I think that "cloud" will be a definite bonus to the SMB shop, and provide a wonderful amount of spare capacity to enterprise shops, but I can't foresee "the cloud" replacing in-house IT completely.
I think that "cloud" will be a definite bonus to the SMB shop, and provide a wonderful amount of spare capacity to enterprise shops, but I can't foresee "the cloud" replacing in-house IT completely.
But it will replace the major costs of corporate IT - technical resources services. For example, today a large corp (let's use Gazprom as an example) will contract a big IT services company (let's use Wipro for example) to manage their servers. This specific AWS service can in theory replace a large Citrix farm. When I was internal at SAP for example, every employee had access to their very own remote windows desktop, which had the basic office software on it required to do anything they could do on their laptop. The overall idea of cloud isn't the technology, it's that it's shared services.
Need a server? click a button Message queue? click. Database? click. Virtualised Desktops? clicky-clicky. Virtual Tape Drive? (I'm as surprised as you are).
You're still going to need people who need to know what each one of those things means to your business. But in-house enterprise IT today still consists of lots of people (and payroll) who put things in racks, re-image desktops, restore SQL Backups, install custom software and give the tapes to the dude in the motorcycle helmet...
In the medium term the cloud won't replace IT. It will however redefine it to the point that the 'spare capacity' that you mentioned will be seen like an amusing anachronism.