We want to back up some workstations to their local server and are trialing KBU. Are we required to specify an offsite server? If so and we use their local server as both the local and offsite server, does that basically mean we're required to duplicate the data storage requirements for KBU on their local server?
No, you don't have to specify an offsite server, but you do have to specify where the data will be backed up. You can backup to Kaseya's Amazon S3, or you can backup to any machine that has a Kaseya agent on it and some storage. You define the local (or remote) "private" storage from the Configure-> Private Storage menu. It requires and IP, Port, Local/UNC path, and credentials.
Remember there is no charge for storage with KBU, just the agent costs, unless you are using their Amazon S3.