If you plan to use a deduplicating storage appliance as a repository, consider the following options (available on Repository page of the repository wizard):
•For storage systems using fixed block size, you may want to enable the Align backup file data blocks option — then Veeam Backup &Replication will align VM data saved to a backup file to a 4Kb block boundary. This option provides better deduplication across backup files but it can result in greater amount of unused space on the storage device and a higher level of fragmentation.
It is recommended to disable this option for deduplicating storage that uses variable block size.
•When you enable compression for a backup job, VM data is compressed at the source side before it is transmitted to the target. However, compressing data prior to writing it to deduplicating storage appliance results in poor deduplication ratios, as the number of matching blocks decreases. You can use the Decompress backup data blocks before storing option — then, if data compression is enabled for a job, Veeam Backup & Replication will compress VM data, transmit it over LAN, uncompress data on the target side and write raw VM data to the storage device to achieve a higher deduplication ratio.
As for any other deployment and configuration option, this is all about finding the right balance for your environment — here between better performance and higher dedupe ratio. In most cases, the better goal might be to focus on storing and transferring the least amount of data, as that will give the best performance. That is why inline deduplication on and compression off is pretty much the answer for most deduplication solutions.
Using Veeam Low (Dedupe-friendly in v6.5) compression can be also a nice performance improvement, saving 10-20% in the total amount of data that must transfer across the wire, while increasing the size on disk typically by less than 5% (due to slightly poorer dedupe). This 10-20% savings across the wire can really add up to some improved performance if you have many TB of full backups to run. Dedupe appliances can only ingest a fixed amount of TBs an hour, and this performance improvement can translate into shorter backups and faster restores (due to less data having to be transferred across the wire during restores as well), but at the penalty of some additional loss of storage dedupe.