The Microsoft Cloud service (BPOS and 365) had major outages during a three day period starting 10th May 2011. Here's the Zdnet report and here's the Register report. Some companies were left without their Microsoft Exchange email facilities. It is a glaringly obvious and immediate outage with an immediate effect on the senior executive's offices. No doubt there will be some fundamental questioning going on within those organisations about which person organised for such a critical part of the company infrastructure to be outsourced to a third party. Those executives may have liked the proposed savings when the idea was mooted, but they will have very poor memories of their prior involvement when such a major outage occurs.
Normally there is is little redress when things go wrong with Cloud Services. At most the client might get a service credit for the lost service time but there will be no compensation for the disruption and loss of business caused. Pulling back from the "cloud" in retaliation would be a lengthy and expensive process.
The CIO is partly to blame for this business risk unless he/she has prepared for the eventuality of such an outage. At the very least any proposal for a Cloud solution should recommend provision for the costs of a fall back system in the event an such an outage. The senior executives would then be able to make a risk assessed based business decision on whether they want to fund the fall back arrangements. For example it may be an idea to have subscription to an alternate vendor service such as Google Gmail and business Apps. The alternate solution could be back with archival copies of data held on the primary office business system to allow access to important documents during a main system outage. We suggest consideration of alternate vendor to prevent the loss of access during a system wide error denying prime vendor access.