Microsoft's Business Online Professional Services (BPOS) experienced a series of major outages, spanning days and impacting productivity for customers. The outage is just the latest demonstration of the potential problems with moving entirely to the cloud.
BPOS was down for six to nine hours for most customers on Tuesday, followed by sporadic outages over the next couple days. During that time, productivity was significantly impacted, as much of getting business done relies on being able to send and receive emails.
Putting all of your eggs in the cloud basket is simply a bad idea. It is not even a matter of the maturity of relatively nascent cloud services. Organizations use redundant network providers that go to redundant switches that go to redundant network cards on redundant servers with redundant power supplied...you get the idea. It sounds, well, redundant--but there is a reason for it: single point of failure.
IT reliability and availability is all about minimizing single points of failure--particularly for servers and applications that are mission-essential. If all of your productivity relies on cloud-based services, the cloud becomes a single point of failure. When the cloud goes down, so does your business.
I have made this point a few times recently. I talked about how businesses that use cloud services like Amazon's EC2 should also have a plan B. I also talked about why the Chromebook is doomed to fail since its functionality is tied to the cloud, and how Google Docs is a less than ideal productivity solution because of its dependence on the cloud.
Interestingly, the beta of Office 365--the impending replacement for BPOS--did not experience any issues while BPOS was down. But, even if it had, the hybrid approach of Office 365--merging the cloud with local tools and software--would have minimized the productivity impact from the cloud outage.
By all means, use the cloud. There are a variety of advantages and benefits to cloud-based services. However,don't trust all of your server processing, data storage, or business productivity to the cloud--not now, not ever. It is just bad business practice to build your business around a single point of failure.