That’s a trick question, because most of the innovation I’m seeing at the Software 2007 conference in Silicon Valley this week isn’t in traditional, on-premise software, it’s in software services.

You know, on-demand, SaaS, whatever you want to call it. Here’s a few of the companies that have caught my eye:

* Brightidea.com offers an on-demand service for managing, you guessed it, bright ideas. It creates a workflow process for ideas and new products in development, to get such thing to testing, production, and the market as quickly and inexpensively as possible. Innovation is critical to any company’s success, yet time, cost, disorganization, and imperfect processes are often roadblocks. Brightidea.com must be on to something because it has some pretty impressive customers: Bristol Myers Squibb, Honeywell, and Harley Davidson, to name a few.

*CIOs tell me that integration of on-demand software with existing applications and data sources is one of the biggest barriers to adoption. Out in force at Software 2007 are companies that help you do just that. Appirio, for example, specializes in consulting, integration, and even custom app development for midsize and large companies implementing Salesforce.com and other on-demand software. Pervasive Software also offers on-demand integration services, using an on-demand delivery model. Are you thinking what I’m thinking: If on-demand software is so much cheaper and easier, why the need for all this consulting and integration? Appirio includes among its customers Borland and CRC Health Group, so I assume those companies have done the due diligence and figured out SaaS is cheaper in the long run, even after paying for those additional services.

*Citrix in Saas? I have a hard time keeping up with Citrix and what business they’re in (remember back in the ‘90s when they were big into network computers, those things that were supposed to replace PCs?). Now Citrix is on to another trend—yep, on-demand software—and a division called Citrix Online seems to be paying off. It serves up on-demand offerings such as GoToAssist (for customer service-type job roles), GoToMyPC (secure remote access) and GoToMeeting (online collaboration). A company spokeswoman told me Citrix Online is generating $200 million a year in revenues; that’s up from about $100 million in 2005. And it was awarded by the Software Industry Information Association last month for excellence in on-demand Web conferencing and collaboration.

*Could Ketera’s on-demand procure-to-pay software succeed where some on-premise procurement software offerings floundered? (Think CommerceOne.) Ketera says it now has 115,000 users, up from 20,000 last year, for the service, which manages workflow, supplier contracts and transactions. CEO Burton Goldfield, who joined the company last year, has an impressive pedigree in software sales: he was previously senior VP of worldwide field operations at Hyperion, and before that, head of sales at Rational prior to its IBM acquisition. Customers include United Airlines, BP, and ServiceMaster.