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I am a sysadmin for a small group of about 7 people who prefer Apple machines for their work. These machines are currently either a) not backed up at all, or b) backed up using Retrospect(Which I'm not very fond of).

I don't really have the budget for anything fancy, and I'd like to keep it as user friendly as possible.

Ideally I am thinking of a VPN server they can connect to(to keep the traffic secure, and because they work from home frequently) along with an AFP server for use with TimeMachine. The goal would be to get better backup coverage, along with user-initiated restores and overall ease of use. Does this seem like a reasonable idea? Has anyone done this before? Are there any obvious problems I've overlooked?

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This should work fairly easy. I've done this myself for some people. The easiest way to set this up is to set up an OpenVPN-server. You could either go with TunnelBlick (free) or Viscosity ($9) as the clients.

As for the share to use with Time Machine, set up an AFP-share on a server somewhere that is easy to connect to the OpenVPN-connection and announce it via Bonjour/Avahi.

More info on the steps, little bit outdated, but gives you an idea.

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OpenVPNAS has a native OS X client in the latest update. No need for tunnelblick. –  MDMarra Nov 17 '11 at 22:21
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Warning: Lion requires a bleeding edge version of AFP to get TM backups to work

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