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Migration of Windows SBS 2003 to newer hardware

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I am concerned about the process I am following in regard to a hardware migration we are doing. In prep for this migration, we purchased this Acronis product which comes with ISO to make bootable media. We did this and booted the original server, connected an ext. USB hard drive and started a backup of 70GB. The time taken was going to be 12 hours, so we aborted the process.

We want to make sure we are doing this correctly. Can we use the bootable Backup & Recovery SBS CD, make the backup of the original HP server to USB drive, then boot the new HP server hardware and restore?

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Yes you are doing this correctly. If your new server has a RAID controller be sure to try the B&R CD to be sure it recognizes the controller. I have a Dell T710 and did exactly what you are trying to do.
Also, be sure to copy all the drivers (2003: chipset, network, controller) for your hardware to a USB key so that when you boot from the CD on the the HP, connect your USB drive, you direct B&R Universal Restore to the directory on the USB key which holds all your drivers for the OS and the new hardware.

The backup to the USB should not take anywhere near 12 hours. For 70GB it should take around 20-30 minutes. Are you sure the USB is 2.0 and not 1.0?.