If is a difficult decision to make I agree, but still inevitable in my opinion. As it stands Sims appears to be going down the SharePoint route. I had a discussion with Birmingham recently and they do plan to host it centrally, but schools will still host their MIS systems locally. It's all down to cost at the end of the day as I mentioned above.
I would argue that centrally LEA hosted MIS's is the worst way to go IMHO, When you look at some LEAs Centrally Managed Internet & Email systems (or the firms they paid probably £100,000's to for the services) they are just not reliable enough.