Should the ArcGIS SDE software be installed on the database server machine?

We are looking to standup an ArcSDE geodatabase but the relational database resides on a remote network. From a performance standpoint should the SDE software itself on a local access machine or co-located with the remote database server? I know it can installed on either machines, but has anyone benchmarked both architectures and noted any differences? (given a constant network and bandwidth in both)

James Fox
DBA - Contractor
BIA Divsion of Water and Power
Golden, Colorado