If small businesses are anything, they’re cost conscious. And many are looking to Voice over Internet Protocol (VoIP) to help lower the monthly phone bill, often a big expense.

Switching to VoIP can be especially worthwhile if your company spends a lot on long-distance calls to far-flung employees, partners, and contacts. If you’re already connected to some of these people via a local or wide area network (LAN/WAN), you might as well be making phone calls to them over the pipe that you’re already paying for.

Sending your voice calls through an IP pipe along with your data communications has another set of beneficial side effects. For one thing, your company can use “unified messaging,” which lets you manage your voice mail and e-mail in the same place. You can also employ so-called “presence” features to see the status–on cell, busy, and so on–of coworkers and contacts.

The first step is buying a voice and data connection (or trunk) that’s big enough to handle both your voice telephony and data traffic. This pipe (usually a T1 line) will be dynamic, meaning that it automatically allocates more or less bandwidth to telephony or to Internet access as you need it.

Once connected with a voice and data pipe, you’ll decide what sort of VoIP PBX (private branch exchange) is right for your business, and where it should reside. The VoIP PBX–the modern-day progeny of the old analog PBX–is the software brain that manages your VoIP calling traffic, based on your commands. You have three major options here, according to John Macario, president of Boston-based business VoIP consultancy Savatar.

Some businesses–especially those in need of advanced calling features–prefer to own their VoIP PBX and house it on-site. Products such as Adtran’s NetVanta, Avaya’s Quick Edition, Cisco’s UC500, and TalkSwitch’s 24-CA are popular low-priced systems that small organizations can set up and operate in-house without much trouble. An on-site PBX gives you more administrative control over the system–that is, if you have the time and the know-how (or an IT person) to make changes to it. The downside to owning your PBX is that when your business outgrows it, you will have to buy more hardware, Macario says.

Outsourced Options

Alternatively, a hosted service lets you junk the old analog PBX hiding in your closet and instead pay a service provider–such as 8X8, Aptela, M5, or Speakeasy–to manage your company’s calls on its IP PBX servers. Since those servers are commercial grade, they give you a lot of VoIP PBX features, including old standards like “hold” and “transfer,” as well as new IP-driven features like “find me/follow me.” When your business grows, you just buy some additional seat licenses from your VoIP provider, rather than investing in new hardware.

“Hosted VoIP service has come of age over the past few years,” says Yankee Group senior analyst Patrick Monaghan. He adds that the technology has improved to the point where value-added resellers (VARs) can sell the service and guarantee a reasonable level of quality and reliability.

VARs usually sell a bundle that includes the hosted IP PBX service, the data pipe, a long-distance plan (for calling non-VoIP phones), and any other hardware adapters or routers needed.