When a small business grows beyond two or three people, the demands for working collaboratively and sharing information may dictate an upgrade in computing needs beyond the mere exchange of files on CD. That’s when it may be time to invest in a computer server.

A server is a computer designated to run software that provides services to members of a workgroup or organization. The server orchestrates incoming requests from individuals’ desktop or laptop computers, connected either through cables or wireless connections. For the small business, a server can facilitate such valuable resources as e-mail or a company website over the Internet.

Almost a quarter of small businesses -- 22 percent -- plan to replace or add servers in the next 12 months, says Laurie McCabe, vice president of AMI Research, the New York-based research firm.

Different types of servers

The term server can sometimes be confusing. It can refer to either computer hardware or the software providing the services -- or both working in tandem. For the purposes of this article, server refers to the hardware that provides the processing power for server applications.

In the past, mainframes and minicomputers played the role of server. But, these days,  much less expensive PCs can generate enough computer power to host more sophisticated applications. Servers come in different sizes and capacities. Depending on the size and needs of the business, these functions can be performed on a PC similar to a desktop, or on a larger (and more expensive) computer with extra power, extra memory, and extra storage capacity. Server computers come in different forms, from basic generic PCs to rack-mountable computers, to blade servers that have their own processor but share some functions, such as power and cooling, with multiple other blades.

In some instances, a server will perform one specific function – for example, an e-mail server manages the sending and receiving of email for an organization, or a backup server manages a company’s archived data. It’s common for large enterprises to have dedicated computers for different tasks. Small businesses with less intense processing needs can run multiple applications on the same server, or use blade servers.

Blade servers pool and share power distribution, which makes them more efficient than rack servers, says Jed Scaramella, an analyst with IDC, of Framingham, Mass. “This eliminates multiple power supplies per server without sacrificing reliability. The systems also hold a natural advantage by removing cables from the back of the rack to improve airflow.”

The majority of servers today are built with Intel X86 processors, and run Windows or Linux, the latter being an open source platform, according to the Gartner Inc., the research firm in Stamford, Conn. Solaris and other types of Unix are also popular. It’s common for servers to come with operating system software already installed. Pre-installation can make the transition to the new software easier, especially for small businesses that lack an IT department.

Server options

Given the rapid growth of small businesses deploying servers, the question often arises about which type of server to choose, whether to buy or lease or offsite servers and how much they cost. Here is some guidance:

Buying new: Low-end servers can cost less than $1000; Dell recently introduced servers that start at $599.  The average server purchased by small businesses last year was $2,458, AMI Research’s McCabe says. Blades are more expensive; IBM blade options start at around $4,000 and up for just the basics.  So-called “white-box” computers, from no-name vendors, are less expensive. Twenty percent of small businesses use white-box servers, McCabe says. Servers can last years, but the rapid increases in performance can obsolete servers quickly. The average server within small businesses does its job for 49 months before it is replaced, McCabe says.

Buying used:  Small businesses can also buy their own servers used. Despite technology improvements, some firms opt to buy used computers for a fraction of their original price.  Buying servers outright works best when the company has computer support in-house or has a trusted consultant.

Leasing servers:  For small businesses strapped for cash, leasing and paying by the month is a way to finance the purchase of a server. Leasing involves a relatively short engagement of between two and three years. When the lease is up, the company can buy the equipment for fair market value or upgrade to new technology and continue monthly payments. Sometimes comes with tech support.

Offsite hosting:  Companies will run some services, especially Web servers, on computers in their data center.  The small business pays a monthly fee and trusts the hosting firm to make everything work. A good option for small businesses without their own IT staff.  Increasingly, e-mail, backup, and other services that might have required a dedicated server are being managed via off-site hosting.