Cloud PBX phone system

What is “cloud PBX?”

Cloud PBX (private branch exchange) takes the functionality of a traditional phone system and delivers it over the internet, instead of through legacy copper lines or circuits. Think of it as your business phone system—modernized, secured, and hosted in the cloud.

You might have heard cloud PBX referred to as hosted PBX, virtual PBX, or simply as a hosted phone system, but they all generally mean the same thing.

Cloud PBX can be accessed via an Internet connection instead of the usual public service telephone network or PSTN. You might know these as “analog lines” (or PRI or something similar). All the setup and maintenance is handled by the provider.

That means no bulky hardware, no high CAPEX, and no endless IT headaches. You simply subscribe, log in, and start communicating across all your devices.

You still get all the functionalities of a traditional phone system. The only difference is you’re now accessing these over the Internet, which also indirectly leads to other perks like easier maintenance, lower costs, and more flexibility and scalability. This makes cloud PBX a practical and cost-effective business communication solution, for startups and small businesses as well as larger enterprises.

How does a cloud PBX work?

In a nutshell, with cloud PBX, your business phone system is hosted in the cloud and works entirely over the Internet—no physical hardware needed. That being said, you have the option of making and receiving phone calls with IP phones, desk phones, mobile phones, or even other devices, such as desktop, laptop, and tablet PCs (thanks to “softphone” apps, which essentially let you make phone calls from different devices).

Cloud PBX providers typically have numerous data centers to protect your services against a single failure point. This makes sure all of your voice services are working all the time even if one server goes down or a particular connection is lost, so your customers and clients can always reach you when they need to.

Why do companies use cloud PBX?

There’s not just one reason for choosing cloud PBX, and some reasons are more important than others for certain companies. Some businesses with ambitious growth plans may prioritize flexibility and scalability, while others might care more about call quality and reliability.

Here are some of the main reasons companies switch to cloud PBX:

Cost efficiencies

The relatively low cost of cloud PBX is often the most attractive feature for businesses. With cloud PBX, you don’t have to pay large upfront expenses to purchase and set up hardware. Instead, you can pay monthly for the number of seats actually needed for the business, which can be substantially cheaper over the long run.

Cloud PBX service providers also take care of maintenance and updates, which saves you the extra expense there, as well as ensuring that all your users are working from exactly the same version of the software. This helps your IT team happy (and the cost savings will keep your Finance team happy).

Future-proofing

Cloud PBX systems combine the best of traditional phone services with a diverse range of integrations with your other tools and software. This makes your cloud PBX system more scalable, and allows it to flex and adapt to your business needs and tech stack as they evolve.

Mobility

Today’s workforce is a mobile one. More people are working remotely and working on the go. Virtual PBX makes it easy to work from any device and from anywhere in the world. Who says work has to be confined to the office or your desk?

More advanced Ai features

Compared to traditional business phone systems, cloud PBX tends to give you more advanced options including live transcription, real-time coaching, Ai-driven analytics, and more.

9 features to look for in a cloud PBX phone system

Choosing a cloud PBX solution can be tricky if you don’t know what you’re looking for. Here are some features you should look out for when choosing a cloud contact center or hosted PBX system for your business.

1. Ai-powered transcription and conversation intelligence

Real-time transcription is now table stakes, but the best cloud PBX systems go a lot further than that. With Ai, transcriptions are just the tip of the iceberg. Now that you have real-time voice transcription, your cloud PBX must do something with it, otherwise you’re left with data that you can’t do anything with.

With Dialpad Ai, for example, you get not only highly accurate transcriptions, but also post-call summaries, automated action items, and real-time coaching prompts. Supervisors get live alerts when certain keywords are mentioned or when sentiment dips—so they can step in before issues escalate.

And for contact center supervisors, Dialpad has real-time alerts and Custom Moments. These are context-sensitive notifications and tracking based on words, phrases and even the tone or sentiment of the call. You can use these on a live call to help your team handle customer issues, and also have supervisors jump in when needed.

2. Unified collaboration: Voice, video, and messaging

How many apps and logins do you need to communicate internally and externally? Maybe we can bring that number down to one.

Typically, businesses would pay for separate video conferencing solutions—but why do that when some enterprise-grade cloud PBX solutions are full-fledged unified communications platforms?

For example, you can not only make phone calls from Dialpad’s desktop and mobile apps, but also start 1-on-1 video calls with your co-workers and have robust voice and video conferencing—all in the same app:

3. A mobile-first experience: iOS, Android, and tablets

With hybrid and remote work now the norm, your cloud PBX must deliver the same experience on mobile as on desktop. You should be able to download these apps to your devices and not only get all the features you’d get in the desktop version, but also integrate with other apps you’re already using, like Salesforce.

Hey, why shouldn’t remote workers get all the same benefits as office-based employees?

4. Integrations that connect your workflows

Cloud PBX isn’t just about calls anymore—it needs to plug into the rest of your tech stack. Look for deep, native integrations with the tools your team already relies on, like Salesforce, HubSpot, Zendesk, Microsoft 365, and Google Workspace.

Now, this doesn’t matter so much if your business doesn’t really use other software, but if you do, make sure you choose a cloud phone system that offers diverse (and easy-to-set-up) integrations with other software and apps.

For example, Dialpad integrates with popular business apps including Salesforce, Zendesk, Zoho CRM, Clio, OneLogin, Front, Kustomer, Intercom, Miro, HubSpot, Slack, Microsoft 365, and Google Workspace... Just to name a few.

These should be easy to set up and customizable for your offices/locations/branches, users, and contact centers.

5. Smart call routing and auto attendant (aka. IVR, AA)

If your business gets a lot of phone calls, a virtual receptionist can help manage call flow and direct callers to the right people in order to minimize your call queues. These are sometimes also called IVR features or auto-attendants and you get this included in every one of Dialpad’s plans.

These should also integrate tightly with your contact center flows and give you easily accessible KPIs and analytics. In Dialpad, you can design and update call flows in minutes, integrate with your contact center, and track KPIs like abandonment rate or queue times:

6. Custom caller ID

If you have a customer support team or outreach team that calls prospects and customers, then this is an important feature to have in a cloud PBX system. Being able to choose which number and caller ID shows up when you call both helps maintain your brand image and boosts answer rates. 

In Dialpad, agents can pick the outbound ID that’s most appropriate for the situation—whether that’s a local presence number, a department line, or your main business number:

7. Analytics: Data that makes sense

Reporting shouldn’t just tell you what happened—it should help you improve performance and provide a better customer experience. Modern cloud PBX analytics include visual dashboards, call heat maps, and even Ai-generated insights like keyword trends and sentiment analysis.

For instance, Dialpad’s heat maps show you things like call volume and how quickly your team is picking up phone calls:

8. High availability and resiliency

One of the main advantages of choosing a cloud PBX service provider is that (depending on your provider), it can offer more reliable uptime, with minimal disruption to your service. If you’re running a business, your phone lines just have to be up and running, with as little downtime as possible. Dialpad is already reliable overall—but there are two unique things about our dual cloud architecture:

1. Best-in-class audio and video quality: we split the voice and video components of calls to purpose-built and streamlined data centers;

2. While resiliency and profoundly redundant services are leveraged in Google Cloud, which makes them nearly infinitely scalable and redundant

9. Number porting and global coverage

Features and functionality aside, one of the most basic things you need is the ability to port your current business phone numbers over. If the phone system you like can’t do that, then even the best cloud PBX phone solution won’t be very useful. (That being said, your current phone provider also has to cooperate—if they refuse to release your phone numbers, then your new provider won’t be able to complete the port and it’ll be a bit of a hassle.)

Common challenges of cloud PBX

While the advantages of cloud PBX generally outweigh the challenges that might come with it by far, we thought we should still give you a sense of possible issues to expect. This way, you can anticipate issues before they come up and have a smoother setup. Here are some of the most common challenges relating to cloud PBX telephony.

Quality maintenance

Maintaining quality of service can be difficult, depending on where you’re located and which Internet provider you’re with. Dialpad has built our infrastructure network to provide the best “last mile” to you, wherever you are.

If you don’t have a good Internet connection, then it won’t matter which cloud PBX provider you’re with—you’ll get jitter and packet loss and that weird “robot voice” sound on your calls.

How to solve this? Easy:

1. Make sure your wifi routers have enough “horsepower” to handle video and voice, and that you have enough of them. That is one of the most common issues we see.

2. Get a failover circuit: by leveraging multiple and redundant circuits or services like SD-Wan or failover scenarios on your office router is the surefire way to protect yourself.

3. Every cloud PBX provider will have Network Recommendation Guides. These are put together to make sure all your calls and video look and sound great—get familiar with them.

Security risks

As cloud PBX systems are internet-based, they can be targets for cyber threats. While encryption is still essential, businesses today need a multi-layered security strategy that goes beyond the basics. Here are a few things to look for in a provider:

• Enterprise-grade encryption: All data should be encrypted both in transit and at rest.

• Regulatory compliance: Your provider should help you stay compliant with standards like GDPR, HIPAA, PCI-DSS, and emerging Ai governance requirements, with options for data residency in specific regions.

• Identity and access management: Integration with tools like Okta, Azure AD, and OneLogin ensures secure authentication for all users.

Dialpad takes a multipronged approach to security and call encryption—you can learn more about it through those links, or talk to us! We also have a dedicated security team, working around the clock to protect your business from security threats.

Adoption and change management

One often-overlooked challenge isn’t technical at all—it’s human. Moving from a legacy PBX to a cloud solution can feel like a big shift for your employees. Without proper onboarding, you risk low adoption, which is a waste of your investment.

To make the transition go smoothly, provide hands-on training. Ask your provider if they can support onboarding by walking your users through how to make calls, host video meetings, and use integrations.

Another helpful byproduct of choosing a unified communications platform instead of just a cloud PBX phone system is that it consolidates your tools. This can significantly reduce the learning curve by combining calling, messaging, and video into one app, which means users won’t have to constantly toggle between different tools.

Cloud PBX vs. other types of communication solutions 

While “cloud PBX,” “VoIP,” and “UCaaS” are often used interchangeably, they’re not the same thing. Here’s how cloud PBX stacks up against other common options:

• Cloud PBX

  • A virtual version of a traditional PBX (Private Branch Exchange) hosted in the cloud.

  • Manages call routing, extensions, voicemail, and auto attendants—all without on-premises hardware.

  • Best for businesses that want a modern, flexible phone system but don’t need (or aren’t ready for) a full unified communications suite.

• VoIP (Voice over Internet Protocol)

  • A type of technology that simply means making phone calls over the internet instead of copper phone lines.

  • Cloud PBX is built on VoIP technology.

• UCaaS (Unified Communications as a Service)

  • A complete platform that integrates calling, messaging, video conferencing, and often Ai-powered features—all in one app.

  • Cloud PBX can be thought of as a component of UCaaS, powering the telephony side of things.

  • Best choice for companies that want one tool for all communications (internal and external), especially for hybrid and remote teams.

• On-premises PBX

  • The “old school” alternative: a hardware-based phone system maintained in your office.

  • Offers control but requires upfront investment, IT staff, and ongoing maintenance.

  • Lacks the scalability, remote flexibility, and Ai-driven features of modern cloud PBX systems.

What you get with Dialpad’s communication solution

If you’re looking to move on from your traditional PBX business phone system, take Dialpad’s free trial for a spin. It's a collaboration platform, not a phone system, but it gives you all the essential phone system features you need. Here are just a few examples:

No hardware (unless you need it)

Everything runs in the cloud, so there’s no hardware installation needed. No hardware also means that there’s no physical maintenance or updates required, and you don’t have to buy anything up front. Of course, if you’re in an industry that does need desk phones, Dialpad is compatible with those too.

Cost savings

Rather than paying up front for an on-premises phone system, you can pay on a monthly or annual basis for a cloud PBX system. Typically, a cloud PBX provider will provide a flat rate for each user or device you have, and the price will only fluctuate based on how many users you have, so you’re not surprised with extra fees.

For example, with Dialpad’s most basic plan, you get unlimited (inbound and outbound) calling within your local country, the US, and Canada, you also get call recording, call routing, auto attendant, video conferencing, custom voicemail greetings, and more.

Scalability

Easily provision (and deprovision) users with Dialpad. The cloud has an expandable amount of storage available, so there’s no limit to the number of users you can add to your system. In Dialpad, user provisioning is quick and easy. You can set up a new hire almost instantly and manage your virtual phone numbers on your own and without hiring IT help:

Entering a busy period like Black Friday or the holidays? Maybe your company is moving from a few dozen calls a day to several hundred? A traditional phone system has limits on the number of calls you can handle. With a cloud PBX, this restriction is eliminated. The cloud PBX can handle most changes in your business with ease, so you can focus on your customers and not “how many thingies my phone system has.”

Industry-leading Ai

Dialpad Ai has analyzed billions of minutes of business conversations, and powers a variety of useful features in Dialpad, like real-time call transcriptions, sentiment analysis, and agent assists.

Flexibility

With VoIP phone systems and more modern collaboration solutions, you can access all functionality you need over the Internet. Specifically with Dialpad, you can communicate with customers, prospects, and teammates across any device including iOS, Mac, PC, and Android. (And did we mention it’s browser-based too? You can not only join calls, but also host calls and get full functionality for all your online meetings—from a web browser.)

Another reason a cloud PBX is more flexible is because it's able to integrate with other applications and services—an invaluable feature and benefit to working “in the cloud.”

Excellent customer support

Not only does Dialpad have a thorough and extremely detailed Help Center knowledge database that you can find answers on anytime, you also get 24/7 phone and chat support coverage on the Pro and Enterprise Plans—worldwide, not just in the US. (With the Standard Plan, you still get web and chat support 24/5.)

We go one step beyond and have purpose-built the entire Dialpad ecosystem with a single purpose: to make it easy for you—from our user-friendly desktop and mobile apps (table stakes, at this point) to the incredibly easy setup and administration.

How to get set up with cloud PBX on Dialpad

Getting your phone system set up with Dialpad couldn’t be easier. For starters, it doesn’t require you to install any new hardware, and maintenance and updates are also handled by Dialpad. Here’s how to get set up in a few simple steps:

1. Sign up for a free trial if you want to try it out first. It takes just a few minutes, and you can use your Google or Microsoft 365 account to speed it up even more.

2. Choose a business phone number during your signup process.

3. Download the desktop and mobile app to start using Dialpad on your devices.

That’s it!

You can BYOD (bring your own device) and use existing devices like desk phones and mobile phones, as well as laptops and tablets.

If you want to keep your existing local, toll-free, or international phone number, Dialpad’s team can help you port it over.

Level up your cloud PBX with Dialpad

There are, of course, a number of factors to consider when choosing a phone solution. Pricing is the most obvious one, but there’s also security, flexibility, and scalability.

Dialpad’s cloud PBX system covers all of these bases, and its fast deployment means it can be set up in minutes, anywhere in the world. Add phone lines, swap numbers, and more—in real time. (There are many other business phone system providers out there, like RingCentral and so on, but many of them cannot do this.)

Dialpad’s desktop and mobile apps work across PC, Mac, Android, and iOS, allowing you to make and receive calls on any device. Easily do call transfers if you need to send incoming calls to other team members, and never miss a call again with the call forwarding feature, which sends missed calls automatically to your cell phone or a colleague, with your business number showing in the caller ID.

Try it for free!