In regular telephone systems, a PBX (private branch exchange) is the switching system that manages calls between internal or local users. It also shares a number of lines that connect to the external, public phone system and parcels them out as needed to the local users. In addition, enterprise PBX systems have other features that allow them to take incoming calls, send them to the correct extensions, connect calls to answering services, etc. A typical PBX consists of a set of external phone lines, a computer server system that manages call switching, a set of internal phone lines and some form of console for manual control.

In VoIP or IP telephony systems, the IP PBX does all this and more. It performs all the switching and connecting of VoIP calls. In many cases it does the same for regular telephone calls (in systems that can handle both kinds of phone system). It is also highly programmable and can perform advanced functions including voice menu systems, automatic call conferencing, click-to-call (click on a contact record on a PC screen to initiate a voice call), call logging and tracking and much more. Using an IP PBX system and VoIP telephone service allows an organization to combine (or converge) voice and data networks into a single system for cost-savings, simpler management and greater functionality.

Typically an IP PBX system is a piece of software running on a server . Depending on the workload, that server can also be performing other tasks, but usually it is dedicated and also acts as the VoIP system’s connection to the internet. IP-PBX systems can come as software for you to install on an existing server of your own, or as preconfigured software on a server, or even as a turnkey box that is completely set up in advance to just connect to your existing network.