Small and midsize business (SMB) IT admins increasingly adopt cloud-first backup strategies. Veeam Backup & Replication v12.3, combined with Veeam Data Cloud, enables direct backups to cloud object storage – eliminating the need for on‑premises backup hardware. In this post, we’ll explore the benefits of backing up directly to object storage (including built-in immutability and cost savings around $14 per TB), compare costs versus traditional on-site storage, and outline a design for multi-tier retention using Backup Copy jobs. This guide is tailored for SMB technical audiences and IT admins looking to modernize their backup infrastructure.

Cartoon of a beaver and a raccoon AI-generated content may be incorrect.

Why Direct-to-Object Storage in Veeam v12.3 is a Game Changer

Veeam v12 introduced the ability to back up directly to object storage as a primary target. This means you can send backups straight to services like Amazon S3, Azure Blob, or Veeam’s cloud storage (Veeam Data Cloud Vault), without staging on local disk first. The benefits for SMBS are significant:

  • No On-Prem Backup Server Required: You no longer need to maintain a large NAS or disk array on-site for backups. Backups land directly in a cloud object repository, eliminating on-premises backup targets and their associated costs and maintenance.
  • Unlimited Scalability: Object storage is virtually limitless and scales on demand – you can grow from a few TB to dozens or hundreds without procuring new hardware. This “pay-as-you-grow” model is ideal for SMBS with growing data.
  • Immutability & Air-Gap by Default: Cloud object storage supports object lock (WORM) to make backup data immutable. Veeam v12.3 fully leverages this, ensuring backups in object storage cannot be modified or deleted for a defined retention period, protecting them from ransomware. Veeam Data Cloud Vault, for example, uses “Zero Trust storage that’s always immutable and logically air-gapped from production”.
  • Resilience (3-2-1 Rule Made Easier): Off-site backups are inherently baked in, satisfying the 3-2-1 rule (three copies, two different media, one off-site). If your production site is hit by disaster, your backups remain safe in the cloud.

Veeam Data Cloud is Veeam’s hosted backup storage service that simplifies this approach. It provides a fully managed, secure cloud repository (built on Azure) with flat pricing and immutability. You specify how much capacity you need and point your backup jobs to it – Veeam handles all the backend storage management.

Built-In Immutability for Ransomware Protection

One of the biggest advantages of cloud-first backups is immutability. Ransomware often targets backup files (93% of attacks try to encrypt or delete backups ), so having off-site, immutable copies is critical. Object storage immutability means once a backup is written, it cannot be altered or removed until its lock period expires. Veeam v12 supports native immutability on all major object storage platforms (AWS S3 Object Lock, Azure Immutable Blob, etc.). With Veeam Data Cloud Vault, immutability is automatically enabled on every backup (“Zero Trust storage… always immutable” ).

This significantly boosts ransomware resiliency for SMBS without extra effort. 82% of organizations now use immutable cloud storage as part of their backup strategy, and 61% use cloud storage alongside disk for backups. By writing your primary backups directly to an immutable cloud repository, you ensure you always have a secure, off-site copy that malware cannot compromise.

Key point: Immutability in object storage is built-in and easy to activate with Veeam v12. You no longer need physical WORM media or manual air-gapping procedures – your cloud backups are tamper-proof by design.

Cost Benefits: Cloud Storage vs. On-Prem Backup Infrastructure

Beyond security, cost is often the deciding factor. Let’s compare the cost model of using cloud object storage for backups versus maintaining on-prem backup storage hardware:

  • Cloud Object Storage (Veeam Data Cloud Vault): Pricing is typically pay-per-use, e.g. “starting from $14 per TB per month” all-inclusive. This flat rate includes the storage, API calls, and even egress for restores – no surprise fees. At $14/TB/month, 40 TB of backup data costs roughly $560/month (≈$6,720/year). There’s no large upfront purchase; you pay for what you use and can scale up or down at any time.
  • On-premises backup Storage usually means buying a disk-based storage device or server (with redundant drives, RAID, etc.). A reliable 40 TB on-prem appliance can cost around $25,000 upfront (for hardware, RAID controller, enclosure, support warranty, etc.). That’s an up-front capital expense. Additionally, you’ll have ongoing costs: power/cooling, space in your rack, drive replacements, and IT staff time to manage it. Over a 3–5 years, the total cost per TB often becomes significantly higher than the cloud. And if you outgrow 40 TB, you face another capital purchase.

To illustrate, here’s a simplified cost comparison:

Backup Target Cost Model Approx. Cost for 40 TB Immutability Management Overhead
Cloud Object Storage (Veeam Data Cloud Vault) Subscription (OPEX) – pay per TB-month $14/TB per month $560/month for 40 TB ($6,720/year) Yes – object storage WORM lock (built-in, no extra effort) Minimal: No hardware to maintain; provider manages durability and scale
On-Prem Storage (Disk/NAS appliance) Capital expense (CAPEX) + maintenance $25,000 upfront for ~40 TB (one-time) + ongoing utilities & upkeep Possible via air-gapped or WORM media (not inherent; needs setup) High: Hardware provisioning, upgrades, monitoring, off-site transport for 3-2-1, etc.

As shown, cloud backup storage can be very cost-effective for SMBS. At ~$14/TB-month (Veeam’s flat pricing), you pay under $7k per year for 40 TB of protected data—and this includes all infrastructure, replication across availability zones, and immutability. To get equivalent resilience on-prem, you’d spend tens of thousands upfront, plus ongoing admin effort. Even factoring in multi-year cloud costs, the flexibility and eliminated management overhead tilt the equation towards cloud for many businesses.

Note: Cloud storage costs scale with usage, so it’s essentially an operational expense. There’s no depreciation or sunk cost in hardware. If you decommission servers and need less backup storage, you pay less. Conversely, if you suddenly need more capacity, you can expand immediately without waiting for hardware procurement.

Fast Internet Makes Cloud-First Backups Viable

One historical barrier to cloud backups was limited bandwidth, but this is largely disappearing. High-speed internet connectivity is now widely available to businesses, even SMBS. Fibre and cable providers often offer 100 Mbps, 1 Gbps, or faster connections. In the U.S., for example, 88.6% of customers can get at least 100 Mbps download, and 76.4% have access to gigabit speeds as of 2024. With such bandwidth, sending backups off-site is no longer an all-night or multi-day affair.

Modern backup software like Veeam also uses techniques to optimize cloud transfers for limited windows: incremental forever backups (after an initial full), compression and deduplication, and WAN acceleration if needed. Many SMBS find daily incremental backups (often only a few percent of total data) easily transfer within overnight windows over a decent broadband link.

Example: A 500 GB incremental backup over a 200 Mbps upload link (~25 MB/s) can theoretically complete in ~5.5 hours. With a 1 Gbps fibre link, the transfer would finish in under 1.5 hours. This means even relatively large daily changes can be pushed to cloud storage before the next work day.

A cloud-first backup strategy essentially treats the Internet as your “backup network.” With proper planning, you may not need any local backup storage at all—the cloud repository serves as both your primary backup and off-site copy in one. Of course, if bandwidth is a concern, hybrid approaches are possible (keep a short-term local cache, etc.), but the trend is clear: broadband speeds have made direct-to-cloud backup viable for SMBS.

Design Example: Multi-Tier Retention with Backup Copy Jobs

Every department in an organization may have different data retention requirements. For example, Finance might need 7-year archival retention for compliance, whereas Marketing may only require 1-year retention. Veeam Backup & Replication lets you accommodate these needs using Backup Copy Jobs to create secondary backup copies with different retention policies.

Scenario: You want to keep 30 days of backups readily available for quick restores and maintain longer-term archives (e.g., annual backups kept for several years) for specific departments.

Solution: Configure your primary backup job to target the cloud object storage repository with a short-term retention (e.g., 30 days of restore points). Then set up Backup Copy jobs for longer-term archival:

  • Primary Backup Job: This job backs up VMS/files directly to object storage (Veeam Data Cloud repository). Retention might be 30 daily restore points. This is your fast recovery tier for recent data.
  • Backup Copy Job(s): These jobs read the latest backups from the primary repository and copy them to a separate cloud repository (or bucket) designated for long-term storage. You can have multiple copy jobs if different sets of data need different retention periods:
    • Backup Copy—Finance Dept: Copy from the primary repo to a Finance Archive repository (object storage). Use GFS (Grandfather-Father-Son) retention to keep, say, quarterly backups for seven years. For example, configure the copy job to create monthly full backups and mark one yearly, preserving those as long-term restore points.
    • Backup Copy – Other Depts: Copy to a General Archive repository with a 1-year retention (or whatever is needed).
  • Each Backup Copy job can be set to run continuously (immediate copy) or on a schedule. With Immediate Copy mode, as soon as the primary job creates a new restore point, Veeam starts copying it to the secondary location. This ensures your archive is always up to date with minimal lag. Alternatively, a scheduled copy (e.g., nightly) can gather the day’s backups and transfer them.
  • The secondary repositories might use cheaper storage classes (for example, an archive-tier bucket). But even standard object storage is fine and simpler, since you’re only storing one extra full per month or so for GFS, the cost is modest.

Retention Logic: Backup Copy jobs have a retention policy independent of the source. Your primary backup could prune anything older than 30 days, but the copy job might retain selected points for years. Veeam’s GFS feature on copy jobs makes it easy to keep weekly, monthly, or yearly points as required. For instance, you could keep 12 monthly and five yearly backups in the archive repo, giving you a 5-year history.

This design gives you a tiered backup approach:

  • A short-term tier (30 days) for operational recovery, all in the cloud object storage for quick access.
  • A long-term archival tier (in the same or another object storage repository) for compliance, isolated from day-to-day backups. Because the archives are also in object storage, they inherit immutability and off-site protection.

A different backup copy job can handle each department’s data if needed, allowing granular control. For example, you might tag or organize VMs by department in backup jobs and then have the backup copy jobs filter by those tags to send data to the correct archive. Veeam’s job configuration flexibility lets SMBS easily implement enterprise-grade retention schemes.

Tip: Even though everything is stored in cloud object storage, you still benefit from the 3-2-1 rule. The primary and secondary copies reside in separate logical containers (and possibly separate cloud regions or accounts), so a compromise of one does not affect the other. And both are off-site from your production environment.

Conclusion

For SMB IT admins, embracing a cloud-first backup strategy with Veeam v12.3 offers robust benefits: you eliminate the expense and headaches of on-site backup storage, gain built-in ransomware protection with immutable object storage, and enjoy predictable costs (~$14/TB-month in the cloud vs a significant upfront spend on hardware). With today’s fast internet speeds and Veeam’s efficient transfer technology, even substantial backups can be sent off-site daily, keeping your data safe and off-site without impacting production.

We explored how you can design a two-tier backup approach: use object storage as your primary backup repository and your secondary archive, using Backup Copy jobs to meet different retention needs per department. This gives you a flexible, compliant setup that scales as your business grows – all without buying new storage boxes.

In summary, Veeam Backup & Replication v12.3 with Veeam Data Cloud empowers SMBS to adopt a cloud-first, immutable backup strategy that is secure, simple, and cost-effective. With slashed upfront costs and no hardware to babysit, you can reallocate time and budget toward other IT initiatives, confident that your backups are safe in the cloud and ready to be restored immediately. Its enterprise-grade data protection is now within easy reach for small and midsize businesses.

Dave Kawula – Microsoft MVP / Veeam Vanguard