Convince Your Boss to Upgrade Your Phone System: IRR Calculation

Phone System IRR

The IT department often gets the brunt of employee and customer frustrations for phone issues, yet your boss doesn’t see the need to upgrade your phone system. Whether it’s due to a lack of understanding or financial concerns, there are different reasons why upper management could be hesitant to move forward. With a strong argument, you can change the decision makers’ minds.

Build your case for a phone system upgrade by explaining the benefits, then seal the deal with an IRR (internal rate of return) calculation. Outlined below are steps for convincing your boss that the organization deserves a better phone system.

Explain the Drawbacks of Your Current System

Describe to your boss how your business has outgrown your current phone system. He or she might be unaware of all the current issues. For example, poor call quality and dropped connections hinder an employee’s ability to reach clients and co-workers. This disrupts productivity, reduces profitability and produces subpar interactions.

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Outdated phones also can’t keep up with modern demands. With an old phone system, remote workers or multiple sites have trouble staying connected. Disjointed communications not only exasperate teams but also increase the likelihood of mistakes and delays. In summary, your current system makes it harder for workers to do their job and drives up costs — a double whammy!

Communicate Advantages of a System Upgrade

Phone systems have the potential to do much more than make and receive calls. By replacing your PBX/Key system or Centrex PRI service with a hosted phone system, your organization will experience many benefits. After you’ve explained to your boss the current phone system’s problems, detail the advantages of an upgrade.

Reduces Costs

Save money on long-distance and toll-free per-minute charges with a hosted phone system since it uses high-speed internet rather than analog signals to establish an audio connection. One provider for both internet and phone streamlines operations and cuts infrastructure costs. Furthermore, VoIP (voice over internet protocol) equipment is less expensive than premise-based telephone equipment as it’s the current standard.

Boosts Productivity

Get more done with 100 percent uptime, crisp call clarity, feature-rich phones and seamless mobile device connection. Regardless of location, remote workers or multiple sites will be able to stay connected by mobile, tablet and PC under a single, unified system. Your team won’t be limited to their desk phone to make calls or have to struggle through poor call quality.

Enhances Interactions 

Few things interrupt business more than calls with static, echo or background noise. With a hosted phone system, your organization will have fast speed and connection clarity which leads to better client interactions and team collaboration. Create positive experiences with clients and workers with noise-free connections.

Count on a Phone System IRR Calculation

Sometimes, numbers speak louder than words. An IRR calculation is an effective tool for comparing projects and justifying investments. By providing financial proof that an upgrade makes economic sense, you’ll be able to sway your boss that a hosted phone system is best for the organization.  

What Is an IRR?

Internal rate of return (IRR) is a method used to compare investments or projects. According to Investopedia, “The ultimate goal of IRR is to identify the rate of discount, which makes the present value of the sum of annual nominal cash inflows equal to the initial net cash outlay for the investment.”

Basically, if the IRR exceeds the cost of capital, then the project is deemed as a good investment. On the other hand, if the IRR is lower than the cost of capital and doesn’t meet the minimum rate of return, then it’s considered a bad investment.

IRR vs ROI

While both IRR and ROI are performance measurements for investments, they differ in the following way: ROI is the total growth of an investment whereas IRR is the annual growth rate. ROI is easier to calculate, but it’s challenging to make accurate estimates when measuring the monetary value of the costs and results for projects. That’s why IRR makes for a stronger case.

How to Calculate IRR of a Phone System Upgrade

Use an IRR calculation to compare the return of an upgraded phone system vs. the current system. There are two ways to calculate phone system IRR, through a formula or software program. We recommend using a software program to save time and improve accuracy but here’s what the formula looks like:

Internal Rate of Return IRR Formula
Image source: calculatestuff.com

Find the Right Business Phone System

By communicating the advantages and calculating the IRR of a phone system upgrade, you’ll be in a great position to convince your boss that it’s a worthy investment. Your organization will run smoother and the IT department will be free to focus on other projects rather than be tied up with phone issues. Once your boss approves, next you’ll need to find the right business phone systems partner.


Schedule a consultation to learn about our hosted phone solutions to make your upgrade a seamless transition.

James Smith

As President and Chief Connector, James loves solving complex communication problems to help businesses transform, optimize, grow and succeed. One of his favorite parts of the job is being able to smooth the pathways for clients to communicate clearly and effortlessly. On this blog he shares telecommunications industry news and the latest trends.

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