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Local vs. Cloud Backups: Which Approach Should SMBs Choose?

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In today’s digital age, data is everything—even for small and medium-sized businesses (SMBs). Data enables digitally transformed SMBs to drive growth, increase productivity, and maintain a competitive edge.

However, the same data SMBs rely on so much is also vulnerable to various threats, including malware, targeted cyberattacks, hardware failure, natural disasters, user error, and malicious employees. That’s why it’s paramount for SMBs to choose a reliable backup approach.

There are two main backup approaches available to SMBs: local backups and cloud backups. Each of these two approaches has specific advantages and disadvantages, and we explore them in this article to help SMBs choose the best backup approach for their business.

Finding the Right Data Backup Strategy for SMBs

In order to find the right data backup strategy, it’s paramount for SMBs to clarify their data backup objectives by asking the following questions: How many copies of important data do we want to create? On which storage devices do we want to create them? Where do we want to keep them?  

Many experts believe that the 3-2-1 backup strategy provides ideal answers to the questions above. According to the strategy, SMBs should always have:

Three copies of data:

This means having one primary copy and two backup copies, and it ensures that there are still two copies available for recovery even if one copy is lost or corrupted.

On two storage devices:

To provide redundancy in case of hardware failure or corruption, it's recommended to keep the two backup copies on different storage devices, such as external hard drives and optical disks.

With one copy kept off-site:

Having one copy kept off-site provides protection against local disasters like fires, floods, or theft. This ensures that SMBs’ critical data is always recoverable, even if their primary location is affected by a disaster.

In practice, the 3-2-1 backup strategy can be implemented using both local and cloud backups, but that doesn’t mean the two approaches are equally suitable for all SMBs. Let’s take a closer look at each of them.

What Are Local Backups?

Local backups store backup copies of data on physical storage devices that are located on-premises or in various physical locations. Examples of storage devices on which local backups are commonly stored include external hard drives, network-attached storage (NAS), or tape backup systems. SMBs can create local backups using many different backup software tools, such as those offered by Veeam, Synology, and Backblaze.

In practice, local backups can be used to implement the 3-2-1 backup strategy by backing up all workstations on a central NAS device and tape backups or USB flash drives. The tape backups or USB flash drives can then be regularly moved to a secure off-site location so one copy of data is always protected against local disasters.

Advantages and Disadvantages of Local Backups

Local backups offer several advantages, including:

Fast Data Recovery:

Because local backups are stored on-site, they can be quickly accessed in case of data loss. The actual speed of data recovery then depends on the storage device itself, with hard drives being considerably faster than tape backup systems.

Greater Control Over Data Security:

With local backups, SMBs have greater control over the security of their data, as it remains within their physical premises and is never handled by any third party.

Lower Long-Term Costs:

While requiring some initial and ongoing investment, local backups can cost SMBs less money in the long run since the cost isn't based on the volume of data transferred by on the amount and type of available backup space.

Easier Compliance with Data Regulations:

Depending on the industry, some SMBs may be required to keep backups of their data on-premises to comply with data regulations. For such SMBs, local backups may be the only choice.

No Internet Connection Required:

Local backups don't require an internet connection to be created or restored, which can be advantageous for SMBs in areas with poor internet connectivity and slower data transfer speeds.

However, local backups also have some disadvantages, including:

Limited Capacity:

With local backups, the total storage capacity is always equal to the sum of the storage capacity of all purchased backup devices. This means that SMBs may not always be able to create extra backups in addition to their regular backup rotation.

Limited Accessibility:

The accessibility of local backups suffers greatly when some employees work remotely and backup their work data on USB flash drives. Local backups also present a challenge for SMBs with multiple locations since it can be difficult to ensure that each location has access to the backup data it needs.

Potential for Theft:

Backup storage devices that are not kept in secure locations are vulnerable to theft. A random thief could steal a hard drive full of sensitive business data, or an employee could misplace a backup device in a public place. Both incidents could result not only in the loss of critical data but also in a costly data breach.

Vulnerability to Disasters:

Local backups stored on-premises are vulnerable to natural disasters like floods, fires, or theft. In such cases, SMBs may lose their original data and primary backups simultaneously, leaving their potentially outdated off-site backups as the only available option for recovery.

Manual Processes Required:

It's impossible for SMBs to completely automate local backups because someone always needs to install new backup devices, configure backup settings, and physically move backup storage devices off-site. And whenever something needs to be done manually, errors can occur.

What Are Local Backups?

With cloud backups, backup copies of data are stored on remote servers that are owned and managed by third-party cloud providers like Amazon Web Services (AWS), Microsoft Azure, or Google Cloud. These providers charge for their backup services based on a pay-for-what-you-use basis, which means SMBs only pay for the backup storage capacity they actually need.

Because cloud backups are always kept off-site and optionally replicated multiple times across different geographical locations, they make it easy for SMBs to implement the 3-2-1 backup strategy in practice. For example, Microsoft’s Azure Backup service by default replicates data to a secondary region located hundreds of miles away from the primary region.

Advantages and Disadvantages of Cloud Backups

Here are some of the main advantages of cloud backups:

Unlimited Scalability:

Cloud backups can scale up or down easily, depending on the amount of data to be backed up, and SMBs don’t need to invest in expensive hardware to increase their total backup capacity.


Because cloud backups can easily scale up or down and are typically charged on a pay-as-you-go basis, SMBs only pay for the storage they really need. This can make cloud backups more cost-effective than local backups, but only when cloud backups are used efficiently.

Remote Work Friendly:

Cloud backups can be accessed from anywhere with an internet connection, making it easy for remote workers to access their backup data and for SMBs to avoid data loss regardless of where their employees are located.

Disaster Recovery:

SMBs that keep their backups in the cloud can recover lost data even in the event of a local natural disaster because cloud backups are by definition stored off-site and often spread across multiple data centers in different geographic locations.

Backup Automation:

It's the responsibility of the cloud backup service provider to manage the physical backup infrastructure, so SMBs set up their backups to run automatically and avoid the error-prone manual processes associated with local backups.

But cloud backups are not without some disadvantages:

Reliance on Internet Connection:

Since cloud backups require a working internet connection, they can be vulnerable to network outages or other connectivity issues. This can cause backups to fail or be delayed.

Long-Term Costs:

Cloud backups can be expensive in the long run because their cost depends on the amount of data transferred or stored, particularly for SMBs that have large amounts of data to back up or those that require frequent backups.

Data Security:

With cloud backups, SMBs are entrusting their data to a third-party provider. This raises concerns about data security, particularly with regards to data breaches or unauthorized access. This disadvantage can be largely mitigated by choosing a reputable cloud provider that secures data both in transit and at rest.

Regulatory Compliance:

SMBs in certainly highly regulated industries, like healthcare and finance, are often required to store backup data within a specific geographic location or with specific security measures in place. Such SMBs need to ensure that their chosen cloud backup providers can meet their compliance needs.

Limited Control:

Cloud backups give SMBs limited control over their backup data. They may not be able to customize backup settings or schedules to their exact needs and may not be able to access their data in the same way as they could with a local backup.

Which Backup Approach Should SMBs Choose?

Given the above-described advantages and disadvantages of local and cloud backups, it’s clear that cloud backups are the better choice for most SMBs. The advantages they offer are really compelling, while the disadvantages are usually easy to overlook or overcome.

The only exception are SMBs with specific data security or compliance requirements that prevent them from backing up all data to the cloud. For them, combining both local and cloud backups to keep the most sensitive data locally and the rest in the cloud is a viable option. This is known as a hybrid backup approach, and it can combine the advantages of both backup approaches.

If you are unsure which backup approach is right for your SMB or are looking for a reliable IT provider who can help you implement the approaches described in this article, then don’t hesitate to contact us at TechGen. We can help you choose and implement the right backup approach for your business to ensure that your data is always protected.

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