Funnily enough I happened to visit an IT consulting company yesterday who run _entirely_ from the cloud on a collection of services.
They have zero onsite servers and no IT support staff.
They have about 100 employees spread over two offices. Not judging that as right or wrong but that is what they do and they are happy with it and believe they are spending less than they would be in a traditional model.
It is a trade-off. On site has advantages, cloud has advantages. Both have disadvantages and both have risks. I don't believe on-site is inherently less risky than a cloud server.
Both have costs. Maybe you could gold plate your on-site stuff so it is super coolio awesome rock-solid no matter what happens, but how much would it cost and how long would it take and what could you have done instead with that time and money?
Both types of environments change underneath you without notice - assuming you are in a decent size organisation. Been there, done that got the tee shirt.
One thing that is very clear to me is that physical boxes take significantly longer to provision. Sometimes time is money and that one area where cloud services win hands down.
If you read one of my previous comments, you'll see that I've seen multiple companies switch back to on premise hosting after the migration to Office 365 didn't work out for them because they experienced too many problems with performance, outages and other issues. Such a migration is an involved and expensive procedure in companies the size they were. Not something you do unless you have to. I will not claim this represents most users or companies, but it does illustrate that it is not for everyone and that theory and practice do not always line up as expected.
Please note that I have also stated that there is a time and a place for cloud solutions. It is a valuable tool that can be massively advantageous in the right circumstances. However, everything seems to get forced into the cloud model, whether it is appropriate or not, and companies are made to depend entirely on cloud services when the need seems absent. For instance, I cannot imagine being an engineering firm and having all your and your client's IP tied up in a cloud service. Even with a good, independent backup, you won't have the infrastructure or training required to continue business if anything were to happen to that cloud service. How much of an impact even a short outage can have was demonstrated by the Blackberry server issues of 2012, with many companies switching platforms because of it.
How can a company of that size have zero support staff? Even if the servers and services are fully operated by another party, there is still the need for local support and maintenance of client workstations and the network. With around 100 users, that is not a negligible task.
To be clear, I think you're confounding cloud computing and subscription pricing, which are very diffferent things, despite having a few similarities. We were discussing subscription pricing primarily, and the unfortunate issues surrounding the activation. It's still, however, software running locally with local files.
I'm not sure what exactly you are claiming isn't obvious to a client -- I didn't claim anything was obvious to the client. I said that it's very clear why software companies want to move to subscription pricing. Customers frequently fail to understand it and feel very attacked by subscription pricing, but having seen the nightmare that is customers who refuse to upgrade, and thus continue to cause a support burden because they want to run ancient software whose bugs were long ago fixed in newer versions, or because they want to run ancient app versions on new OSes, or your latest app release on a prehistoric OS, I am ultimately in favor of licensing that encourages or requires users to upgrade constantly.
Companies are currently pushing hard to tie subscriptions to the cloud. That is their way of combating piracy and increasing their control over the end user. Local software is rapidly becoming just a front end for cloud services. Autodesk with its Fusion 360 software is a good example of this. But of course you are right that they are two distinct things.
I wasn't disagreeing with you regarding the desire of companies to push for subscription pricing. However, I do think the reasoning is too self-centred. A company that's only focussed on improving things for itself will not survive in the long run. A mutually beneficial relationship with the customer is what forges long term relationships.
I also feel there is a middle ground between running ancient applications on a prehistoric OS and constantly forcing a user to update to new versions. Installing security updates is good, but continuously forcing users to migrate to yet another version is less ideal. I think communicating the product lifecycle to your customers is good. They know what to expect and can plan budget and training accordingly. This is what Microsoft did in the Gates and Ballmer era. Now, there are no versions as such and things are much more fluid. You get whatever you get, each release gets one year of support and you just have to deal with it. Added to that, the mechanism has already been abused a few times to push the Microsoft agenda, and the end user is left with a sour taste.
Don't get me wrong, it's not all bad. Microsoft does some pretty amazing things and the effectiveness of much of the software is undeniable. It's just that I think that this push for the cloud without reasonable alternatives is a mistake. Inevitably, a new balance will be reached. Hopefully this will happen without too much friction along the way.