Backing up the database without compromising performance
120GB should not take 2 hours


Do you have a separate disk array for backups, with a separate network interface to move the backups off the server?
If you have Enterprise Edition, can you use mirror backups
Can you do weekly full backups and daily differentials?
Is backup compression turned on (Standard in SQL Server 2008 R2+, Enterprise only in SQL Server 2008)


And without more details, it will be hard to be more specific