Storage Decision Guide for Microsoft 365 Backups

The first Version of Veeam Backup for Microsoft 365 (V1) was released on Nov. 29, 2016. I was involved in the very first projects with the new product. Over the years, we saw a huge growth in customers and in product features as well. Due to the growth in data, usage and customer numbers, we adjusted our backup components to fit new needs. Over the last years of being a subject matter expert for Veeam Backup for Microsoft 365, I was able to collect a lot of experience I want to share with you.

In my customer meetings, I receive nearly the same questions regarding repository type and sizing every time. Let’s start with some basics about Veeam Backup for Microsoft 365 repositories.

Veeam Backup for Microsoft 365 Repository Overview

The repository is based on a jet blue database which is also used in many Microsoft products.

It’s free, scalable and has been crash-tested over many years.

Running a database as a repository is completely different than using a file-based repository like we use in Veeam Backup & Replication. That’s also a reason why you can not use a Veeam Backup & Replication repository to store Veeam Backup for Microsoft 365 backup data on it.

The requirements are way stricter and there is a gap in flexibility as well.

Storage Performance Makes the Difference

With version 4 of Veeam Backup for Microsoft 365, we introduced the backup to object storage feature for better scalability and flexibility. A better data compression was an improvement as well due to the object storage compression we can leverage. The local repository compression rate went up to 10% and object storage compression rate went up to 55%. Side note: There is no deduplication for Veeam Backup for Microsoft 365 repositories because of the underlying jet database.

The recently introduced Veeam Data Cloud now effortlessly stores backup data on object storage, so no performance or compression differences here. But there are some big advantages – Storage is unlimited and there is no need to worry about sizing or billing. The Backup as a Service (BaaS) approach within our Veeam Data Cloud embodies simplicity, flexibility, and reliability.

I want to add that, technically, NAS-Devices are supported and it’s possible to use them as a repository over SMB, but there are too many disadvantages (see Helpcenter) to go into that topic deeper (see compare-matrix below). NAS storage is also only under experimental support. Please see Veeam Experimental Support Statement for more details.

Deduplication devices or local disks with an enabled deduplication option are not supported!

What Does This Mean for Our Repository Choice?

We can choose between two options:

  • Local repository: Disks directly attached to the backup proxy. Depending on your proxy type, physical or virtual, the disk can be a virtual disk, iSCSI attached disk or a directly attached physical disk.
  • Object storage: Storage based on cloud protocols for S3 or Blob. Object storage can be rented over public cloud providers (Veeam Data Cloud (BaaS), Azure, AWS, IBM Cloud, Wasabi, Backblaze and many more!) but it is also possible to use the S3 protocols on a supported on-premises device running in your own data center.

Pros and cons of local storage vs. object storage

Local Repository Existing storage can be used;
Storage costs are very transparent;
Data is on premises and can be backed up with Veeam Agent or Veeam Backup & Replication to a different location (3-2-1 Rule);
Inflexible extension of storage;
Size limitations of filesystem;
Performance issues with bigger repositories;
Lower data compression (up to 10;
Object StorageFlexible and “infinite” storage;
Higher data compression (up to 55%);
Pay what you need;
Better performance;
No limitations;
Back up copy to archive cloud storage (S3 Glacier, Azure Archive);
Pay what you need;
Additional costs for restores (depending on cloud storage);


Repository typeScalabilityPerformanceCostsFile compression3-2-1 Rule
Local Repository**************
Cloud-Object Storage**********************
On-Prem Object Storage*******************
*Deduplication devices are not supported **SMB-Shares only experimental


If you want to back up a small-to-midrange environment, depending on your user quantity and storage amount, you can start with an on-premises repository. As already mentioned, NAS devices are not considered as a recommendation.

You can start directly with the on-premises resources you have.

If you don’t have storage resources available or want to be as flexible as possible, it makes sense to have a deeper look at object storage vendors. They are very reliable and can be a cheap alternate to an on-premises device. The environmental size does not matter.

Object storage is the preferred choice of many of our customers because of its reliability, the better compression and a higher performance.

If you want to keep your data on-site due to regulations or your personal preference without losing the advantages of an object storage, we recommend a storage system with S3 integration. Compatibility list can be found here.

The Veeam Data Cloud is a good choicedie cloud ist eine gute Wahl, wenn sie keine Infrastructure bereitstellen wollen und eine flexible, skalierbare und einfachen betrieb haben wollen

If you are looking for more information on how to set up the repository or what the best practices for your needs are, please check out the resources below:

Stay up to date on the latest tips and news
By subscribing, you are agreeing to have your personal information managed in accordance with the terms of Veeam’s Privacy Policy
You're all set!
Watch your inbox for our weekly blog updates.