Re: Not buying it
TerryB, Good comments, but some assumptions you're making are problematic. First and foremost there are and will continue to be businesses that will benefit more or less from having better or faster IT. In a traditional manufacturing company where there are just a few products and limited global distribution, legacy IT will continue to serve just fine with basic improvements around virtualization, a little cloud/SaaS and maybe some automation.
As for internal vs. external there are many situational questions that need to be answered before a decision can be made, but in general terms the following is likely true:
Few large manufacturing firms still own the majority of their manufacturing and there are many reasons for that (Scale, risk, investment, distribution, labor, taxes, etc). In many cases IT can and does mirror manufacturing. Yes, if you have a fairly standard "unchanging" environment in most cases a well managed private environment will be best. However, once you venture beyond "unchanging" and inlude risk, global distribution, capex, speed to market, scale, etc. You're much better off putting appropriate environments in the hands of folks who manage that stuff for a living.