Ernie,
I'm not sure what you mean by "straight IT", so I'll address it from the following point of view;
Straight IT = traditional silo'd, heavily architected, legacy application and infrastructure environments that are costly to maintain, and difficult to move or change.
Getting past "straight IT" is likely to be the outcome of any organization adopting cloud in any meaningful way. In order to fully benefit from Cloud, your organization will have to adjust to how IT "can" be delivered, vs. how it's always been delivered. If an organization only adopts cloud with the goal of "cost reduction", I do believe they will fail in the longer term. I whole heartedly agree with Randy Bias & JP Morgenthal on the point that Cloud adoption shouldn't be about saving money on IT, but rather on enabling new business.
In light of what I've written above, I would say that if you're really worried about CapEx you can solve that by leasing hardware or using a public/hosted cloud environment. However, I view CapEx as more a strategy for how costs are captured and reported, vs. a "savings" effort. The real savings might come from how you adopt a "hybrid" or "multi-cloud" environment that allows you to balance risk of ownership and monthly cost through the use of "just-in-time" resources (I.e., run your 99 days out of 100 work on private cloud and the spikes on day 100 in the public cloud)

JP Morgenthal

Principal, Ranger | Cloud & VDC Services, EMC Consulting

Posted on Feb. 23, 2012

To quote my last blog entry (http://www.jpmorgenthal.com/morgenthal/?p=329) "Sure, executives will be thrilled with the immediate cost reductions, but when was the last time anyone remembers their CEO saying two years later, 'don't worry Bill, you saved us $2 million two years ago, you're still golden in my book!'" The point being, the move to cloud provides and immediate benefit, but it's short lived. If there's not a longer term strategy to address operational concerns, those costs will simply begin to rise again over time.