Cloud PBX systems are quickly making older PBX technologies obsolete due to much lower equipment cost, greater reliability and simpler operation. However, some businesses today still rely on what is called a digital PBX. Like a cloud PBX, a digital PBX is a phone system created specifically for a business or organization. Unlike a cloud PBX, however, the programs required to operate a digital PBX are usually hosted on a company's own server. That's why digital PBX systems are sometimes called "on-premises PBX."
Owning and running an on-premises PBX can be a major investment, often requiring a business to purchase, provide power to and run wiring for a dedicated server and phone system. An on-premises digital PBX also requires regular, skilled software and hardware maintenance and an out-of-the-way space that usually requires upgraded cooling. A company's own IT personnel are usually responsible for maintaining the server that hosts an on-premises PBX and troubleshooting the software that runs it.
For small businesses, that can increase costs, stretch IT resources thin and even lead to unexpected system crashes, especially if an on-premises PBX develops an issue during a time of high call volume.