: key systems, Private Branch Exchange (PBX) systems, and KSU-less phones. The type of system you choose will depend on how many stations (extensions) you need and what features you require.

PBX and key systems
If your company has more than 40 employees, or if you demand advanced functionality from your phones, PBX systems are often the best solution. You may know PBX systems as the massive telecom cabinets used by huge companies. While that still can be the case for large installations, the technology has progressed to the point where a powerful PBX for a small company can sit unobtrusively on a desk. Most come standard with all the features you might want. In addition, they are totally programmable, so they can support the most complex implementations. You will likely pay a premium for this flexibility, but in many cases the price difference between PBX systems and less adaptable solutions will be smaller than you might expect.

In the 5 to 40 employee range, key systems are more typical. This type of phone system uses a central control device called the key system unit (KSU) to provide features that are not available with ordinary phones. For example, a central unit typically allows users to make calls to another in-office extension, and prevents other users from accidentally picking up a line that is being used. Modern key systems also come standard with most features a business would expect - but in some cases they are less customizable.

While there are technical differences between key and PBX systems, the distinctions to a user have become relatively blurred. Many key systems include features that were once available only on PBXs, and some systems operate internally as either a key or a PBX depending on the software that is installed. The term "hybrid" is often used to describe systems that resemble both key and PBX systems.

Both key and PBX telephone systems require professional installation and maintenance. All outside telephone lines must connect to the KSU or PBX cabinet, as well as all inside extensions. Unfortunately, configuring and wiring these phone systems can be nearly as costly as the phones themselves. You will almost always be able to use existing phone wiring, but unless the phones you have are relatively new, they may not be compatible with the central unit and you will need to purchase new telephone handsets.

KSU-less systems
If your company has fewer than 10 employees, you may be able to meet your telephone needs with a KSU-less system. For a much lower initial investment, KSU-less phones are designed to provide many of the features of a small business phone system in a decentralized manner. The phones themselves contain the technology necessary to allow them to communicate with each other without requiring a central cabinet.

KSU-less systems are not permanently wired into your office. These phones can easily be unplugged and moved to a new location or sold. This allows you to treat a KSU-less system much like any other business machine rather than as a permanent investment in your premises.

Make sure any KSU-less system you are considering is compatible with the type of telephone wiring used in your office, as well as accessories such as answering machines and modems. Because they are so inexpensive, KSU-less systems are not usually sold or supported by telecom vendors - you will need to do the shopping, installation, programming, and maintenance yourself. And they are also more susceptible to "crosstalk," a problem in which separate conversations bleed into each other. With hybrid key systems dropping so far in price, KSU-less systems present more risk than they are worth for most businesses.

Sizing a phone system
When buying a phone system, a primary concern is to make sure that the system is the right size for your firm. Knowing your requirements in advance will help you negotiate with vendors. There are two main factors that will determine the size of the system you need:

• Lines. Also called trunks, lines indicate the total number of outside phone lines used by the company.
• Extensions. Extensions refer to every device within the company that needs to connect to the phone system. Most of the extensions will be for telephones. However, fax machines, credit card terminals, modems, and any other equipment that requires a phone connection must also be tallied.

In key systems, system size is usually indicated as a combination of lines and extensions. For example, a 12 x 36 system accommodates up to 12 lines and 36 extensions. In contrast, most PBXs define size in terms of "ports," which indicate the maximum number of connections that can be made to the system. This includes outside lines and inside extensions, as well as phone system accessories such as voicemail or automated attendants.

Even if a telephone system can handle your current phone traffic, you should be sure that it can also handle your future needs. The ideal system should be able to handle expansion in a very cost-effective manner. PBX systems allow you to increase capacity by adding new cards that increase the total number of ports available; some key systems are expandable by simply adding another cabinet identical to the first. For planning purposes, inquire about how much it will cost to add more extensions, making sure to specify different amounts, e.g. 10 vs. 20 vs. 50 more extensions. Learning the exact method of expansion is not important - what is important is that expansion is easy and affordable.

Basic phone system features
Telephone systems can be equipped with literally hundreds of features for switching calls and directing traffic. Phone system dealers estimate, however, that most companies never use 90 percent of their telephone features. Instead of comparing features on a one-to-one basis, you should examine how your phone system is used. Limit your feature search and evaluation to only those options that will improve the workflow in the office.

Some of the most popular features that are standard in many systems include:

• An auto-attendant is the recorded message that answers your phones and instructs callers how to reach the person or department they are looking for. If you have a high volume of calls, this may be important - or you may value having a real person answer every call.
• Conferencing features vary widely. Consider how often your staff needs to make conference calls, and how many different people need to call in. If the conferencing features you need aren't readily available, there are other options for conducting teleconferences (http://www.buyerzone.com/telecom_services/telecon_services/buyers_guide1.html ) that you can purchase separately.
• Music-on-hold is fairly self-explanatory - in most systems you simply plug in a source of music. Find out more in our Message On Hold Buyer's Guide. (http://www.buyerzone.com/telecom_services/on_hold/buyers_guide1.html )
• You can help callers find the people they need with dial by name, dial by extension, or dial from directory services.
• Phone sets themselves have more standard features, as well. Display phones have a small screen that shows information such as the name and extension of an internal caller, the duration of call, and in some cases, caller ID. Speaker phones are familiar fixtures in many conference rooms, but are also now standard on most new hand sets. Speaker phones can be half-duplex, which means that only one person on the call can be heard at a time, or full-duplex, which lets both parties talk simultaneously, like a regular phone. Some phones also have a 'listen only' mode for speaker phone, which is useful for monitoring a conference call or while on hold.

With more feature-rich phone systems, voicemail is sometimes included as part of the system. However it is a fairly expensive option if it is not included. If you already have a voicemail system, talk to your vendor about its compatibility with the system you are considering. Or if you're shopping for voicemail, take a look at our Voicemail Buyer's Guide. (http://www.buyerzone.com/telecom_equipment/voice_mail/buyers_guide1.html)

Although having the right features is important, even more critical is making sure they are easy to access. Because most employees devote very little time to learning how to use a phone system, you should make sure that using the most common functions is extremely simple and intuitive.

CTI and advanced phone system features
For companies who make more extensive use of the phone, modern systems offer some significant benefits.

Automatic call forwarding, also known as "follow me anywhere," helps both your employees and your callers. By routing incoming calls to wherever your employees are, whether on the road, working at home, or at a remote location, automatic forwarding increases the likelihood that callers reach the person they need. Callers do not need to make a second or third call. In addition, your employees avoid having to return to an overflowing voicemail box.

Computer telephony integration (CTI) covers a wide range of applications that connect your computers to your phone system. One example is one-click dialing for an outbound call center. Employees can use their contact management applications to place calls without dialing the number manually, reducing errors and time per call. Other CTI applications handle incoming calls: in conjunction with caller ID, calls can be routed to the correct representative before they are even answered. And callers' account information can be displayed automatically when an employee picks up.

CTI applications themselves are usually sold separately from phone systems. If you are interested, you should investigate what CTI applications are marketed for the software you use, and then make sure the phone system you choose is also compatible. Most high-end phone systems CTI-ready.

For businesses with the highest call volumes, automatic call distribution (ACD) can really increase productivity. ACD manages incoming calls to maximize efficiency and reduce call answer times. It also tracks per-call and per-employee statistics, allowing you to improve your call center's responsiveness. While ACD is extremely valuable for large call centers, most small businesses probably will not see much advantage to it.

Telephone system dealers
Virtually all phone systems are bought through dealers who handle not only for the sale but also for the installation and programming. As a result, finding a good dealer can be the most important part of the purchase, since any phone system you choose needs to be properly installed for optimal performance.

The most important consideration in choosing a dealer is the number of installations the dealer has completed with your system. A dealer who has installed many of the same systems will be much more familiar with the problems that can occur. Ideally, the brand you are considering should be the dealer's best-seller. Knowing that the dealer is committed to the line, you can be assured of a long-term source for service.

Often, a demonstration of different phone systems can clarify what solution is best for you. Some dealers will ask you to come to their office, and others will visit your site. Either is fine, but visiting your site also allows the dealer to get a better sense of your existing infrastructure and communication needs.

Inquire about the dealer's specific installation experience. Ask about the size of the companies involved and what options or features were added. Also obtain a list of references, including several completed in the past year, so you can ask about their experiences in detail. When it comes time to your installation, make sure the dealer sends experienced technicians to conduct the implementation.

Ongoing support of your phone system can range from being important to absolutely critical, depending on your business. Vendors will provide a combination of warranties: the manufacturer's guarantees of their hardware(typically three to five years) and dealer-provided service level agreements (SLAs.) An SLA specifies how quickly the dealer will respond to a problem with your phone system - 4 hours is fairly typical for major outages during business hours. If your business needs 24 x 7 coverage or shorter response times, expect to pay extra for these premium service levels.

Some other questions you may want to ask:

• Who will install the system? The dealer or a subcontractor?
• Who will provide training? What will training include?
• What are the costs associated with service and maintenance?
• Does the dealer provide backup during a power failure?
• Does the dealer have remote maintenance capabilities?
• What changes can we make ourselves to avoid service calls?

Price
The watchword when buying phone systems is total cost of ownership (TCO). Buying purely on price can easily get you into trouble: more reliable, expandable systems do tend to cost more per user up front - but the savings you will see in the long run make it worthwhile. In addition to being able to add more users as your company grows, you should find out how easily your phone system can be upgraded as new features and technologies are released.

Estimating costs for a complete phone system are very difficult: costs can quickly climb into the tens of thousands of dollars. Key systems and hybrids can range from $350 to $1000 per user, depending on the features you select. For larger PBX systems, prices start at around $800 per user, but usually wind up more in the $1000 per user range. There are significant economies of scale: very small offices will find it hard to stay under $1000 per user for any system, and companies with 100 or more employees save considerably.

KSU-less systems generally cost between $130 and $225 per phone. While the savings may seem attractive, keep in mind that this is really only an option for offices of 10 or fewer people. If a KSU-less system fails to meet your needs and you have to upgrade your system again, the savings you thought you achieved had will vanish. And you'll also have to dedicate some of your staff time to set up and maintain the system.

Phone system prices vary based on five factors:

The base system
The central base system, or cabinet, controls and oversees the entire phone system. This price differs between systems and rises as cards and accessories are added. A small central unit can cost as little as $1,000, with the price increasing considerably to the tens of thousands of dollars for larger systems. The base system will be the main limiting factor for your phone system both in terms of features and expandability.

The actual phones
Most systems can be equipped with several different types of phones. The least expensive sets may cost less than $100, but can make accessing features very difficult or provide less than optimal sound quality. Most mid-level handsets sell for $200 to $300 per unit.

On the other end, some "executive phones" sell for many times the standard price. These phones can make using the system slightly easier, but are often just flashier - the main result of larger screens and more buttons is often increased profit for the dealer. Receptionist stations are also more expensive, but they bring important features for the person at the center of your telephone system. Most businesses will buy a mix of models.

Phone system add-ons
You will also need to purchase phone system accessories such as voicemail, music on hold, and CTI applications if your phone system does not come with them built in. These features can easily tack on thousands of dollars to your purchase.

Many manufacturers sell equipment bundles that can save you quite a bit. These typically include the central control unit, several phones, and voicemail. They are sold in varying sizes - your vendor can help you choose a bundle and then add on any other equipment you need.

Wiring and installation
Installing wires in an unfinished building can be fairly inexpensive. However, installing wiring through already finished walls can add quite a bit to your total cost. If you 'are in a location with existing wiring, make sure you have the dealer inspect it so you can re-use it if possible.

Everything else
This includes training, programming, service, and future modifications. Pricing is usually based on the time these tasks will require and can often be the most flexible portion of a bid. Sometimes, it is best to compare the hours that will be spent completing training/programming/service tasks with the price tag for the service.

Buying tips
Demo the system. Test the system before you buy. Pictures and feature charts are insufficient for a purchase that will be used extensively by every person in your office. Some areas to assess: Check how phones feel in your hands, see how easy it is to access extensions and voicemail, and evaluate phone and speakerphone quality.

Check voicemail compatibility. Make sure any phone system you are considering is capable of working with a wide range of third-party voicemail systems. By keeping your options open, you will minimize the chance of getting stuck with an inferior or overpriced product.

Get extra wiring installed. Avoid rewiring down the road and request that plenty of wiring be installed when the system is first purchased. A good benchmark is to ask for at least double the wiring you currently need. While this will add to the cost of installation, it will really only be a fraction of the cost you will face if wires need to be added later.

When to shop and buy. Shop for a dealer's advice at the beginning of the quarter when sales targets have just been set, and make your purchase at the end of the quarter when you can get a much lower price.

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