Rarely does bad news come wrapped around good news, but if your company needs to upgrade your telephone system, consider yourself lucky. OK, not lucky, because replacing phone systems takes far more time and money than you first think. At least today you have options that reduce the money required from outrageous to merely surprising, a huge savings.

Small and medium businesses now buy more IP PBX systems than traditional telephone network PBX systems. Last time you bought a PBX you probably had options for the PBX vendor and long-distance provider, but no options on which local service carried your calls. Now you have options for all three.

Will Gibson, president of Fluent Systems, started experimenting with VoIP phone systems back in 1999, "before it really worked," he says with a laugh. His company focuses on companies needing 30 to 50 phones, although he does have one national construction company customer with thousands of phones spread around 82 locations.

"The sales process is lease driven," says Gibson. "Companies start looking when their lease is running out." Rarely will companies add a new phone system while still making payments on their current one, but Gibson has had a couple of customers who saved so much with a new IP PBX they did just that.

When Gibson started, the big savings came from "toll bypass,- shifting voice traffic between offices off of toll lines to existing IP data networks. Suddenly a phone in a remote office was another extension, not a long distance call. An IBM executive once told me that a decade ago, 90% of IBM's long-distance calls were employee to employee. With long-distance rates at about 15 cents per minute, bypass saved big money.

But today rates are four cents per minute or less, and you can't justify an IP PBX on long-distance cost savings. Look instead to adding more features, simplifying your networks and easier management.

Gibson resells systems from Sphere Communications because they offer SIP Trunking, among other features. Session Initialization Protocol (SIP) Trunking bypasses your local telephone lines and goes directly to an IP switch at the carrier. This feature avoids the need for multiple telephone lines from the traditional telephone company linked to your building, and avoids the expensive ($2500-$5000) gateway hardware that connects your IP PBX to traditional phone lines.

James Gaskin writes books (16 so far), articles and jokes about technology and real life from his home office in the Dallas area.