The latest buzzphrase actually has a lot of merit – server capacity has evolved much faster than the demands of business software, and ask as you might, neither Dell nor HP will sell you half a server.
The federal government recently announced that they have finally come to understand this strategy (http://www.nytimes.com/2011/07/20/technology/us-to-close-800-computer-data-centers.html), with a cost savings in the billions. Of course, you may not realize benefits quite at that level, but the calculus is the same – it is cheaper today to share server resources.
But saving money is only one consideration. You also have to consider how backups, redundancy, and network capacity compares. With a few locations and some mobile users you may not be taxing your headquarters network, but no matter how many 9′s you’ve been promised it will be down from time to time. With costs spread over hundreds of customers, cloud providers can make multiple redundant ISPs cost effective. Not to mention electrical redundancy – you do have a diesel generator in your server room, don’t you?
Like any major decision in your network infrastructure, there are a lot of issues to consider and no right answer for everyone. But moving your resources into the cloud, despite being far overused terminology, is getting more attractive every day.