>>Why use Office 365 - which is a cloud service then?
So you can switch devices, hot-seat on any PC, etc? Store files in your own private cloud/whatever.
Regardless you miss the point - only a large business can have their own data centre. Small biz typically have a server in a basement somewhere and someone takes a USB disk home at the weekend :)
For them, cloud-based is way MORE secure than they can afford - typically they might not even have a full-time IT guy, just someone helping out.