VoIP vs. UCaaS: Business Buzzwords Demystified

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Written by Anne-Marie Hays | Last Updated November 1st, 2019
Anne-Marie Hays is a Content Management Intern with Best Company. She enjoys comedy, hates crowds, and loves that you are reading this bio.

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Are you in charge of telecom decisions for your small to mid-sized business (SMB)? Are you confused about whether you should be looking into solutions for voice over internet protocol (VoIP) or Unified Communications as a Service (UCaaS) vendors or both? If you are confused about these buzzwords, you have come to the right place.

This article will explain the difference between VoIP and Unified Communications, how they work together, and how they can help your (SMB) save money and increase productivity.

What is VoIP?

Voice over internet protocol, or VoIP is a technology that provides phone service via the internet instead of the publicly switched telephone network (PSTN). Applications are endless. It can be used for home phone service, mobile calling, businesses networks, and even frontline call centers.

With VoIP service, users can make and receive phone calls to local or virtual numbers without needing an actual, physical phone. Phone calls can be placed with a computer or mobile app, but can also be extended to old-school analog telephones with a special adapter, like MagicJack or Ooma, or to Session Initiated Protocol internet phones, or SIP phones.

Andy Abramson, CEO of Comunicano, Inc says, “A good VoIP provider will provide a mobile app that works on iOS and Android devices which integrate with the smartphone or tablet's dialer, so it can be your primary calling service. The app needs to work both as a dial through where it is able to present your VoIP number after dialing over your mobile operator's network and also work over LTE/4G and Wi-Fi where it can offer HD audio quality, so calls between the SMB team members are all in high quality audio (or video).”

Instead of sending your voice over the physical phone line, your voice is turned into digital data and sent as packets through your internet connection. When you are talking on the phone, software is decoding data at the source.

In the business world, VoIP and Unified Communications or UCaaS are often used interchangeably or in conjunction with each other. Let’s explain a little about how they differ and how these two technologies work together.

What is Unified Communications, UC, or UCaaS?

"'Unified communications' (UC) is the buzzword right now with VoIP, where all of your chat, conference calling, email, phone calls and voicemail are on one platform,” explains Brian Mulligan, VP of Sales at the Kelser Corporation.

Unified Communications as a Service (UCaaS) follows the internet service business model where XXaaS means “something as a service.” Examples include Kindle providing books as a service and Netflix offering movies as a service. UC companies are providing access to Unified Communications software tools as a service. They are giving their software, infrastructure, and/or platform to businesses to use for a monthly or annual fee.

UC features

While UC can be hardware or software-based technology, UCaaS ups the ante by using each voice user’s account and, with cloud technology, makes hundreds of other functions possible. One of these is easier access to your voicemail.

Mulligan explains, “Voicemail to email integration is a great feature when you are traveling or out of the office where a voicemail is put into a WAV file and sent to you as an email that you can listen to directly from your mobile device, without having to login to the phone system, enter passwords and take more time out of your already busy day on the road.” 

Additional examples of UC calling features include things from call recording and analytics to time-saving functions like ring groups and features that improve customer experience like customized interactive voice response (IVR) system and hold music or messaging.

UC collaboration tools

UCaaS instantly adds more value to your business’s VoIP system by offering collaboration tools within the same platform and allowing for communication via voice, video, text, and messaging.

What if you had an extra half hour per work day? How would you use that time?

Collaboration tools include video conferencing, desktop sharing, file sharing, communal calendars, scheduling, and presence sharing, so that you know when your boss is in a meeting, away from the desk, or just out of the office.

UC can help you and your employees to be more productive and save time. UCaaS functions helped companies save an average of 32 minutes per day, per employee in a recent study. RingCentral’s team messaging can even lead to a 64 percent productivity boost.

Unified communications features can save companies with 100 employees up to 191 company-wide hours per day. Increased availability is a big factor in phone-based business segments like customer service centers.

Not only do UC tools can help make internal collaboration easier, but they can also improve the experience with external clients and customers by making you more available. In addition to voice calls, additional  modes of communication can include business SMS text messaging, live text chat, and video chat, as well as file sharing.

In PC Mag, RingCentral Vice President of Collaboration Mike Pugh lauds how blending these formats lets conversations and interactions exist in a continuum rather than just one channel. He concludes that that this movement towards a conversation continuum is “both new and impactful to SMBs.”

VoIP and UC in contact centers

Many business cloud providers offer contact center solutions for companies with a heavy B2C presence. These solutions will include VoIP service for inbound and outbound internal and external phone calls, but add on the ability to communicate with coworkers and customers with chat, email, and SMS text messaging to offer customers multiple contact methods, hence the name “contact” center instead of “call” center.

Managed vs. hosted VoIP

These communications technologies can be implemented in a variety of ways, depending on a company’s size, existing structures, and tech capabilities. What are the options, and which is best for you?

  • Single-tenancy system integrated with on-premises, in-house applications
  • Multi-tenancy programs where clients just use the same platform, the same way
  • A hybrid model, with some features and functions provided in-house and others provided via a hosted provider.

Some VoIP providers offer different software tools for an a la carte experience. For example, if your company already uses Skype for Business or Slack, you already have many of the collaboration tools you need. If you want to use VoIP for voice service, then when picking a provider, you can choose to go with one service for all of your needs and dump your old collaboration provider. Or you can choose just a voice service and forgo the provider’s tools to keep using your internal system. You can get multiple pieces from multiple vendors, or you can get most everything you need, all in one place.

Next, you must choose between managing your service in-house or having a service provider host it for you, which is more and more popular. This choice comes down to your existing resources.

Jeremy Rose, Director at CertaHosting warns that although managing your VoIP in-house is more expensive, “in the long run, it’s giving you more freedom.” He continues, “A hosted VoIP setup, on the other hand, comes without hardware expenses, but you're making your business completely dependant on a third party.” As with most decisions SMBs have to make, you will have to strike your own balance between independence and costs.

Who uses VoIP?

About 60 percent of companies are already using at least partial hosted UC service, but it varies in usage. Currently, only about 7 percent are using hosted VoIP or voice service. The majority of users are SMBs. However, these number are likely to change in the near future when PSTN telephone companies begin to phase out their traditional phone service offerings.

Aaron McCarthy, President of Maven IT explains why: “Traditional phone service is becoming a dying breed due to the fact that the large carriers (mainly AT&T and Verizon) no longer wish to maintain their copper networks. These old networks have become too costly to maintain and these carriers are now beginning to shut down many central offices that were providing traditional telephone service to businesses and consumers. This is being done in favor of voice over internet protocol (VoIP) service as it can ride over the internet and is much less costly to maintain.”

It is not a matter of whether you will have to make the transition, but when. McCarthy suggests a proactive approach. He says, “At some point in your business and/or consumer life, you will need to make the switch from traditional telecom to VoIP, if you haven’t already. Switching to a VoIP based phone prior to being notified that your carrier’s central office is shutting down is much preferred so that you have time to perform the proper evaluation.”

With telecom giants switching off their service, it is no wonder that the UC market is expected to grow exponentially in the next decade.

According to Transparency Market Research, the global UCaaS segment is expected to have a compound annual growth rate (CAGR) of 29.4 percent from 2016 to 2024, moving the market from a starting point of $8.23 billion in 2015 to $79.3 billion in 2024. The report also explains that UCaaS solutions will continue to lead the market due to increased adoption of IP telephony, low cost of ownership, and cloud communication platform advancements.

What benefits can be offered by switching from standard phone service to VoIP?

Depending on business needs, some companies need to add or remove users for seasonal or other business-driven reasons. With hosted VoIP, just as new features can be added alongside existing systems, users can easily be added or subtracted.

“Expansion plans should be considered when choosing a VoIP setup, and that the service provider can accommodate your current and future needs. For example, cloud-based VoIP is particularly good at updating and expanding your network,” says Jeremy Rose, Director of CertaHosting.

Outsourcing tech

Who is going to take care of the system? Do you need to hire an IT administrator when you don't have one? Does the system require extensive training for your team to be able to use it?

With VoIP, it's easy. Businesses have the option of outsourcing and IT troubles to another company offering their platform, as well as expertise as a service.

As opposed to new landline phone systems, VoIP offers the ease of setting up a phone system without much physical infrastructure changes because it uses your internet. Your new phone system uses the internet that you already have. No new phone wiring is necessary.

Installation

If SMBs without a highly trained tech team can likely deploy hosted VoIP on their own, businesses save on downtime and install costs.

Lower installation costs are necessary when compared to landlines because most of it can be done at a distance. No hardware has to be installed, unless you opt to adapt existing analog phones, or you choose to implement new SIP desk phones.

When it comes to hundreds of users, like in a huge business or call center, most providers offer professional setup or implementation services.

In addition to decreased installation costs, businesses save money by switching to VoIP through cost of ownership and hardware, as well as ongoing personnel costs like tech support.

Initial investment

The initial investment for hosted VoIP is very low. Initial investment refers to how much you have to pay upfront to start. These costs can include hardware like adapters or Wi-Fi analog adapters.

Hosted UC allows businesses to avoid costly hardware purchases, except for optional desk phones. A server room or rack cooling space isn’t necessary. Back end infrastructure is bundled into your monthly fee. Businesses can avoid the need for infrastructure like control units, analog jacks, and on-premises servers for hosting voicemail.

Reducing application friction with software integrations

In addition to the multitude of calling features like call recording, call forwarding, and analytics, one of the key things that VoIP and UC offer is the ability to integrate software tools into your calling platform to help increase productivity.

“Integrating UCaaS with other cloud capabilities (such as enterprise apps from SalesForce.com) drives user productivity for firms by reducing the friction between business applications and business processes,” says Henry Dewing, Principal Analyst at Forrester Research in Guide to Unified Communications as a Service.

With a buffet of software integrations working with different VoIP providers or available for API development, where should businesses start their selection process?

Andy Abramson from Comunicano, Inc has some advice to help guide your shopping experience. He suggests, “When it comes to selecting a VoIP provider for small business the most important consideration is what works best for where your business is heading, and not base the decision on what it will be replacing. This involves thinking about the type of integrations with other services you want your phone service to work with. For example, does it integrate with Google's G Suite or Office 365, SalesForce, Service Now, or other cloud-based services? Will your VoIP line be able to be text messaged the same way your mobile device is? Do you need video calling? With more and more digital natives growing up with texting and video being their modes of communication, making sure your VoIP provider offers those need to be key determining factors.”

Local, long distance, and international calling

With VoIP service, you can place outgoing calls to and take incoming calls via local phone numbers, even if you are hundreds or thousands of miles away. This virtual local presence allows your customers to contact you without having to pay long distance rates when using a landline.

If you end up switching to VoIP, what will your phone number be? Depending on the size and scale of your business, whether you are going to be mostly taking inbound calls or making outbound calls, there are different answers. Usually, when you sign up with a VoIP provider, in the initial stages, you choose whether you want to keep your existing phone number or get a new one. You can also choose between a local number, a vanity number, or a toll-free number.

What do these options cost, why are there so many, and what is the difference?

“Some VoIP companies charge extra for toll-free or vanity numbers, and some don’t offer them at all. Local numbers are great for small business, but toll-free numbers offer scalability and cross-state reach while vanity numbers are built-in marketing,” explains Lana Lepikhova from MightyCall.

The bottom line

VoIP is the technology that enables voice calls over the internet. UC adds advanced capabilities, analytics, and software integrations to this technology. It makes internal collaboration, analysis, and call recording possible while offering ways to make your customer-facing support easier, more streamlined, and faster. Even better, the average VoIP and UC customer gets access to these added tools for less money than they were charged by a traditional telecom provider for voice service alone.

The Top VOIP Providers Companies

company logo
#1 RingCentral chevron_right
8.9 Overall Score
4.4
starstarstarstarstar_half
(30)
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#2 CallTower chevron_right
8.4 Overall Score
4.3
starstarstarstarstar_half
(29)
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#3 Jive chevron_right
7.8 Overall Score
4.5
starstarstarstarstar_half
(36)

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