Oops... The internet's down again!
Okay, let me get this straight. You want to save some money by going to cloud-based computing. Doesn't this require a connection to the internet if you want to get anything done? You know, silly things like e-mailing the guy in the cubicle across the room. Or, say you need to e-mail the disaster plan to your public affairs officer on the next floor. Things you may want to do after say... an earthquake, or something. You know, one of those pesky little natural disasters that may not destroy your building, but might just have the teeniest possibility of trashing your internet connection?
After an earthquake, how will the police process arrest documents? How will the public works director get a list of priorities to his managers in the same building? With building based servers at least you can get work done on site, even if you can't communicate with other locations.
Seems like a risky proposition in a city that has suffered many disaster related outages in the past.