As has become my annual habit, I’m providing a list of 10 companies, most of them relatively small, that I think will be worth watching this year.

1. Psydex. Psydex qualifies as my favorite technology of 2009. The company uses semantic algorithms to parse information feeds (millions of individual records) in real time. It then assigns mathematical values to them individually and/or to aggregates of items. The outcome is data that can be usefully and powerfully analyzed. Psydex can identify important events in real time and spot trends at the earliest possible moment. And if you’re wondering whether it analyzes blogs and tweets, along with news feeds and price feeds, well, yes it does. It can take data from just about any kind of feed. It probably identified this posting the moment I hit the “publish” button. (See previous posting Psydex: Web 3.0 and Real Time Intelligence for more information.)

2. Pervasive Software: I have two reasons for mentioning Pervasive Software. First is that Pervasive’s primary activities are in Data Integration and I think that whole market will do well – because it’s far from saturated, and the heaps of data to mine just keep on proliferating. This means that Informatica, the giant in this market, will most likely have a good year too. The second reason for mentioning Pervasive is that it has a so-far-little-recognised jewel – its DataRush parallel data processing engine and platform. There are not many such engines and as we advance further into the world of multicore CPUs, every vendor that has a parallel engine is likely to experience strong demand. Parallel engines improve processing speeds by one or two orders of magnitude, bringing down query responses (for example) from hours to minutes. I’ll write about this in the coming months, because it’s significant from a technology perspective.

3. Virtual Bridges. I mentioned Desktone last year, as a company with an interesting cloud proposition – cloud-based client virtualization, with thin clients on the desktop and the virtual PCs in the cloud. Virtual Bridges offers an end-to-end client virtualization solution of its own creation (based to a large extent on Open Source technology) and can provide it, like Desktone, from the cloud – if that’s your inclination. The emergence of Virtual Bridges was perhaps the only significant development in the client virtualization market last year. (See The Virtual Desktop: A Challenger for Citrix? for more information.)

4. RainStor: RainStor  uses a dramatic level of compression to store archived data (to disk) in a near-line manner. The data is archived in a readable and accessible form, making this kind of compression distinctly different form most other forms of compression. (See In-Memory Database – As Archiving Capability?) RainStor (originally trading as ClearPace) has done well in the last year probably as a combination of two factors, first it is a low cost solution to archiving, and second, it is technology that is very cloud-friendly. Rainstor should prosper from the burgeoning popularity of cloud computing.

5. NetSuite. I wrote about NetSuite a few months ago (Will NetSuite zap SAP?) because I was impressed in two ways. First, NetSuite is a very well integrated set of applications, built from scratch to compete as an ERP-SaaS offering. Secondly it has started to win business from SAP among the low end of the SAP user base. It doesn’t have the breadth of SAP, but it does have breadth and it is acquiring a complementary software ecosystem. The reason it has won business from SAP is that its TCO is at most a tenth of SAP and can be much less. I believe SAP is vulnerable to a head-on assault from the cloud – it is still ways away from having a credible cloud offering. NetSuite is likely to be an increasingly painful thorn in SAP’s side this year.

6. xkoto. This is a company I’ve been tracking for a while. xkoto (it really is spelled without a capital X) does database virtualization. You can think of it as being “Oracle RAC on steroids”, except that it isn’t built for Oracle, but for IBM’s DB2. Last year xkoto added a version for Microsoft’s SQL Server and has been doing well with it. There are technical reasons why xkoto is likely to perform well, aside from its SQL server version. The simple fact is that multicore works in its favor and nowadays multicore is not only ubiquitous, but inexpensive. This works in xkotos favor. Also worth tracking in the alternatives-to-Oracle space is EnterpriseDB.

7. Kickfire. As I’m in the area of database, it’s only fair that I should also mention Kickfire. Kickfire is a kick-ass database appliance built for what I’ve called QLDB – Quite Large DataBase. You can explain the Kickfire commercial proposition with the words “low latency and low cost” and the technical proposition with the words “SQL on a chip.” If you want or need to know more read this post. I suspect that Kickfire will grow. By the way, in the large database space, Green Plum and Vertica are the companies I keep an eye on. I added Kickfire to the list last year.

8. Oniqua. Oniqua could be described as a BI company, but in reality it’s a little more complicated than that. Their software comprises a specially tailored BI suite for companies such as mining companies, oil companies or heavy manufacturing companies, which helps those organizations optimize their use of assets. With such companies, asset productivity rather than employee productivity is the over-riding factor. I wrote about this in Asset Performance Management For The Enterprise. Later in the year I ran into CSC doing something rather similar in an unrelated area – cash management (see The Optimization of Cash Management.) These products are carrying out important optimizations that can have a dramatic impact on a business. Both products are worth tracking and should prosper in the coming year..

9. Zecurion. I ran into Zecurion last year (see this post.) I was intrigued by the company for several reasons, one of which is that it is Russian and few Russian software companies are successful enough to become international. Zecurion does encryption and it does it well. Encryption is, perhaps, the most overlooked area of IT security. In terms of reducing the risk of data loss, encryption probably offers better protection than any other type of IT security products out there (with the possible exception of whitelisting). However, it can get in the way of user activity. One of the virtues of Zecurion’s encryption products is that they are unintrusive.

10. OpenSpan. Finally, I’d like to draw attention to OpenSpan, a company I’ve mentioned before. When the OpenSpan platform first emerged I characterized it as SOA on the desktop. OpenSpan is development software that enables slick and, if well used, highly productive integration at the user interface. It can link together functionality from just about anything, including desktop apps (such as Excel, Word), internet capabilities (Google Apps, Zoho, whatever) and web services (which means just about any web site.) I like to think of it as AppleScript for Windows, although that’s being very kind to AppleScript, which is just a scripting language and not a highly productive development environment. OpenSpan has been growing very fast, garnering customers in large organizations and among the SIs. 2010 may be its breakout year.

A few months after I published my list of companies to watch in January 2009, LexCycle, the first company on the list, was eaten alive by Amazon. It was ironic, because the original piece I wrote on LexCycle was entitled One Million Users: Is Stanza Killing The Kindle? Well Stanza didn’t kill the Kindle, instead it was made to play nicely with it. Sadly, that didn’t amount to much of a reprieve – it’s a year later and Apple’s imminent tablet will doubtless make kindling of the Kindle as the year goes by.