Setting up Windows Deduplication in Server 2012 or Server 2012 R2 is easy.
You can do this through Server Management Console, but I find it is faster and simpler to do it using Windows PowerShell.
Click the PowerShell icon on your taskbar and when the PowerShell window opens, enter the following commands:
Import-Module ServerManager Add-WindowsFeature -name FS-Data-Deduplication Import-Module Deduplication
This installs deduplication.
Next, choose the volume that you want to enable deduplication on, such as volume D:, and enter:
Enable-DedupVolume E: -UsageType Default Set-Dedupvolume E: -MinimumFileAgeDays 0
This set the deduplication type to default, which is good for backup files. It also sets deduplication to run on all data files, which is also a good choice.
Once you write or copy files to the deduplication volume, you need to run a deduplication job to actually deduplicate the files. Windows sets up an automatic job to deduplicate the volume using the Windows Task Scheduler. You can also manually run a deduplication process, on demand.
To get the best deduplication performance, read How to Make Windows Deduplication Go Faster.