What are IP PBX Phone Systems and How Do They Work?

What are IP PBX Phone Systems and How Do They Work?

It is always worthwhile to purchase the best PBX phone system that several companies can support. This way, if the service is not adequate, you have options. Some organizations are forced to replace the PBX; if no such possibility exists, there are a few different choices regarding types of PBX systems. Where do you start with so many IP PBX options in the marketplace? Here are some ideas of what will be needed to know to make a decision:

What Does PBX Mean?

A Private Branch Exchange (PBX) system connects all telephones at a location with the main number. It was generated mainly to reduce costs incurred when calling within an office. However, it has become prevalent and is now a staple for monitoring and guiding calls. Many features can be incorporated to customize PBX. 

There are constantly new features that often remain integral, such as: 

Call Forwarding

To reach busy employees on their own extension or mobile device. Call forwarding allows the best employees to be always available at all times using this feature.

Extension Mobility

With the ability to route calls to mobile devices, employees can remain on-call regardless of their location. With remote PBX access, employees can collaborate easier wherever they are. 

Hunt Groups

This feature allows calls to be routed to a single extension or multiple phones based on pre-determined rules. Calls can be sent to voicemail if the user is busy. 

Call Forwarding

This feature enables calls to be forwarded to the next available agent if your PBX system is being used for a customer service contact center. 

Call Routing

With user extensions, call routing can transfer calls within a network to the relevant user based on set criteria. People can always reach the right user or department by dialing a simple extension number.

Auto Attendant

This feature replaces the need to have a receptionist to route your calls. Incoming calls can be directed correctly and automatically with this feature. 


Busy employees can catch up with their messages later with the voicemail feature of PBX. While this feature was popular in traditional PBX systems, the latest voice-to-text/email features allow employees to read their messages more efficiently. 


Interactive Voice Response (IVR) can improve customer experience with an automated system that allows callers to access data without the intervention of an agent. Callers can access information by following voice instructions with a dual-tone multi-frequency (DTMF) interface. 

Nowadays, PBX systems have evolved a lot to become far superior to their traditional origins. With the introduction of cloud technology, cloud-based IP PBX solutions have replaced traditional PBX systems within organizations to improve mobility and collaboration.

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Types of PBX Systems

Advancements in PBX technology have taken it from traditional on-premise PBX solutions to web-based IP PBX systems. Let’s explore their main differences:

Traditional PBX

Traditional PBX runs on its wiring and does not usually allow for any integration to the PC (screen pops, etc.). This is a system where a private telephone switch is installed in a company facility. With traditional PBX, there are two options. A LAN (Local Area Network) based system gives further options regarding special and advanced features. However, it only allows essential characteristics that a conventional phone system would have offered in the last 25 years. 

Things like off-hook call announcements, hands-free intercom talkback, paging, message waiting lights, etc., are all WAN (wide Area Network). Some LAN-based may have some of these features, but not all. In the case of a business with multiple locations, if the sites are connected to a LAN, they can share all elements of the VoIP system without needing to set up distinct phone systems in each location. This is a very reliable option that will not go down in a power outage. But it's a good idea to upgrade your traditional PBX system to the latest in technology. 


PBX now offers a hosted solution. This means that the phones to be connected do not use actual and physical lines and wires but only through the Internet.

This is a popular option for small businesses. The leading reason that this is a great option is because of the flexibility and cost savings involved. Since it does not require the purchase and upkeep of hardware and equipment, it is more cost-effective than the traditional PBX.

IT or telecom managers can administer everything through the Internet. Another significant advantage is that IP telephony is immediately available in LAN-based systems. IP PBX allows users to receive and manage calls through one central phone number. Compared to VoIP vs. IP PBX, IP PBX allocates the most advanced features possible.

Why Do Businesses Use PBX?

There are many benefits to using PBX in businesses:

Cost Savings

When integrating a PBX system into your business communication infrastructure, you will reduce the cost of on-site hardware maintenance when using your own devices. IP PBX systems are a great solution for businesses wanting to implement an affordable communication system. 

Mobile Access

IP PBX allows access to anywhere, anytime, from any device with convenient mobile apps. This is supportive of the modern hybrid workplace model most businesses use to operate a remote workforce.


With highly secure IP PBX and on-premise PBX capabilities, businesses can be assured that their data doesn’t fall into the wrong hands. PBX allows user-based and multifactor authentication access to data to ensure that only authorized users will have access. 


As your business grows, your PBX system can also grow by adding new users as needed. This is a great option for businesses to keep their overhead costs down by upgrading or downgrading their communications systems as needed.

Advanced Features

Advanced call features such as call routing, voicemail, auto attendant, and remote user connectivity make PBX the perfect business communication solution. These features go along with the scalable functions of PBX to provide the perfect tools for efficiency. 

By adding the features of PBX to your business, you can elevate business communication and brand image with the public. If your business is looking to upgrade to the latest in IP PBX technology, consult with our phone systems software page and compare the best PBX providers in the market. 

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