"""Like most industries, we have a case management system which the firm runs on. It needs an on site installation of office, not a hosted one. Office 365 is therefore pointless, as is google apps."""
Which can be resumed on: "Not all workloads are good for hosting them on the internet"
""AWS for a "cheap" server for a pilot project? Server 2012 comes with Hyper-V, letting us just fire up a virtual server. For free. Why pay for AWS?""
I see your point and I agree with you, any computer these days (even cheap laptops) can run at least one or two virtual machines.
The only reason for going to an external provider is when the company lacks the expertise or resources to connect a server to the internet, which is the case of most web servers.