What is a Virtual Phone System?

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What is a virtual PBX? First of all, we’re not really fond of the term virtual PBX, or Private Branch Exchange as it’s really known, even though it very accurately describes what a Virtual Phone System is.  Even though I just spelled out what PBX stands for, if you are a typical small business owner much like we are, you still have no idea what it really is, and there in lies the problem with the use of the term “Virtual PBX”.

So a term that we prefer to use is, “virtual phone system”. It just makes much more sense, and we’ll break down why we think so:

  • virtual – an adjective that applies to things that really exist, however may not exist explicitly at a given location or site, but in reality are created or carried on by means of computers. Get all that? Ok, in other words, something that exists, but maybe isn’t really located right in the same location where you are sitting.
  • phone system – basically a system that has all the functions and features requested/required by most small businesses today.

So in reality a virtual phone system is simply a business phone system that doesn’t physically exist in a closet somewhere in your home office, office building, or office suite, but rather it’s “hosted” at the service provider’s physical location. This means that all the hardware and software (except a web interface you use to mange your account) sits at the physical location(s) of whatever service provider you select. This benefit should not be underestimated, as the cost of that hardware and software can be extremely expensive, and in most cases cost prohibitive for very small and small businesses. Those systems also normally require someone on staff who knows what they are doing, to make changes whenever you add or change something in the system, or fix things when you have the occasional bump in the night. With virtual phone systems, you neither have the hardware and software investment or the staffing overhead.

Below is a diagram courtesy of VirtualPBX.com, that does a great job of allowing you to visualize what a virtual phone system actually accomplishes in the real world.

Virtual Phone System Diagram

Basically a caller places a call to your toll free number or local business phone number. When that happens the call is actually sent to, and received by, whatever service provider you select. At that point an auto-attendant answers with a greeting you’ve selected or recorded, and then routes the call based on how you have configured the system. Most systems now have integrated fax abilities as well, which means that the system automatically detects if the call coming in is from a human or a fax and routes the call correctly.

In a normal land based phone system, each extension would be assigned to a desk phone somewhere in the office where the phone system is installed. However with these virtual phone systems, you can assign that extension to any phone number anywhere in the world. As you can see from the diagram, these phone numbers can be associated to individual employees, branch offices, etc. Actually, you can even assign an extension to a set of numbers that it will cascade through until answered, and then if unanswered, ultimately to a voice mail box. Many systems also allow voice mails to be converted to emails so that you can easily manage all of your communications from one location.

This allows small businesses to have employees or offices located all over the country or even the world, that are all easily reachable by your customers and clients through a single phone system that’s easy to setup and now are very affordable. With these virtual phone systems, you can even easily transfer calls between extensions, even when those extensions are half way across the world from each other. Try that with a traditional PBX (phone) system.

The ability to enable distributed employees, distributed support centers, or distributed offices that are still seamlessly connected via phone, is one of the top differentiating factors between virtual phone systems and traditional phone systems.

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Christina Sterling

Editor at VirtualPhoneSystemReviews
Christina is the chief editor at VirtualPhoneSystemReviews.com. In her spare time she is also a web developer and a small business owner. She loves camping, traveling, and all things VoIP related.

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