For programmers this is not a new paradigm, but for those IT types who are accustomed to going to a physical server to troubleshoot a problem, it requires a new mindset. In addition, even for those who support the actual hardware, remote KVM sessions and remote power reboots for a hung server are commonplace, so that once installed, the need to 'touch' the hardware is greatly reduced.
This trend seems to be accelerating as the economics of the times cause many smaller to mid-size firms to try to lower costs in IT headcount, equipment capital cost, as well as recurring hardware and software support costs. This becomes an especially significant motivator when it becomes necessary to upgrade an older server room or data center to meet the rising power and cooling demands.
The result -- upper management may be forcing CIOs to move to a hosted model or outsourced solutions such as Amazons EC2 service or Google's Gmail, solely based on perceived economic savings. And while overall there may be cost savings when all things are working, the cost or impact of a possible outage is never truly factored into the picture.
More importantly, once your organization's data is migrated to the cloud, it is no longer under your direct control. This has many implications, such as the security and integrity of the data, as well as the ability to operate at all, in the event of an outage.
While presumably all the majors providers have substantial resources dedicated to ensuring uptime and availability, there are no guarantees of recovery when thing go wrong. I believe that before an enterprise (of any size) decides to divest itself of all its own IT equipment and systems, it should take a good hard look at their potential exposure if their providers do not meet expectations. Also, how quickly and easily can the data and systems be migrated to another provider or even back in house, if necessary? (This is both a contractual issue and a real IT architectural and systems concern.)
There are advantages to consider if you move to hosted site or a cloud service (or a combination of both). However, think carefully before you send your data into the cloud. Make sure it is not just wisps of water vapor, particularly when the turbulent weather comes.