What is a Digital Phone System? Choosing the best Digital Phone Systems for your business

Digital Phone System
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Businesses, small and big, need a phone system to facilitate communication within and outside the organization. With several options available, it can be challenging to find the right mix of features and capabilities that suits the business requirements. While a traditional phone system works for a business with simple communication needs, others may demand advanced features and top-quality performance from their phone system.

What is a Digital Phone System?

Generally used in businesses supporting features like email and fax, interactive voice, multiple extensions, unified voice, direct lines, and more, a standard digital telephone system typically has several phones to expand up to a specified limit.

It comes with the ability to use direct lines and extensions to dial, a keypad entry recognition, and paging functionality for internal communication.

These systems often include the feature of hold music. Some play preset music while others allow playing hold music from other sources. Every digital phone system can record voicemail.

More advanced telephone systems also come with modern notifications for missed calls and messages. They also allow playing back audio for voice messages. Some may even offer an interactive voice response function to let users control the options using voice commands instead of a keypad.

Some digital phone systems are equipped with web management centers to enable users to review their calls, listen to voice messages, view and delete messages, and access customer information when communicating with them.

Sometimes, these systems can offer professional call center features to distribute calls automatically to agents. This type of functionality works based on customer menu options and pre-specified skills for agents.

They also allow keeping track of quality through reporting on customer satisfaction and call times. Many of them record calls automatically to let managers review conversations and monitor service.

Analog vs Digital Phone Systems

Analog telephone systems have been supporting businesses for decades now. They are based on copper wire lines and deliver reliable service with decent voice quality and features you would have in a home phone like speed dial, mute, hold and redial.

They may even allow transferring calls between extension lines. However, they have limited features.

Due to their simple design and limited expansion capabilities, they are available at lower prices. But they can involve costs for support, upgrade, and configuration as they use less modular hardware.

For example, you need to hire a professional to rewire the punchboard when you want to change the location of an extension. Getting an analog phone system is cheaper but creates a closed system that does not easily integrate CRM systems and VoIP.

In contrast, digital phone systems are modern. PBXs are generally designed to allow adding features and functionality. Boards are available for analog, digital, and IP phones. It is easy to add support for features like VoIP, hold music, and alarm systems with additional boards.

Today, most digital phone systems offer an interface regardless of their hardware. The interface allows enjoying features like fax to email, desktop client, voicemail to email, voicemail to SMS, etc.

While a fully digital PBX is software-based and purely IP, hybrid PBXs use proprietary digital hardware with IP networking. As these systems don’t rely on copper wire circuits, there is a lot of flexibility to add, move and change.

Such changes can be easily configured using point-and-click software. Digital systems offer a voice quality similar to or better compared to analog. Apart from the standard features like transfers and extensions, these systems provide voicemail, virtual auto attendants, and call forwarding features. They also offer the ability to integrate with sales software and call center.

Types of Digital Phone Systems

Digital phone systems are found in one of the three types:

PBX On-Premise

The original telephony system in use for decades, on-premise PBX exists as a phone box inside the walls that handles the received calls and directs the calls on the line to the right user.

Modern PBX systems come loaded with extra features, but it is ultimately the conventional PBX that manages the calls made within the organization.

RELATED: PBX Solutions: What is a PBX?


A VoIP phone system is an improvement over the conventional digital telephone. The significant difference between a traditional business phone and a VoIP PBX lies in their functions and technologies.

The On-Premise PBX analog or digital wires while VoIP PBX makes and receives calls through a data link or broadband, making it cheaper. Some of the benefits of this type of phone system include better quality of voice calls, using a device for multiple sites, and making free calls.

VoIP Hosted

A hosted VoIP phone system is the most modern and portable digital phone system. This model removes the box and takes everything to the cloud.

With this method, the calls and messages are converted into digital format, transported to the cloud, and sent to the other end within milliseconds.

This type of phone system has better versatility, higher quality of audio and video, and lower costs of implementation and maintenance compared to others.

RELATED: IP Telephony: A Guide for Business Users

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Benefits of Digital Phone Systems

A digital phone system demands an investment but offers several business benefits. Let us look at some of these:

  • It is easy to integrate a digital phone system with a CRM system to handle communication
  • Digital telephony does not involve expensive cabling and wiring
  • It offers several advanced features, including a public broadcast system, voice and video conferencing, and a multi-function voice, video, and data system
  • Digital systems automatically route calls to the individuals with the right skills in the call center setting to improve customer satisfaction and efficiency
  • It also offers additional features like a paging system, call blocking, music on hold, call recording, ID system, and automated assistance
  • Systems based on VoIP telephony eliminate long-distance call charges
  • Capabilities like web and email integration let remote workers stay updated and respond promptly
  • Integrated digital phone systems that display customer accounts help improve sales and customer relationships
  • A digital phone system can be customized to grow alongside the business
  • It is a low-cost service without any issues that could result in system failure
  • With a digital system, you can have multiple users, multiple lines, remote access, screen popping, and more

A digital phone system can be easily set up and customized to meet the business needs as some features come as standard and others available as upgrades and add-ons.

Expandability is easily achievable with this system as it accepts expansion cards, modules and licenses. Some of the most popular examples of add-on features include music on hold, find me follow me, voicemail, Station Message Detail Recording (SMDR) and Automatic Call Distributor (ACD).

This abundance of features and capabilities and the ability to get customized for businesses make digital telephone systems so popular.

RELATED: Benefits of VoIP: What advantages does VoIP offer businesses?

How to Set Up a Digital Phone System?

Setting up a digital phone system in your work environment is not so expensive and complicated as conventional communication lines.

Firstly, you don’t need to struggle to find a secure space to install any hardware infrastructure. Secondly, your monthly costs are much lesser with a cloud-based VoIP system.

The primary equipment needed for this service includes:

  • A VoIP telephone device that you can connect to the computer or an adapter if you are using a traditional phone system
  • A VoIP service provider and an ISP are different companies

A cloud-based VoIP does not require setting up an on-premise server and allows adding users as you expand the business.

Internet and VoIP providers generally offer flexible plans where you can add features and upgrade to meet the changing needs of your business.

RELATED: How to set up a VoIP phone system for your small business

How to Choose a Digital Phone System for your Business?

Every business has unique requirements, so there are several things one should consider when choosing a communication system. Let us discuss a few essential considerations.


You may spend more on a business telephone system if you underestimate or overestimate your growth. Consider the number of users, devices, and the projection of phone lines in a specific period.

Some businesses may rely on dedicated lines, while others can afford one line per department. However, if the business starts growing rapidly, it may not find a dedicated line for a department sufficient.


When setting up a digital phone system, it is crucial to focus on flexibility so that you can leverage the latest technology and advancements.

For example, audio conferencing is a valuable technology that allows users to connect and communicate simultaneously. You need special equipment with a microphone to enable multiple users to converse in real-time to use this feature.

Apart from new apps for business communications, technological advancements can be seen in hardware and equipment.

Also, your employees may need to communicate through mobile devices. This will affect your phone system choice as you require different ones for different types of personnel.


This depends entirely on business needs and the objectives associated with the communication system. A PBX system is ideal for companies that need call management features and insight into the call data.

However, if you want advanced features and detailed analytics for every call, you should go for a VoIP phone for the business.

RELATED: What are the best types of Phone Systems for Business?

Final Thoughts

A digital phone system is an excellent way to make sure your communication system grows and evolves with your business.

Traditional phone systems cannot match the features, ease of use, and flexibility of PBX and VoIP services.

These modern telephony systems provide businesses with the most secure and scalable ways to communicate, cutting costs and ensuring maximum uptime to improve efficiency and productivity.

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