If you want a phone system that’s housed inside your business, rather than in the cloud, you need to buy the technology to make it happen.

Businesses that need multiple lines and extensions can’t just plug their phones into a jack and start talking. Instead, they rely on private branch exchange (PBX) hardware to keep their phone services running.

The PABX hardware allows businesses to connect their internal lines to each other and connect those lines to either the public switched telephone network (PSTN), which is how a traditional landline system works, or the Internet, which is how Voice over Internet Protocol (VoIP) systems are run.

A PBX system is the hardware that allows circuit switching within an organization’s phone system, said Aaron Charlesworth, vice president of marketing and product for Vonage Business Solutions.

“PABX is simply a generic term for the telephony network that a company leverages to place and receive calls both inside and outside their organization,” Charlesworth said.

One of the main benefits of using a PBX system is that it saves businesses on the costs of maintaining a separate phone line for each employee who needs a phone. With PBX hardware, businesses can have more phone extensions than actual phone lines.

PBX technology also provides the benefit of a set of features, such as voicemail, interactive voice response, call queues, call transferring and call recording.

Depending on the type of phone system a business wants, either the company itself or an outside party will own and operate the PBX hardware. Businessesusing a traditional landline phone system will own the hardware, which will be located inside of the company’s offices, said Bernard Gutnick, senior director of product management for ShoreTel.

“You are almost like a little phone company,” Gutnick told Business News Daily.

In addition to the PBX systems that are compatible with landlines, there are also IP PBX systems that work with a VoIP-based phone system. Similarly to the landline, IP PBX systems are owned, configured, maintained and housed by the business.

The main difference between the two is that the landline PBX systems connect to the phone company’s copper wiring, while the IP PBX system connects to the VoIP provider via an Internet connection. Additionally, since the IP PBX systems are connected via the Internet, they can offer additional features, such as sending voicemails to an email inbox.