New Back-Up System for Server?

Hi there! I've got myriad questions, so thank you in advance for reading through all of this and offering your input.

I currently work in a small business office. We have a LAN system running through our server - a Dell PowerEdge 1800, running Windows Server 2003 Small Business, Version 5.2, which is using Windows Service Pack 1.

We've been backing up our system using the good ole' Dell DLIVS160 Tape Drive system. However, my boss has entertained the idea of possibly switching our back-up system from using tapes, to simply backing up to an internal hard drive.

Essentially, my boss wants to remove the Tape Drive and replace it with an internal hard drive. We would go external, but the nature of our business can't allow us to back-up on easily portable media. This is another reason we're contemplating doing away with the tapes.

Are there any practical solutions to our problems? Can it be done? If so, how difficult would it be? If so, what necessary tools / hard drives would be recommended in order to complete such a task?

Again, thanks in advance for all of your help! - Joe