Now we have another entrant called Birst, which today will announce what it calls a Business Intelligence appliance. No, it’s not hardware — that’s what I thought, too . It’s actually software that you install locally on your own on-premise servers. And yet it’s still a software-as-a-service (SaaS) offering. How does that work?

Having already become a player in the basic cloud-based BI business, the company realized that most of the data that makes BI valuable in the first place doesn’t live in the cloud but actually is used with applications that run behind the firewall.

I talked with Birst co-CEO Brad Peters, who told me that the software runs like a SaaS product — you access it through a browser, just like you would any other typical SaaS product, and you get the same benefits, including zero worries about upgrading or adding new features. But you also get the benefit of having it run on-premise behind the firewall. “It’s the exact same experience as with the cloud,” he says.

The whole point of BI, Peters says, is to take data created in various business applications — whether it’s SAP, Salesforce.com, Concur, Omniture, Siebel or what have you — into a dashboard, where it is arranged into a graphical presentation or report that you can then use to make business decisions.

The textbook case for BI is comparing data on marketing spend to deals. If you find you’re spending a lot of money on one type of marketing campaign that seems not to be generating leads and deals, and not enough on one that seems to be working better, you can see the pattern and make needed changes, Peters says. “What BI is really about is taking the raw data and synthesizing it so that business people can act on it,” rather than relying on spreadsheets.

Big companies like SAP and Oracle are in the BI business, too, but their solutions cost a lot of money and are therefore aimed more often than not at bigger companies. Yet Birst has its share of larger customers: Citrix Systems is a Birst customer, as is Rackspace, the Web and cloud services host.

So far, Birst has raised a combined $20 million in two rounds from Dag Ventures, Sequoia Capital and Hummer Winblad. Peters said the company is keeping most of its funding details close to the vest — he wouldn’t say how much Birst’s most recent round was, for example — arguing that there’s been too much attention paid so far to BI start-ups and how much money they’ve raised. “Ultimately, a software company needs to make money, and BI is really hard,” he says. “You can waste a lot of money really easily. There’s been about $300 million raised by companies trying to do BI, so clearly the amount of money raised doesn’t correlate to success.” Those sounds like words to the wise.

A longtime tech exec, Kertzman is one of the funniest players in the tech sector, and was once the font for all the best jokes about Microsoft, back in the day when no one made jokes about Microsoft for fear of digital defenestration.

Today, Kertzman is actually much more serious, focused on the business-to-business part of the Web 2.0 world, rather than the more popular consumer-facing areas into which most VCs have been pumping oodles of money.

While Kertzman was early into the widget trend–in fact, he was the first to say the word to me at a Demo conference where he was showing off the Widgetbox, the widget directory startup, a moment for which I shall never forgive him–his new focus is on companies like SlideRocket, the online presentation application, and other Web-based productivity products like it.

Yes, I swear, SaaS–Software as Service–can be interesting! Really!

We also liven things up with some chatting about too-high valuations and thoughts on the Microsoft-Yahoo takeover battle, as well as the recession.

Here’s the video of Kertzman:

Yesterday, I was a judge on a three-person panel at the Under the Radar: The Business of Web Apps conference, held at Microsoft’s (MSFT) Mountain View, Calif., campus in Silicon Valley.

The event, sponsored by Dealmaker Media, was a very good version of many such conferences held often around the region, where start-ups come to show themselves off in what amounts to a geek version of “American Idol.” There were just over 30 companies there yesterday.

In other words, entrepreneurs come to make a PowerPoint pitch before the panel and the audience and then we get to ask questions and make comments, a la Simon Cowell.

(I tried to channel Paula Abdul, but 10:45 a.m. is much too early to start drinking–um, it’s just Diet Coke!–for me!)

The companies I judged–with Stephen Stribley of Microsoft Office-Live and Hummer Winblad Venture Partners’ Prashant Shah–were in a category called “Manage Up.”

That meant they were all essentially in the enterprise-software-as-a-service arena that has gotten–and will get–increasingly hot.

The group I judged included: Act-On Software (an on-demand Internet communication and collaboration service), Magento (an open-source e-commerce), Mumboe (an online document-management service), and NetBooks (a Web-based business-management system).

All were interesting and promising, although all had issues, from security to marketing challenges to, of course, bigger competitors.

I did a video of snippets of the presentations of all four in a row, starting with Act-On, as well as a little interview with one of my favorite VCs–but only because he is funny–Mitch Kertzman of Hummer Winblad. He was there to support several of his investments, including SlideRocket (an Internet presentation application).

Here’s the video: