Last week, Cognos, a supplier of business intelligence software, acquired Celequest Corp., a provider of real-time dashboards that are delivered to customers on a software-as-a-service (SaaS) basis. The purchase gives Cognos its first SaaS offering. The packaged software industry, which has traditionally offered its wares on the basis of a license agreement under which the software is installed and run on a customer's computer system at that customer's site, has been experimenting with new delivery models for some time. Ideas such as the application service provider (ASP) model, software-as-a-service, and on-demand aim to give manufacturers lower cost, greater flexibility, and less complexity to manage, but there is much confusion over definitions and the characteristics of each notion. Cognos's move into the so-called SaaS market follows the lead of other software vendors that have opted for one or more of these new delivery ideas. Such companies as NetSuite, Microsoft, Plexus, Oracle, and SAP, among others, all offer these various delivery options today for their applications. Software market observers are often inclined to trot out analogies from other industries when discussing these software delivery ideas. Do you really need to own the movie if you can just rent it using an on-demand service offered by your cable TV provider? Isn't SaaS a bit like leasing a car rather than owning it? These analogies do have a couple of things in common with the new delivery models for enterprise software. One is that technology is making it possible to do things differently. Web-based access to enterprise software functionality regardless of physical location opens up possibilities for companies, especially those with little IT infrastructure. The other is greater flexibility in how a purchase is made. The new software delivery options, particularly those that avoid the need for a capital expenditure, do make it easier for some companies to afford the technology. But deciding whether one of the new software delivery options is right for your organization requires a lot more due diligence than you would exercise in downloading a movie or even leasing a car. Your company's ability to function could well depend on how well you understand the details of these new delivery models. So before you jump into ASP or SaaS delivery models, do the homework to understand what the real costs are, what exposure if any you may have, and what the tradeoffs are with traditional license agreements. Purchasing enterprise software is still a mission-critical business.