What is a VOIP Phone System?

What is a VoIP Phone System? Voice over internet protocol (VoIP) is software that provides businesses with a phone system over the internet, which can reduce hardware costs and scale call volume. Advanced features include intelligent call routing, video conferencing and voicemail transcription.

Rising graph

The global market for VoIP solutions will grow to $145 billion by 2024.

Source: ClarityTel

Cutting the cord

New businesses that switch to hosted VoIP can cut initial startup costs by up to 90%.

Source: CarolinaDigitalPhone


Businesses that make calls over VoIP using a computer save an average of $1,727 per month.

Source: HarborNetworks

Common Features of VoIP Phone Systems

Here are the common features found in a VoIP phone system:

Automatic call distribution icon

Automatic call distribution

Billing administration helps users create price quotes, send invoices and manage customer balances. Some systems also let customers make mobile payments.

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Computer telephony integration

Computer telephony integration allows users to control phone functions, view call info and route calls through a computer. The feature can also integrate with customer relationship management (CRM) and enterprise resource planning (ERP) software.

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Voicemail transcription

Voicemails are automatically transcribed and emailed, along with the recording, to the appropriate user.

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Mobile access

Businesses can access VoIP software from mobile devices or dedicated apps. Mobile access helps connect users in remote locations and different geographical regions.

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Text messaging

Companies can send customers automated text messages for appointment reminders, checkout confirmation and delivery notifications.

Call management icon

Call management

Call management includes call forwarding, waiting, transferring and recording. Administrators have the ability to monitor, interrupt and assist users during calls.

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Companies can track and analyze VoIP usage, call statistics and other vital metrics through an intuitive, visual dashboard.

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Interactive voice response

Interactive voice response (IVR) lets customers use their keypad or voice to navigate through a phone menu system. IVR collects info for accurate automatic call distribution.

Softphone icon


A softphone, or software phone, is an application that lets users access telephone capabilities through a headset attached to a computer, tablet or mobile device.

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Video and conference calling

Users can join and lead video and conference calls from their computers or mobile devices.


Top Benefits of VoIP Phone Systems

Using a VoIP phone system has many benefits, including:

Greater efficiency and productivity

Greater efficiency and productivity

VoIP software gives companies audio and visual communication tools, such as video calling and chat applications, that improve team collaboration. Companies can reduce the number of missed deadlines and errors while increasing employee efficiency and productivity.

Lower costs

Lower costs

Companies can lower their hardware costs with a VoIP solution. Instead of traditional phones, businesses buy VoIP-compatible phones (hardphones) or softphones. In addition, many VoIP plans are more affordable than traditional phone services.

More remote workers

More remote workers

The best talent isn’t always located near a company’s offices. VoIP software allows companies to hire more remote workers and gives them tools for real-time communication.

Third-party integrations

Third-party integrations

VoIP solutions can integrate and share data with other business software, including CRM, ERP and ecommerce platforms. Companies can generate new leads from live chats or respond to customer support requests by email and text.

Increased data collection and analysis

Increased data collection and analysis

With VoIP software, businesses have the ability to record and analyze calls for a variety of metrics, including wait times, average talk time and calls abandoned in queue. This info helps companies develop strategies to improve customer experience and retention.

Scalable platform

Scalable platform

Landline telephones require additional hardwiring to increase the volume of calls they can handle. In contrast, VoIP phone systems can scale quickly as long as the company has enough bandwidth and internet speed.

Enhanced security

Enhanced security

VoIP software encrypts communication to protect confidential info during transmission. In addition, vendors offer advanced security features, such as virtual private networks, multiprotocol label switching and deep packet inspections.

How to Choose a VoIP Phone System

VoIP phone systems have different features and pricing, so it’s important to take the time to research your options. We recommend the following steps when choosing a network monitoring tool:


Identify your company’s needs

The first step in identifying your needs is to understand the calling needs of your company. How many phones do you need? Do you manage your own customer support? Are there times when call volumes spike?

The next step is to get input from your employees. Do you have a sales or customer support team that needs high-quality audio or the ability to route calls? Do you have a large IT department that’s knowledgeable in VoIP technology?

You should also consider what features you’d like to implement. Do you need the ability to host hundreds of people in a video conference? Will thousands of customers call you during a new product launch or around the holidays?

It’s a good idea to figure out which key performance indicators will be affected by the VoIP phone system. Will it improve employee productivity and efficiency? Will it reduce call handling times? Can it lower telecommunications expenses for the entire business?


Create a Shortlist

Research vendors that best fit your needs. In addition to current requirements, consider the implementation process and the scalability of the VoIP solution.

The implementation process can vary significantly. You’ll want to speak with vendors and ask about timelines and fees. Be sure to ask if training is available.

Think about how many employees and customers you have now. If you plan to grow the company, make sure the VoIP software is scalable. It should be able to handle peak call volumes and offer the functionality that your team needs.

Once you’ve researched these issues, you can put together a shortlist of vendors whose software matches your needs.


Contact vendors

Begin contacting vendors on your shortlist. You should request a demo of the solution to see how it works. Make sure to test the software with the employees and IT administrators who’ll use it most often.

As discussed in the Pricing section above, VoIP phone systems vary in cost. You’ll need to factor in the number of users and callers required. It’s important to fully understand the vendor’s pricing structure.

Some vendors also charge extra for implementation, support and training. Keep this in mind when asking for a quote. You’ll want to compare all-in prices among different vendors.

Be sure to clearly define the level of functionality you want.


Get customer references

Once you’ve completed a demo of the network monitoring solution and have a better understanding of pricing and services, it’s time to get references from a vendor’s current or previous clients.

If the vendor has been in business for less than five years, it’s particularly important to get references.

The vendor will give you the names of clients with positive experiences, but make sure to ask for companies that have similar needs to yours (e.g., businesses with a large contact center or that need advanced security tools).

When contacting the reference, ask if there have been any issues with the vendor or the solution.

Challenges of VoIP Phone Systems

All software has its advantages and challenges. Companies that use VoIP phone systems should consider the following challenges:

Monitoring bandwidth

Although a business may have high-speed internet, it might be throttled or not optimized to give VoIP solutions the most bandwidth. Companies should use network monitoring tools to ensure they’re getting accurate speeds and internet usage is prioritized correctly between applications. In the event of an internet slowdown or a crash, businesses also need to have a backup plan.

Man at monitor

Finding knowledgeable IT professionals

VoIP software combines several different IT disciplines, including voice technology, data management and network administration. Finding professionals that have the skills and knowledge to maintain and service VoIP solutions can be a difficult task. Businesses should make sure their vendor has a support team to help solve any issues that arise.

Man with jigsaw puzzlek

Securing the VoIP solution

Because VoIP solutions run over the internet, they’re vulnerable to cyberthreats in a way that traditional phone systems aren’t. VoIP software can be infected by malware or phishing scams, and malicious actors can hijack calls or perpetrate call fraud. Companies that want to secure their phone system should look for vendors that offer virtual private networks, multiprotocol label switching, deep packet inspections, authentication, and regular patches and updates.

Man in front of locks

Maintaining data privacy laws

Many industries, such as health care and finance, have very specific regulations about data privacy. Companies that record calls using VoIP will have to comply with all applicable laws regarding encryption and storage. If your business faces data regulation, be sure to consult with the vendor on their privacy features before purchasing a solution.

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The solution is straightforward to set up and and free for up to eight simultaneous calls.


Users report issues with lagging and high costs as features are added.


3CX is an open-source VoIP solution with on-premise and cloud deployments that helps companies improve collaboration and customer service.



Setup is easy, and the user interface is flexible and intuitive.


Users report that sometimes the app crashes, calls are dropped or audio lags.


Dialpad is a cloud-based VoIP solution that offers products for sales, support, meetings and mobility to companies of all sizes.



The solution is easy to setup, and the user interface is intuitive.


Users report that support packages can be expensive, and the solution lacks advanced voicemail features.


Mitel is a VoIP solution that offers companies of all sizes cloud communications, collaboration and contact center services.

Ooma Office


The solution is simple to set up, has an intuitive interface and offers many features for the price.


Call forwarding and virtual receptionist may be difficult to use. Some users report intermittent outages.


Ooma Office is a cloud-based VoIP solution for companies of all sizes with flexible deployment options.



The solution is easy to install and use. It's compatible with multiple operating systems and syncs calls between computers and mobile devices.


Users report that sometimes the mobile app freezes or can't connect to the server.


Zoiper is a flexible, open-standard and service-independent VoIP softphone app with on-premise and cloud deployments.