If you want to improve the connectivity, efficiency, and effectiveness of your small business, then you could benefit from a small business server. In fact, you might already be using servers in your business whether you realize it or not.

In this article, we’ll cover everything you need to know about small business servers, why you need them, how servers work, common uses for servers, server security and policy considerations, and factors to consider when determining the kind of server your SMB needs.

​​​​​​​​​​​​​​​​​​​​​What is a server?

A server is a centralized computer for your business. It runs specialized software that manages a host of core IT functions like running applications, email platforms, conducting security updates and permissions, managing printers, and more. 

There are three main types of servers utilized across most businesses: on-premise, off-premise, and fully cloud-based. 

Oftentimes, companies will use a combination of the three depending on the operational needs of the business. 

With on-premise and off-premise servers, you can create your own virtual servers similar to what you can get with cloud-based server platforms. Server virtualization is the process of taking a physical server and dividing it into multiple virtual servers. 

Using Hyper-V or VMware, you can segment your server’s resources (computing power, memory, storage space) into discrete parts that at the Operating System and Application-level, function as if they’re distinct physical computers. This can be a useful way to increase inter-application security or better utilize your existing IT infrastructure by creating firmer boundaries for how much of a given physical resources certain applications can use.

​​​​​​​​​​​​​​Why do small businesses need servers?

file and network server security

There are many benefits to using SMB servers. Increased security, data centralization, application sharing, and enabling remote work environments are just a few. Let’s take a further look below.

File and network security

Integrating servers into your business is an effective way to increase file and network security by allowing you to limit access to files across your enterprise. 

For example, entry-level employees don’t need access to the same files as managers or supervisors. Similarly, the marketing department doesn’t likely need access to financial records or employee files in the human resource department. 

Properly configured servers provide you with this flexibility by offering tools for access restriction to your various IT resources, thereby increasing security on your network.

Workstation security

Like file and network security, implementing a server solution into your business also assists with workstation security by managing user access. 

For example, if you want to restrict a user so they can no longer log onto a device, visit specific websites, download certain applications, or again, only access certain files, a server setup allows you to manage this more effectively. 

Workstation security runs hand-in-hand with group policy (see below), which is managed through a server infrastructure.

Centralized data/resources

Another benefit of using servers in your small business is the centralization of storage across your network.

Instead of storing data and resources on individual workstations, you can store it on a shared server. Not only does this make it easier to manage storage and data resources, it also provides a certain level of control and security.

Centralizing data on servers also makes it easier to share customer management tools, accounting software, multiple records, and other resources with select people and departments. 

For example, businesses in the financial services industry often utilize centralized data storage as the security and management control this configuration allows, which makes meeting compliance standards much less burdensome.

Shared applications

In addition to centralizing data and resources, providing access to shared applications is another benefit of SMB servers. 

By installing server-based versions of your most used software programs, you can easily enable access to certain users across your network, thereby reducing the need for more powerful workstations and decreasing the likelihood that vital information will get siloed on one particular person’s computer

If you need to run a CRM application, for example, you can install it on your server with relevant data, then provide access to your sales department. 

Virtual Desktop Infrastructure (VDI)

The ability to utilize virtual desktop infrastructure (VDI) is another benefit to incorporating servers into your small business’ IT infrastructure. This is especially beneficial to companies operating in partial or fully remote environments where employees might need to access their applications and files off-site. 

Using software like VMware Horizon, you can create virtual desktop environments on your server to replace some or all of your employee’s individual configured and managed physical workstations. With this setup, your employees can then access their specific desktop from within your office or remotely via a secure VPN connection.

This not only better enables remote work, but can also save on IT costs by allowing your company to invest in lower-powered “thin clients” instead of more expensive traditional desktop computers. And that’s on top of the management efficiency centralization provides.

VDI can be implemented in cloud server environments, though some businesses find on- or off-premise implementation is better as latency can be lower when run more locally.

​​​​​​​​​​​​​​​​​​​​​How do SMB servers work?

data center for smb servers

Small business servers mostly function like traditional PC computers. They maintain similar components like power supplies, CPU, RAM, and most everything else you would expect in your desktop computer. 

The features and benefits, however, vary depending on whether they are on-premise, in a data center, or operating in the cloud.

On-Premise (Dedicated) Servers

On-premise servers come in the form of a tower (think of your desktop computer without a monitor, keyboard, and mouse) and are stored under a desk or in a closet somewhere in your office. This is the typical choice of small businesses looking for an entry-level server solution. 

Additionally, these dedicated servers can also be rack-mounted. With a uniform height, width, and depth, multiple servers are stored together on a purpose-built server rack, making the physical storage of your server setup easier to manage.

Whether you choose a tower or rack-mount server setup, the components are similar throughout.  

Your server will need a hard drive (HDD) for storing files and data, Central Processing Unit (CPU) and memory (RAM) for running software, and some sort of consistent power supply with battery backup so you can safely shut it down if your office power goes out.


There are multiple advantages to choosing an on-premise server. First, there’s a fixed cost of ownership. You purchase the server once, and most times, you only need to pay a one-time licensing fee for your Windows server operating system

A second advantage is that a dedicated server is fully customizable. You’re in control of your entire setup and decide how powerful and fast your server operates. You are also in complete control of how your data are split across your server, desktop, and other network infrastructure. 

These types of servers can often also be faster to access than off-site or cloud-based servers, as there’s less delay in communication between your server and all the devices trying to access it. 

In addition to requiring a large up-front cost to buy and configure, on-premise servers require IT staff to manage day-to-day operations. 

And depending on your usage and components, you’ll need to upgrade or replace your hardware at some point (this timing varies, though every 4 years is typical).

And because on-premise servers are by definition located on-site, you’re completely responsible for creating and managing your failover process and implementing the additional infrastructure needed to protect your servers from:

This can be challenging for smaller businesses to manage on their own – which is why they’ll typically hire a Managed Services Provider like Commprise to manage this work for them.

Off-Premise/Data Center Servers

Off-premise servers are similar to on-premise ones in that there’s often some physical hardware selection and management involved, though in this case that hardware is located outside of your offices in a purpose-built data center managed to some degree by another company. There are some unique advantages to this.

Like on-premise servers, you can still choose the power and speed (CPU/RAM) of these servers. In some situations, data centers may even provide you with hardware-for-rent.

Colocation facilities also offer physical security through 24/7 monitoring, ensure certain redundancies are in place (such as power backup and proper cooling of equipment), and in some cases, even offer further services like setup, configuration, and server maintenance.

And while these are great advantages, using a data center means you have less control over your server infrastructure locally. If there are any major problems or security concerns, depending on the data center, your IT staff is responsible for addressing any issues. 

Additionally, the quality of your colocation infrastructure could vary depending on the internet connectivity at your physical office location as well as equipment selection and other configuration factors. 

These are all things to weigh carefully when choosing these kinds of servers.

Off-premise servers are a good solution if you still want physical control of your systems, but your business doesn’t have the time, budget, or personnel to handle long-term technological maintenance. Colocation facilities will provide you with the infrastructure and security associated with dedicated servers without the cost.

Fully Cloud-Based Servers

cloud based server network

Fully cloud-based servers are virtual servers that operate in a cloud computing environment. Like on- or off-premise servers, they are a utility that provides access to computing resources. 

But unlike these other servers, cloud-based servers eliminate the need for physical infrastructure selection and management for your business. Because you’re not managing any hardware, you can allocate more speed, power, and storage as needed. You get 100% control with no need for physical maintenance (though there are still non-hardware based maintenance needs in cloud server setups).

The advantage is that cloud-based servers make scaling your business’ computing resources to handle more clients, employees, or offices much easier than on- or off-premise servers. 

And since most cloud-based servers work on subscription-based plans, the cost of scaling your server’s capacity is more predictable. If your company hits a stride or you need easier and more reliable access for remote users, you can simply upgrade your plan.

An obvious disadvantage of cloud-based servers is the potential for downtime. Because you’re dependent on the internet to access your cloud, if it fails, then you lose access. That being said, while on-premise servers won’t have this issue, cloud-based servers are very reliable due to the redundancies and failover systems providers put in place.

There’s also the potential for more security risks. It’s important to check with your cloud service provider to determine what precautions you’re responsible for to mitigate your vulnerabilities.

​​​​​​​Common uses for small business servers

rack mounted on premise server for small business

There are a myriad of ways to configure a small business server. 

Some of the more common uses are for running applications, managing databases, sharing files, sending emails, configuring printers, and even managing network security. 

Application Servers

Dedicating a server to running software applications is a common way to reduce the need for more expensive, higher-powered workstations. 

It doesn’t mean you have to run all your applications exclusively off the server, but it does make running shared software programs and databases across your network easier (i.e. QuickBooks). Application servers can be an on-premise server, located off-premise, cloud-based, or a combination of the three. 

In addition to cost savings on higher-power workstations, applications also run on servers to allow broader access and simplified control. For example, instead of keeping Quickbooks on each person’s workstation in the accounting department, a server-based configuration can be maintained more easily and prevent data from being siloed with individual people.

While some applications may be available through a Software as a Service (SaaS) model, which offers similar management and access benefits, your company might take an application server approach for software that must be run more locally (i.e. warehouse machinery programs).

Consult with an IT services provider to determine the best setup for your business. 

Database Servers

A database server is used to store data and databases for the various programs and applications installed on your network. 

Database servers respond to “structured query language” (SQL) in order to retrieve information and utilize some form of database management software. Some of the more popular ones include MySQL, PostgreSQL, Microsoft SQL, or SQLite.

If your business has a lot of data to process on a regular basis, a database server can increase your efficiency by making it easier for applications to recall and process data. For example, a marketing team might use a database server with a client-facing application to quickly retrieve information in order to display key campaign insights.

File Servers

A file server is a central server on a network dedicated to storing files and file systems.

For many small businesses, it’s a common practice to dedicate servers exclusively to storing and sharing files, documents, spreadsheets, presentations, photos, videos, and more. 

Like application servers, file servers can be located on-premise, off-premise, on the cloud, or a combination of the three. And not only can users access these files locally but, depending on permissions, they can also access them remotely as well.

File servers are useful for businesses that need to easily share information internally between employees. In some cases, you can connect a file server to your own web offering to make it easier for clients to access information.

And of course, centralizing information onto a file server makes backing it up much easier.

Email Servers

While hosting a dedicated on-premise or co-located email server is not a common practice anymore, a lot of legacy environments still maintain email servers. These types of environments run email on a server, such as Microsoft Exchange, but on the surface appear to operate like most cloud-based email servers.

If your business has a lot of privacy and security concerns, you may consider using a private email server. However, due to the ease of setup with cloud-based options, it’s no longer an important consideration for most businesses

Microsoft365 and G-Suite are two of the more popular, secure, web-based email hosting options for businesses. 

If you decide a local email server is in your best interest, consult with an IT service provider to determine the ideal setup for your business.

Print Servers

If your SMB utilizes multiple shared printers, a print server can help you manage all of the printers across your network. 

By centralizing all of your hardware onto a print server, you can manage print jobs, permissions, apply updates, and more. 

Print servers are common in office environments, like those of accountants, lawyers, and schools, and are often used in tandem with print management software like Equitrac, Papercut, or Uniflow.

Authentication & Security

Addressing authentication and security concerns is a common reason to employ a server setup. 

Using a group policy (see below), you can limit access to varying functions of your servers (applications, files, printers, etc.) to specific users or workstations on the network. 

This is possible for on-premise servers and cloud-based servers using cloud server services like Microsoft Azure.

​​​​​​​​​​​​​​SMB server security and policy

SMB server security and policy

If your small business decides to use servers as part of your IT infrastructure, it is important to plan and implement security and access policies that fit your particular business needs. This involves setting up a domain controller, active directory, and group policy. Note: the following information is based on servers running Microsoft’s Windows Server 2019 operating system.

Domain Controller

A domain controller (DC) runs Active Directory (see below), responds to authentication requests, and is used to verify users on your network.

In the server security and policy configuration hierarchy, the DC is at the top and is an easy way to organize your servers under the same domain (network). The DC simplifies user management and makes it easier to: 

For example, your business would set up a domain which all of your servers and workstations would then connect to. This then allows for the ease of managing users’ access to resources connected to the domain such as applications. databases, and printing. 

Further, it allows for a uniform security policy to be applied to member workstations and to users themselves via Group Policy.

Active directory/authentication

The active directory works in tandem with the domain controller, authenticating and managing users, and other devices on the network. So while a domain controller might respond to authentication requests, the active directory is how system administrators manage permissions, determine who can access what files, use certain applications, and more.

A problem occurs, however when non Windows or cloud-based applications come into play. It can be difficult for the AD to authenticate users. This is where a single sign-on (SSO) can be used either via third-party applications or through Microsoft Azure. 

SSO is an authentication method that provides one login for multiple services. SSO works in concert with the AD with the purpose of easing user access and management across your network. 

When using the various web applications inside of Microsoft 365, for example, users need only use one set of login credentials as opposed to multiple ones

Group policy

If a domain controller is used to structure your network, and an Active Directory is how you authenticate users, then group policy is how you configure the computers and users across your domain. 

In a sense, group policy is the rulebook for how you effectively manage both the users and workstations across your entire network.

For example, you could establish a group policy that determines password complexity for user accounts or automatically maps network drives. You could set up a group policy to automatically redirect file storage onto a server, adjust internet settings to enable VPN access, keep workstations from powering off, or that automatically install printer and virus software updates.

The bigger your business, the more useful group policies become.

​​​​​​​​​​​​​​Does your small business need on-premise, off-premise, or cloud servers?

There are multiple factors that can help you consider the best type of server for your business.

Growth trajectory

Before deciding on the server setup for your small business, consider the growth trajectory of your company. 

Are you rapidly adding more employees, clients, locations, or consistently incorporating new technologies into your business processes? In this case, it might make more sense to rely on cloud-based servers due to their ease of scalability.

Are you planning to keep your organization small and intimate? Then installing a server on-premise (or off-premise in a data center) might make more sense for your company if you’re not needing to access information from remote office locations. You could even utilize cloud-based servers for specific software applications and shared data. 

Again, consult with an IT services provider to help determine what makes the most sense for your small business’ growth trajectory.

Total Cost of Ownership (TCO)

Another consideration is the total cost of ownership (TCO). If you don’t mind managing and maintaining hardware, or paying for software licensing internally, then an on-premise solution might be more beneficial. While the costs are higher upfront, the long-term TCO is lower.

As we mentioned earlier in this article, if you want physical control of your systems but don’t have the time, personnel, or budget to handle long-term maintenance, an off-premise server solution could be your best bet. The costs vary depending on your hardware requirements and the services you require from a data center, but colocated servers allow you to invest in your infrastructure without having to actively manage it in-house. 

If you don’t want to manage hardware, maintenance, or licensing fees, then it might make more sense to opt for a subscription-based model and utilize cloud-based servers. The barrier to entry is smaller and it’s easier to scale if needed because you’re not managing or maintaining physical infrastructure, granted, the TCO is higher in the long-run.

Security concerns

Security concerns are another factor to take into account before deciding on what type of server makes the most sense for your small business. This is an especially pertinent consideration if your company handles sensitive financial and personal information.

If you’re able to manage (physical and network) security yourself, using an on-premise server could potentially be a more secure solution. If you’re not confident in your abilities, a co-located server in a data center may be a better option as data center staff help to maintain the physical security of your servers – though you’ll still largely be responsible for IT security (securing the network, maintaining application updates, encrypting data properly, etc.).

Contrary to popular opinion, cloud-based servers are not inherently less secure than on-premise servers, as there are security measures your IT department and hosting service can ensure are in place.

Again, if you’re uncertain which type of server best complements your small business, consult with an IT service provider to determine the best setup.

Access to shared data

If your company relies heavily on shared data, the type of server that best suits your needs depends on who needs access to that data and when. 

An on-premise server might be beneficial to businesses with a smaller footprint and that don’t need access to shared data outside of a physical office space. However, if you’re intending to rapidly expand your business, employ remote workers, or provide contractors access to data, it makes more sense to invest in a server solution that makes shared data between employees more accessible. 

No matter which server setup you choose, it’s vital you limit access to shared data exclusively to the people who need it in order to mitigate security risks.

Backup/recovery systems

What kind of backup and recovery systems do you want to use? This is another factor to consider before deciding what type of server your small business needs. 

If you’re hosting servers on-premise, it’s a necessity to have a business continuity and disaster recovery plan in place.

If you prefer to take a more hands-off approach and utilize data centers or cloud-based servers, they can help oversee backups and recovery in case of an outage. While outages are less common in these environments, they still happen. Your access to information could also be limited if the entire data center goes down or fiber lines into your offices get cut.   

A server is an effective way to simplify information access control and management for your business. 

Whether you’re trying to increase data and network security, make it easier to share files and applications amongst personnel, or transition your dependency into a more virtual environment, implementing a small business server into your IT infrastructure can help you do that. 

An on-premise server, data center, cloud-based server, or combination thereof may be more beneficial depending on the needs of your business. An IT services provider can help you determine a solution that best fits your needs. 

Commprise is here to help you gain clarity on this matter. With our Managed IT Services, we’ll help you find out which solutions and servers are best suited to serve your company.