At SQL Bits Connor Cunnigham gave the keynote speech on SQL Azure. Engineer for failure. 99.9% availability, unpredictable performance, multi-tenancy meaning you have 180 connections to a single SQL Azure instance rather than 32K connections in native SQL Server.

Hard throttling, you connections get killed

Soft throttling, your app has to have retry capability.

I'm less worried about security. Your pay roll has been done in the clouds for over a decade. I'd be more worried about social engineering hacks that technical hacks.

Then you have co-location of your data. report server in your company + data in the cloud = huge bills. The "cure" is to stick your report server in the cloud. The more uses you find for your data the more of your tools you have to stick in the cloud to get around the transmission costs.

Better make sure you pay your cloud vendor on time, they've got you over a barrel. One flick of a switch and you are out of business.

I particularly liked Denny Cherry's cloud story during his "Always On" talk. He had to take a bit of an indirect route to find out the extra storage his client had purchased was multi-tennanted and his client's DB server shared storage with a file server belonging to a different company. First time the fileserver attempted a defrag the DB experienced a world of pain!

The cloud has its uses. I know of one company that had to convert a huge number of PDF documents. They spun up thousands of instances in their cloud provider and did the whole lot in very little time and far less money than it would normally take. OK, that's hardly 24/7 99.999% availability but it illustrates that the cloud is a tool for a job, its just that people make the wrong assumptions about what the tool is and what it is for. As a friend says, its like picking your nose with a shotgun!