I've run Veeam both (in the past for over a year) on a VM on one of my hosts and now on a physical server. The latter is recent and I'm doing B2D2T and my LTO hangs off the physical server. Just was a free box. Whether physical or virtual, definitely keep the backup config in a different location. With that, it really doesn't take long to get it back somewhere else. My target is still a NAS using CIFS, but that will change probably when I redo my storage and hosts. You get a decent performance boost by using it as a iSCSI target vs CIFS. Mine works fine with the latter, so YMMV.