The on-premise software option means that the hardware and equipment for your phone network will exist at your location. The hardware supporting your VoIP system will be somewhere in the workplace, like a computer equipment room, phone closet, or server room. In this option, your company will own or be leasing-to-own all of the hardware that runs your private network. This will give you greater control over the equipment, software, and the customization of all the features.
All of these systems come with strengths and shortcomings of their own. An on-premise system is going to have higher upfront costs for the setup process, but once you own it, you won’t be paying a recurring monthly fee for the use of someone else’s equipment. When you hire more employees and need to add more phones, you only have to purchase more IP phones.
You will be limited somewhat in how much you can scale up or down your services by your in-house resources. The on-premise option is best suited to mid-size or large businesses because it is most cost-effective with more users in the workplace. The more users you have, the more you can justify the expense for greater in-house resources.