What is a virtual switchboard? First of all, I don’t really like the term virtual PBX or private branch exchange, although it describes very accurately what a virtual phone system is. The reason I don’t like that term is because even though I just explained what PBX stands for, if you’re the typical small business owner like me, you still have no idea what it really is.

So a term I prefer to use is “virtual phone system.” It just makes a lot more sense, and I’ll explain why I think so:

  • virtual – an adjective that applies to things that actually exist, however they may not explicitly exist in a given place or site, but are actually created or carried out by means of computers. Get all that? Ok, in other words, something that exists, but maybe not actually located in the same place where you’re sitting.
  • telephone system – basically a system that has all the functions and features requested/required by most small businesses today.

So, in reality, a virtual phone system is simply a business phone system that does not physically exist in a closet somewhere in your home office, office building, or office suite, but is “hosted” at the physical location of the Service provider. This means that all hardware and software (except for the web interface you use to consume your account) is located at the physical location(s) of the service provider you select. This benefit should not be underestimated, as the cost of such hardware and software can be extremely expensive, and in most cases cost prohibitive for very small and small businesses. Those systems also typically require someone on staff who knows what they’re doing, to make changes whenever you add or change something to the system, or fix things when you have the occasional bump in the night. With virtual phone systems, you don’t have the investment in hardware and software or the overhead of staff.

Basically, a caller places a call to your toll-free number or your local business phone number. When that happens, the call is actually sent to and received by whatever service provider you select. At that point, an auto attendant responds with a greeting that you have selected or recorded, and then routes the call based on how you have configured the system. Most systems now also have built-in fax capabilities, which means that the system automatically detects whether the incoming call is from a human or a fax and routes the call correctly.

In a normal landline phone system, each extension would be assigned to a desk phone somewhere in the office where the phone system is installed. However, with these virtual phone systems, you can assign that extension to any phone number anywhere in the world. As you can see in the diagram, these phone numbers can be associated with individual employees, branches, etc. Actually, you can even assign an extension to a set of numbers that will be cascaded until they answer, and then, if they don’t answer, finally to a voicemail box. Many systems also allow voicemails to be converted to emails so you can easily manage all your communications from one location.

This allows small businesses to have employees or offices located across the country or even the world, which are easily accessible to their customers through a single phone system that is easy to set up and now very affordable. With these virtual phone systems, you can even easily transfer calls between extensions, even when those extensions are on the other side of the world. Try it with a traditional PBX (telephone) system.

The ability to enable distributed employees, distributed support centers, or distributed offices that are still seamlessly connected through the phone is one of the main factors that differentiate between virtual phone systems and traditional phone systems.