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Cloud Telephony: How it Works? And Implementation Guide

cloud telephony
  • Cloud telephony offers a wide range of benefits over traditional phone systems, including cost savings, scalability, and mobility. With cloud-based phone systems, small businesses and large organizations enjoy communication over VoIP which results in reduced call charges.
  • In this guide, we will look into how cloud telephony works and the benefits and features it offers for businesses. Including step-by-step explanation on setting up cloud telephony software.

Table Of Contents:

What is cloud telephony?
How does a cloud telephony system work?
Cloud telephony vs VoIP, what is the difference?
Cloud telephony setup and implementation guide
Features to consider when selecting a cloud telephony provider
Benefits of cloud telephony systems
Cloud telephony use cases
Frequently asked questions

What is cloud telephony?

  • As the name itself suggests, cloud telephony is a virtual-based telephone system accessible via software applications provided by Cloud Telephony Service Providers like TeleCMI. Unlike PBX phone systems and landlines, it allows users to make and receive calls using an internet connection powered by VoIP and webRTC technologies. Thus, the call charges are low compared to traditional phone systems.
  • Cloud telephony is also referred to as VoIP phone systems, Cloud PBX, or cloud phone systems. It also supports multiple channels apart from voice such as video conferencing, team chatting, SMS, and eFax.
  • Reduced call charges, the ability to call from anywhere, no special hardware requirements, and advanced call management features are the main reasons why businesses are migrating to cloud telephony systems.

How does a cloud telephony system work?

  • Cloud telephony or cloud calling works based on VoIP protocol which is a technology used to make and receive calls over an internet connection. VoIP technology converts the analog voice signal into digital data and sends it over the internet.
  • The entire infrastructure is hosted in the cloud by the cloud telephony provider, which means that there is no need for businesses to install and maintain special telephone hardware on their premises.
  • To use cloud calling software, a high-speed internet connection is required. Users can make and receive calls using a web-based interface, a desktop or mobile app, or an IP phone that supports VoIP.
  • When a user places a call, the call is routed to the provider's nearby servers, where it is then forwarded to the recipient's phone number over the internet. This process is seamless and usually happens in a matter of seconds.
Cloud telephony vs VoIP, what is the difference?
  • Cloud telephony is a hosted telephone system managed by third-party vendors and offered to businesses as software as a service to access all its cloud communication features. Where VoIP is a technology used in cloud phone systems to deliver voice and messaging services over the internet rather than connecting with PSTN (Public switched telephone network) or Ethernet cables.
Cloud telephony setup and implementation guide
  • Here are the simple steps to set up cloud telephony at your office or home:
  • 1. Choose a cloud telephony service provider: There are many cloud telephony service providers available in the market. Compare the features, pricing, and reliability of the providers and choose the one that suits your needs.
  • 2. Sign up for an account: Once you have selected a service provider, sign up for an account and choose a phone number or port your existing number to the provider.
  • 3. Configure your account: Set up your call routing preferences, IVR menus, call recording, voicemail, and other features through the provider's web-based dashboard.
  • 4. Connect your devices: Cloud telephony services support a wide range of devices such as IP phones, softphones, smartphones, and web browsers. Choose the device that works best for you and install any required software or apps.
  • 5. Test your setup: Once your devices are connected, test your setup by making and receiving test calls to ensure that everything is working as expected.
  • 6. Start making and receiving calls: Now that your cloud business phone system setup is complete, you can start using it to make and receive calls from anywhere with an internet connection.
  • Tip: Although implementing hosted phone system won’t require complex IT skills, If you're an absolute beginner, then you can partner with a cloud telephony provider like TeleCMI for setting up your cloud phone system and understand how it works.
Features to consider when selecting a cloud telephony provider
Virtual numbers
  • Virtual Phone Numbers are not tied to a specific physical phone line or location. Instead, it is cloud-based. They allow businesses to establish a local presence in areas where they do not have a physical location, making it easier to connect with customers and establish trust.
  • A softphone is a VoIP app that allows a user to make phone calls over the internet by typing contact numbers or user extensions. It looks like a regular smartphone dialer with a dial pad, call recording, and other useful features and comes as a built-in feature in cloud telephony software.


  • UCaaS stands for Unified Communications as a Service and provides organizations with a suite of communication tools such as voice, video conferencing, instant messaging, and file sharing. Some providers offer this feature to conduct business communications via more than one channel rather than only voice.

IVR and auto attendant

  • IVR stands for Interactive Voice Response, which is a technology that act as an auto attendant and allows callers to interact with an automated phone system through voice or keypad inputs. IVR systems can be used to provide information, route calls, and handle simple transactions, such as balance inquiries, account updates, and payment processing.

Automatic call distribution

  • Automatic Call Distribution (ACD) is a feature that helps distribute incoming calls to the most appropriate agent or department, based on a set of predetermined rules. ACD systems can be customized to meet the specific needs of a business and can be used to improve call handling efficiency, reduce wait times, and enhance the overall customer experience.

Call recording

  • This feature allows organizations to record and store voice calls made and received by their employees. Call Recording is a valuable tool for businesses, as it can be used for a variety of purposes, such as quality assurance, training, compliance, and dispute resolution.

Benefits of cloud telephony systems

Accessible from anywhere

  • Since cloud telephony is hosted in the cloud, you can access it from any device with an internet connection, such as a computer, laptop, tablet, or smartphone. This means that you can make and receive calls, send and receive messages, and access other features of the cloud telephony system from anywhere in the world.

Lower call charges

  • The call charges with hosted telephone system are relatively lower than traditional phone systems. Also, many providers offer competitive pricing models and unlimited calling that can save businesses money on their phone bills.

Scaling is easier

  • Businesses can easily add new users and phone lines as needed, without the need for expensive hardware or installation. This means that businesses can quickly and easily scale up or down depending on their changing needs, which can be particularly useful for growing businesses.

Multi-channel support

  • Support multiple channels of communication, including voice, text messaging, SMS, and video conferencing. This means that businesses can use a variety of communication channels to reach their customers and clients, depending on their preferences and needs.
  • Cloud-based phone systems can be integrated into other business applications like CRM, ERP, ticketing, and collaboration tools. This helps business teams work smartly and streamline processes from different platforms.
Increased agent productivity
  • This type of phone system improves staff productivity in a number of ways. It allows employees to work from anywhere with an internet connection, giving them the flexibility to work remotely or from different locations.
  • Features like IVR and ACR can automatically route calls to the appropriate employee or department, improving response times and reducing the need for call transfers. Thus, reducing the workload of staff.
24/7 call handling
  • One of the advantages of virtual telephony is that it can be set up to handle calls around the clock, without the need for a physical receptionist or phone system administrator to be available at all times.
  • Cloud calling platform providers can offer features such as automatic call routing, IVR, business hours, and voicemail to ensure that calls are handled promptly and efficiently, regardless of the time of day.
Cloud telephony use cases
Virtual receptionist
  • IVR or auto attendant feature in cloud calling platform can be used as a virtual receptionist to handle the large volume of incoming calls and direct them to the appropriate person or department within an organization.
Customer self-service
  • Can be used for customer self-service by providing customers with a phone-based interactive voice response (IVR) system that enables them to access information, get help with their inquiries, and complete simple transactions without requiring human intervention.
Virtual meetings
  • Cloud phone system providers have inbuilt audio and video conferencing solutions which can be used for team meetings and collaboration.
  • Cloud-based telephony enabled with an auto dialer helps sales teams optimize their outbound calling effort with features like predictive, progressive, and power dialers. This improves lead conversion rate and automates manual calling.
local presence
  • Enables businesses to display local phone numbers to their customers, even if they are physically located in a different location. Businesses can avail local or international numbers within the Virtual Business Phone System and can expand globally.
Call center operations
  • Cloud telephony enhances call center operations by providing a variety of features and benefits like call monitoring, IVR, sticky agent, call queues, and skill-based routing that can enhance the performance and productivity of call center agents.
Number masking
  • Custom caller ID features in cloud telephony help financial and delivery businesses hide or mask the caller's phone number to protect their privacy.
Internal communications
  • Features like intercom, ring groups, and extension dialing promote seamless internal communications within an organization, enabling employees to communicate with each other over the phone, regardless of their location.
Try TeleCMI Cloud telephony platform

Frequently asked questions


Virtual phone systems, VoIP, webRTC, UCaaS, virtual contact center, and IVR are some examples of cloud telephony.


While PABX and cloud telephony both offer phone systems for voice communication, cloud telephony is a more modern, virtual-based, and flexible option that is often more affordable and easier to manage than traditional PABX systems.


Cloud IVR systems are often used to automate customer interactions and use cloud-based telephony platforms to deliver IVR services, which can be accessed from anywhere with an internet connection.

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