You're assuming that "On premise" equates to "inside our building, in racks we've installed, using power and networking we have to manage." You're correct if that's the case for your business, but my argument is based around the idea that you can use _managed_ hosting providers of physical hardware that'll be either next door to you, in the same city, or close to your users (i.e, you're a business in Germany but your customer base is in London, so you host the servers using a London based provider.)

The idea that you have to manage hardware is greatly diminished when you consider the availability of managed providers that are dirt cheap.