We could run it locally, but the problems that matter simply don't change.

We're paying for servers that sit idle at night, you don't find enough sysadmins for the current problems, the open source models aren't as strong as closed source, providing context (as in googling) means you hook everything up to the internet anyway, where do you find the power and the cooling systems and the space, what do you do with the GPUs after 3 years?

Suddenly that $500/month/user seems like a steal.