Phone Systems

Modern phone systems do more than connect callers. They can increase productivity, cut costs, and improve service.

Used to be if you needed a phone, you bought the standard desktop set from the local phone company representative and had him hook it up. But in the past decade, telephones and telephone service have been revolutionized, thanks to miniaturized electronics and a deregulated telecommunications industry. Today's prospective business buyer faces a bewildering variety of options in building a phone system.

While it might be simpler just to buy a basic system, if you're smart the money you spend can prove a prudent investment rather than just a routine expense. A well-chosen phone system can cut caller waiting time, ensuring fewer hang ups and more sales. It can prevent employees from making unauthorized long-distance calls and automatically perform departmental or client billing, saving money. Often new systems are easy to reconfigure, so as your company grows you won't need to pay a service person to change phone locations. And advanced features can improve productivity by making office communications more efficient.

The cost of modern office phone systems can quickly get out of hand, however, so some study now will save money later. Prices range from $200 to more than $600 per station (a working phone); that includes the phones themselves, wiring for the office, the features you elect for your system, the switch box that connects the system to the phone company, and installation.

Prices are coming down as competition among vendors intensifies, and knowing the sales climate can help you cut the best deal. "For the past two years manufacturers have been embroiled in a price war," says Robert Rosenberg, president of Insight Research Corp., a telecommunications market research firm in Livingston, N.J. "As a consequence, traditional price sheets have been thrown out the window."

Phone System Basics
All office phone systems do the same thing -- allow people at a company to share a group of telephone lines for incoming and outgoing calls. But even the smallest systems now offer a number of standard features, such as the ability to put a caller on hold or to transfer a call from one phone to another.

But before getting wrapped up in features, you'll have to answer a few basic questions. How many people will be on the phone at once? How much can you spend? And how fast do you expect your company to grow? Experts recommend you install at least 25% excess capacity, since a phone system should last five years or more.

Your answers will place you in one of three classes of systems: key systems, hybrids, and private branch exchanges (PBXs) or Centrex (Centrex is a service provided by the phone company that does the same thing as a PBX). Key systems are the smallest; as you move up, hybrids and PBXs will handle more people and will cost more per station. Once you understand the basic capabilities of these systems, you can then decide which features you want.

Key systems These usually can handle up to 60 stations but are recommended for a maximum of only 40. Prices begin at about $200 per station. Most key systems offer many of the features a small business would want but may not provide them all.

The capacity of any phone system is measured in terms of the number of telephone lines coming into your office (outside lines), and the number of internal wires that run to phone stations (extensions). A call comes in over a certain line and is routed to a particular extension. If that extension is busy, the call is moved to another line or to a receptionist.

The capacity is defined by both numbers; for example, a 6-by-18 system has 6 outside lines and 18 extensions. For that system, a maximum of 6 people could be on outside calls, because there are only 6 lines. (And if 6 people are using the phone, a caller will get a busy signal.) While these numbers may sound small, they may be fine for a company with, say, 11 people, only 3 of whom are usually on the phone.

The wires from outside lines and extensions all connect in a small box on your premises called a key service unit (KSU). In a 6-by-18 system, the phone on each employee's desk would have 6 lighted buttons, corresponding to the 6 lines. If the button for line 1 is lit, it is in use. To get an open line for a call, a person would press an unlit button, perhaps line 2. With a key system, a caller manually selects a line.

Because of this requirement, experts recommend you use a key system for no more than 20 outside lines. A phone with more than 20 flashing buttons becomes a bit ridiculous to operate, not to mention expensive to buy.

For small offices, phone companies offer a KSU-less system; the minor electronics needed are in the phones themselves. A KSU-less system may not offer as many features, but it is the least expensive system and you can often install it yourself. KSU-less systems are practical for a maximum of only 10 stations.

Note that with all phone systems, vendors suggest you dedicate an incoming line to a fax machine or modem. That way, if your system crashes, you can still use them. Realize, though, that on a small system with, say, only six lines, a fax and a modem will reduce the number of lines to four, limiting your ability to make or receive calls. One option would be to lease from the phone company an additional line for each device.

Hybrids Hybrid systems are souped-up key systems. They can handle a maximum of 100 stations. Prices start at about $300 per station. The advantage is that hybrids can automatically find an open line when an employee picks up a phone, eliminating the need to select a line. That can save money; simple phones without lighted buttons are cheaper, and if you're buying 20, the savings can offset the higher system cost.