Deja vu
This sounds a lot like the early days of PCs: IT pushing clunky old mainframes, individual workers and departments discovering they can do a lot of the work more efficiently for a fraction of the cost on machines they buy for themselves. A decade or two later, the mainframes are all out of the window and the IT department's grabbed control of the PCs, shackling them all to expensive servers - so the users are discovering they can do a lot of that more efficiently for a fraction of the cost with SaaS they buy for themselves. I suppose the "private cloud" agenda would be IT departments fighting back and trying to stay relevant.
It's been interesting watching this in a large organisation (a university, in this case): IT people grabbing ever more money to maintain baseline services, while departments increasingly found all they really need from the central IT department is essentially an ISP through which to access Internet services. When budget holders start asking why we need to pay them £100 a year for a domain costing under £10 commercially, why it costs £10 and takes a day to retrieve a file from tape when Dropbox does it free in a minute, why a six figure annual e-mail hardware budget can only give tens or hundreds of megabytes when commercial providers give more than that for free...
No, they aren't entirely obsolete - but I think they need to evolve dramatically. Whittled down to the bunch of guys who re-fill and un-jam the printers? (Which, here at least, is a departmental role not central "IT".) Maybe that's why they grabbed control of the access switches in the last few years.
The alternative would be "each building's got a piece of fibre that comes into that big Cisco box there, and it's got an Internet connection we pay (big telco) for ... this whole department exists to babysit that one box". Not really the sort of thing that gets big budgets or enables empire-building.