Single Point of Failure is your network (or theirs....or any route between you or them). That's what I took that to mean.
Yes, that is likely what he meant, and it is a suspect argument for a few different reasons:
1. Redundant internet connections aren't terribly expensive to implement and the ability to eliminate on-premise email, file, and collaboration servers more than makes up for it.
2. Let's say your internet connection drops - how are you going to communicate with vendors, clients, etc? I mean you still have access to your datacenter (assuming it's in the same building) and can communicate internally, but if you have cloud-enabled services, you can literally go to any live internet connection and you're back in business with both your vendors, clients, and other internal staff. If your internet connection goes down frequently enough for this to be a major concern, I think the thing to worry about is finding better connectivity.
3. I'd wager that Microsoft has greater service uptime for email, SharePoint, etc. than most companies do with their on-premise environment.
These are the kinds of things my clients are discussing. I've got clients with as few as 250 seats to clients in the 300,000 - 500,000 seat range and they're all saying the same thing - they want to eliminate as much local infrastructure as possible, free up IT staff to add actual value to the business, and most importantly, implement services which enable users to work from anywhere with ease. Like I said earlier, I'm really trying hard for us to drop the on-premise offerings in our practice because they're just not worth our time. We can maybe take them and outsource them, but our staff has more important stuff to work on to be honest.
If you're in a mission-critical situation where you can't be down, you need redundant dedicated networks and that gets pricey. If you're in a big city, it's likely more viable. My organization had a network they used that was run by AT&T. The route to AWS went a couple of miles out of the way because of where it terminated. It was hopping between Memphis and Atlanta before going to DC and back again....lots of latency potential.
There are going to be mission critical, niche applications that will always need to remain on-premise. Even those are gradually being located in external datacenters (the Cognizants of the world) because of cost advantages.
There was a good discussion over at [H] a few months ago where a technology manager evaluated his options of on-prem vs cloud for his workloads. He did all of the cost computations factoring in hardware costs, software costs, labor, etc. His finding was that the cost to license everyone for M365 was less than only the software licensing he'd have to pay to come close to that level of redundancy for an on-premise engagement. He still had hardware (and regular upgrades for it) and labor costs above and beyond those to consider as well.
Yeah I don't like the idea of cloud, even for my own personal stuff. I want to have full control and knowledge of where my data is. I can see the NAS, see the individual drives, I can login to it and look at the raid status, I can see the individual files, and I can also see the backups, and see that the backups are working. Not a fan of the "it just works" philosophy where you don't see what's going on and just hope it never goes down.
I promise you, you have nowhere near the redundancy or resiliency of a cloud provider. And personal stuff is one thing - try running a business where technology isn't your core competency. If your house burns down tomorrow while you're on vacation, how well is your infrastructure working then? How are you retrieving the data? Even with my own personal on-premise server, I do both local and cloud backups precisely for this reason. My main server is old (running almost 24/7 for the past 9 years) but it is hard for me to justify upgrading it at this stage. I'll probably end up with a low-end server or desktop with a ton of cloud-backed disk space for large files which need to be stored locally.
Same thing with programs that save stuff in a weird format that is not just a file. Like for example, local finance or photo software that uses it's own built in database. If I can't see individual files and KNOW that it is my data, but it's just somewhere "in the computer" then not a fan of that either. How do I back that up and how do I ensure I can get that back if I clean install.
We're not talking about your personal stuff. In the real world, you don't get to make those decisions. You have input but ultimately the business decides what applications to use and you support them whether or not you like it or not.