But, examine what information you have to keep confidential and what you don't. Nothing is foolproof. Big issue is demonstration of very secure environment, redundancy, up-times. The data LMS keeps within it, is a very small subset of the HRIS system. This relaxes people.
Content can reside anywhere.
It can be pointed to, launched, tracked from another server. A lot of these decisions are driven from large organizations that are global that can't track there charge backs, discounting, transfers, etc. There are a lot of intricacies involved with training these days. Make sure that you can figure out today how you are doing your charge backs. If you can map that back into your LMS, that it comes out of the right budget.