I am looking to set up a backup system on a server located elsewhere from the existing setup, so that when the current server goes down, the backup server kicks in to keep customers websites and email still up.
There seems to be a lot of various opinions out there.
You should research failover solutions. Note that your costs will double. For every one server that you fill, you will need one empty server just working as a backup. Keeping everything in sync especially mail and dynamic data can be a challenge.
An alternative solution is just have offsite backup done daily or every few hours. Then have one server for say every 5 or 6 servers spare. When one fails, you can easily get the data backup quickly & online...
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I read about RAID. I have heard about that before but I didn't know what does it mean. As far as I understand it is a technology which helps you to save you data. It has many levels. 0,1,5 etc with different degrees. Maybe RAID help you to make backups?
RAID is NOT a backup. It wont create backups for you. It will help with keeping your server online incase of a drive failure (depends on the raid configuration). I have used rsnapshot from www.rsnapshot.org with great success for backing up linux servers. It is worth taking a look at.
Doing two servers in different datacenters and keeping them sync'd will turn out to be MUCH more difficult than you think. If only it were as easy as doubling costs; it is much more than that and would work in mediocre fashion at best unless really hacked up well.