The first group are almost always better served by dedicated VMs or hardware from a provider specializing in the, if the VM is long-lived.
Managing your own infrastructure (with dedicated servers, so no hardware management) isn't too hard, even if you're a small shop. And managing a fleet of AWS services isn't necessarily less work.
Maybe there's a reason all ads for cloud tend to compare it to running your own data center. Because once you get rid of hardware management, it's not really that much easier being in the cloud, at the risk of lock-in and huge surprise bills.
I know how tedious it is to maintain decades old enterprise Java software, but from a cost perspective, it makes much more sense to keep those rather than constantly refactor to chase the newest trend.
As an example, if you had a software that was written 20 years ago to store data in a relational DB, updating it to work with current versions of that database system won't be much work (if any). If you rely on managed services, I wouldn't be too sure that you get away that easy.
This very much depends. In the example you gave, nothing changes if you used managed services or not.
But you could argue that the 20yo software is technical debt preventing the upgrade of the database due to the source code being lost, the library used to connect to the latest version of the database doesn't exist requiring a rewrite in a moderm language or framework. Etc.
Technical debt really is about code that cannot easily be modified to adapt to the requirements of a business.
If you wrote some code, and it was trash, made no sense, in an obscure language that few people know, with no comments. Yet it ran for 10 years flawlessly with everyone too scared to look at it, but made the business money. It's not technical debt until it needs to be changed/modified.
If you have infra skills then absolutely, it's way simpler to manage. But infra people like don't really fit in "small shops" because the price tag for one of us is (depending on the cost of living) anywhere between a quarter and half a mil total comp. And if you ever want them to take a vacation not on-call you'll need at least three. I say this against my own interest, just go with the managed services and consider it "good problems to have" when you feel the itch to hire some infra person to clean up the debt.
And yes, you'll need three people, but not full time. From experience I can say that even with a hundred servers, it tends to be a small chunk of each of their time. And if you have a redundant system and don't deploy on Fridays, the chance that someone has to respond to a call on the weekend is pretty much 0.
Cloud only ever is worth it when one uses the higher-tier services, like AWS Lambda and the likes. Even running Kubernetes in the cloud is only semi worth it, because it's not high enough in the stack and still touches too many low-level IaaS services.
Of course, higher tier means more vendor lock-in and more knowledge required and all that. But if you are not willing to pay that price, then OVH, Hetzner and the likes will have better offerings for you.
And you cant really do that because people dont really wanna deal with on-prem shit and server hostings
Tehnically speaking, i am rhcsa certified, i know how to do all of this on-prem, hybrid things. I dont even bother looking at job offers from companies that arent cloud based (even if i would get a 10-15% increase, or more if coming from the financial sector) because, i genuinely cant be arsed to deal with all that bullshit again.
I'm done with caring about disk space, and hw firewalls and configuring bs in linux. Fuck iptables, let me manage everything from a (network) security group. Fuck Traefik and F5 and all this bs, let me just plop an Application Gatway in Azure or API gateway in AWS. Fuck database clusters. At this point, i havent even configured an apache/nginx server in a couple of years. WebApps in Azure are more than fine; and for the rest K8s.
As a result, good "classic" sysadmins are a dying breed even at enterprise level. So they're even more rare and accessible for small/medium sized business. If i go to my IT dept. right now, i can guarantee 80% of them would be completely lost to setup and use an AD, AAD is just too convenient.
That basically leaves you with: move to cloud, or learn how to do all of these things by yourself. And those things take time (to learn and to manage)
It's like deciding to make apps with Perl. Can you do it? sure. But you'll probably have to do it on your own.