A server is typically defined as a physical computer, virtual machine, or service that operated primarily to provide services. In an office scenario it is distinguished from desktops or workstations, which are machines or devices from which people actually do their work. Servers can be simple, as in the case of a single process that runs on a machine—or complex, and they can work independently, or with other servers. One of the primary concepts of a server is to separate the resources they require from the resources needed by desktop users. Another central concept is to consolidate and manage data used by multiple users. Having shared data on a dedicated server allows for safer and more robust sharing and management.

In a typical small business you will have data (documents, records, databases, etc.) that you share with others. Having a server for your data will give you the ability to manage access, security, and backups effectively.

Backups are copies of your data, to hedge against data loss from technical failure, physical damage, and human error. In IT circles there is an old formula for backups known as the "3-2-1 principle". This states that you should always have a) 3 copies of your data, b) on 2 different mediums, c) with 1 copy located offsite (i.e. not in your office).

Cloud backups are considered a viable option for data storage intended for disaster recovery. This means that these backups are considered a safeguard in the event that local backups are destroyed or lost. These days, many small businesses are sold cloud backup products with the claim that this is the only backup solution they need—however, this is a dangerous backup plan for the long term.

When a business has a large amount of data they need to protect, cloud backups can be time consuming (and sometimes very expensive) to retrieve if they are ever needed. 'Large amount' is obviously a relative concept, as over time storage media capacity and bandwith have continually increased—but a typical rule of thumb is to calculate how long it would take to recover all your data if you had to rebuild your infrastructure from scratch. You should also consider that cloud backups might not be a practical solution for shared, multi-user environments with a lot of collaboration where mistakes or revisions might require frequent retrieval of specific files from specific dates and times.

Data redundancy is the principle behind using various technical mechanisms to ensure that all critical data is saved in a way that it wont be lost in the event of a hardware failure. This is most often achieved by using a technology called RAID, which functions by using multiple hard drives to protect your data in the event that a single drive fails.

Data redundancy is not a backup, and backups don't necessarily provide data redundancy.

For practical reasons backups typically run on a daily basis (or more infrequently for offsite backups). Data redundancy protects the immediate state of data, and one of the primary benefits is that critical services (e.g. a primary server) wont go down if a hard drive fails. RAID allows for the system to keep functioning, and the redundant data on the missing drive will be rebuilt once it's replaced.