From the August 2013 issue of Entrepreneur

Q: Should my company really be sending everything skyward?

A: The cloud has changed the way we do business, archiving data and computer tools and making them available anywhere that has access to the web. But it's not perfect, and some benefits come at a steep cost. We asked Alen Peacock to play devil's advocate. He's co-founder of Space Monkey, a Midvale, Utah-based startup focused on making file storage faster and more cost-effective through (you guessed it) the cloud. Here, he points out some potential downsides.

You do not control the cloud. "When things go wrong--and they will--you're not likely to be OK sitting on your hands, waiting for someone else's employees to make things work again," Peacock says. "Consider what happens if you're the 823rd-largest customer of a business-critical cloud service.You're at the end of the line."

Peacock points out that almost all major cloud service providers have had outages and data losses. Amazon's cloud-computing platform, EC2, suffered at least three major outages over the past three years, causing some customers to lose their data permanently. Netflix, Pinterest, Airbnb and Instagram are among the companies that suffered service outages last year due to their reliance on the cloud.

It can be slow. "Shipping data across the internet to a distant data center is much slower than storing it locally," Peacock says. "Same goes when you need your data back." Cloud services have finite amounts of bandwidth to share among all users, so the more customers they have, the slower they operate.

It's expensive. In the short term, cloud services appear cost-effective--instead of paying upfront to buy your own equipment and software, you pay a low monthly fee. However, Peacock explains, "It's the long-term costs that bite you. It takes money to pay for server-cooling systems, bandwidth, fire-suppression systems, backup generators, security systems and patrols, and staffing for 24/7 network operations centers. And you'll pay for them every day, for years."

It sucks energy. "The cloud is anything but a clean, energy-efficient technology," Peacock says. "If the world's data centers, where those cloud-based programs are stored, were a country, they would be the 12th-largest consumer of electricity in the world, placing them between Spain and Italy."

No internet means no cloud. "Accessing your files from any device and having a copy safely stored somewhere else rocks," Peacock says. "But when your internet connection goes down or shuts off, so do you."

Service providers can be arbitrary and fickle. Users of cloud services can get caught up in complex policy and gatekeeping issues that can cause their accounts to be suspended or closed. And, as Peacock points out, "One service shutting you down can cause a negative ripple effect across your entire business."