
Fences
Cloud computing is the "new thing" that can be a life saver in businesses. However, rare events like this outline just how much of your business you're risking. There are still several advantages to using a cloud service, especially for small businesses using outsourced IT or the like, but there's just no beating a local network setup with a competent IT staff (even if that staff is just one person). A smaller business can likely handle 30min of a server (even an entire VM host) being offline while a critical component is replaced (competent implies being smart enough to stock a spare part of non-redundant server hardware, if the risk assessment is high enough). Likely your ISP will have an outage before a cloud provider will have downtime, so if your local servers have less downtime than your ISP (fairly doable actually), you could be better off having a local setup. Disaster recovery you say? If your business burns to the ground, you run into the question of why you would need access to your servers anyway? Your competent IT staff would have an offsite backup from the day prior anyway, so access to data is there. Sure, you won't be able to bring all your systems back online and operating until you replace your server(s) (unless you have a very inventive IT staff), but with the "disaster" hobbling your place of business, such would not be required.
Money and skill are the primary game-stoppers for a decent local setup. Your budget can't afford the ideal redundancy, infrastructure, internet-connectivity, or staff that a cloud provider can. It really comes down to if you can afford the one-in-a-blue-moon Amazon-style snafu (with the potential loss of your data), or if you prefer to rely on your potentially less adequate DR plan.