Are the days numbered for the Servers on the plant vs a remote data center or cloud?

This was a question asked to me this week by an engineer at the New Zealand User Conference, and I stepped back surprised at the question from the remote south island of New Zealand, but pleased. The question was asked with full reality especially around the utility industry such as water etc why would people put in servers today and have all that sustaining hassles, versus just renting space and capability at a managed data center. The point is extremely valid as the networks become more robust, the acceptance of virtualization as the norm to deploy applications, why have the hassle with local servers.