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in terms of security, reliability and scalability.
On all three parameters, Cloud file systems are proving to be better today, although they require more Management than Local file systems.
In terms of Security, most reputed Cloud service providers have strong Firewalls in place, quite likely better than any a stand-alone small organization would put in place. Of course, security is only as strong as the weakest link, and having a strong enough security network within the organization interacting with the Cloud Firewall is equally important. Wouldn't do to have the VPN encoding parameters being leaked now, would it?
On Reliability, I would rate both as equally reliable. On Local file systems, the organization maintains complete control, and can choose what kind of hardware to go with. For Cloud file systems, it is a legal matter of the SLA, and whether you want to go for a RAID-5 or10 or something else, will be available as a choice, at a price, of course.
Scalability is one area where Cloud file systems are way ahead of Local file systems, especially if Peak usage and Average usage are very different. You can build this into the Service Agreement, to allow for the temporary use of a high numer of resources during the Peak times, while maintaining a lower level of the Average usage.
At the end of the day, it all boils down to managing the system yourself vs managing the legal wrangles of a service. Most Cloud service providers also have Dashboard which make the Service Monitoring a lot easier, and that may reduce the amount of time you need to invest.
