Both ArcServer 2000 and Windows 2003 have the ability to work seamlessly on the SAN. The advantage of the ArcServer is that it can backup data from other servers (other than just Windows) over the TCP/IP LAN, then to the tape or disk on the SAN.
The SAN is not your issue. The backup software choice is your issue. It should be decided based on its ability to meet your organization's disaster recovery and business continuity needs and your budget.
Dig Deeper on ISCSI SAN
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