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                                                                    Exhibit 10.1

                               MRO SOFTWARE, INC.
                          YEAR ENDED SEPTEMBER 30, 2004
                              EXECUTIVE BONUS PLAN

1.    PURPOSE

      The purpose of the FY2004 Executive Bonus Plan ("Plan") is to provide key
      management employees of MRO Software, Inc. with an incentive to make
      significant and extraordinary contributions to the long-term performance
      and growth of the Company, to promote the common interest of the Company,
      its stockholders and key executives, and to attract and retain executives
      of exceptional ability.

2.    ADMINISTRATION

      2.1   The Plan shall be adopted and administered by the Compensation
            Committee of the Board of Directors of the Company (the
            "Committee"). The Committee will base all decisions and awards on
            quarterly and annual financial statements filed with the Securities
            and Exchange Commission.

      2.2   The Committee shall have full and complete authority and discretion
            to make binding decisions on the administration of the Plan and
            shall adopt such rules and regulations and make all other
            determinations deemed by it necessary or desirable for the
            administration of the Plan.

      2.3   The Committee and the Board of Directors of the Company shall have
            the authority to amend or terminate the Plan, provided, however,
            that if the Plan is amended or terminated, the Company shall be
            required to complete payment to each Participant of the amount which
            that Participant otherwise would have received based on the
            provisions set forth in paragraph 7.2.

3.    DEFINITIONS

      3.1   Plan Year means the fiscal year ended September 30, 2004.

      3.2   Plan Quarter means each of the three-month periods ended December
            31, 2003, March 31, 2004, June 30, 2004, and September 30, 2004.

      3.3   Participant means any executive of the Company who is designated in
            Appendix I.

      3.4   Permanent Disability, means a Participant's inability, as a result
            of illness, incapacity, disease or calamity to perform a substantial
            part of his primary job

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            responsibilities as set forth in his employment contract or job
            description for any concurrent six month period.

      3.5   Plan means this FY 2004 Executive Bonus Plan.

      3.6   Except as otherwise indicated by the context, any masculine term
            used herein also shall include the feminine; the plural shall
            include the singular and the singular shall include the plural.

      3.7   Company means MRO Software, Inc. and its subsidiaries included in
            its consolidated financial statements.

      3.8   Earnings and EPS mean pro-forma earnings per share as disclosed by
            the Company, consisting of earnings per share determined under GAAP,
            adjusted for the amortization of goodwill and other intangibles on
            an after-tax basis in accordance with past practice of the Company.
            Earnings may also be adjusted to reflect such deductions and
            additions of extraordinary items and one-time expenses as may be
            approved by the Committee for purposes of administering this Plan.
            Earnings and EPS are calculated after giving effect to any bonus
            that is paid or proposed to be paid under this Plan.

      3.9   Revenue means total revenues as disclosed in the consolidated
            quarterly financial statements of the Company.

4.    ELIGIBILITY AND PARTICIPATION

      Executives eligible for bonuses under the Plan shall be those individuals
      specified in Appendix I.

5.    BONUS MECHANISM

      5.1   The amount of on-target bonus that is paid will be determined as
            follows:

            (a)   Each participant is eligible to earn forty (40%) percent of
                  the on-target bonus based on the achievement of quarterly
                  goals and sixty (60%) percent based on the achievement of
                  annual goals. The quarterly and annual Revenue and EPS goals
                  are stated in Appendix II.

            (b)   The percentage of the on-target bonus described in Appendix I
                  earned by each Participant on achievement of the amounts
                  stated in Appendix II in respect of each Plan Quarter is:

                  (i)     Q1        5% based on Revenue, 5% based on Earnings
                  (ii)    Q2        5% based on Revenue, 5% based on Earnings
                  (iii)   Q3        5% based on Revenue, 5% based on Earnings
                  (iv)    Q4        5% based on Revenue, 5% based on Earnings

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                                    40% in total

            In the event that the achievement for Revenue in any quarter is less
            than the amount stated in Appendix II for that quarter, but is equal
            to or greater than 97.5% of such amount, then a partial bonus shall
            be paid to each Participant. The partial bonus shall be equal to the
            actual amount of Revenue achieved for the quarter divided by the
            amount of the Revenue goal for the quarter as stated in Appendix II
            times the on-target bonus the participant would otherwise have
            earned for the Revenue component (i.e. 5% of total on-target bonus).
            Achievement for Earnings must be at 100% to be eligible for payout
            on that component. No incremental bonus is payable to any
            participant for achievement above 100% in any quarter.

            (c)   The percentage of the on-target bonus described in Appendix I
                  earned by each Participant on achievement of the amounts
                  stated in Appendix II in respect of year end performance is:

                        (i)   24% based on revenue
                        (ii)  36% based on earnings
                              60% in total

            As stated in Appendix II, there is a minimum, target and maximum
            achievement level for payout based on annual performance, for both
            the Revenue and the Earnings component, subject to the following:

                        (i)   No annual bonus payments will be made for either
                              component if the minimum Earnings number is not
                              achieved (for fiscal 2004 this is .43); and

                        (ii)  Actual payment for performance between minimum,
                              target and maximum achievement will be prorated
                              accordingly.

                        (iii) The total amount of the year end bonus will be
                              paid to the participants as follows:
                              a.    75% of the bonus will be paid in cash; and
                              b.    25% of the bonus will be will be paid in the
                                    form of common stock, on a net after-tax
                                    basis applying the statutory withholding
                                    rate, valued at the closing price on the
                                    second day after the day that the Company
                                    issues its fiscal 2004 fourth quarter and
                                    year-end results, subject to the agreement
                                    of each recipient to restrictions on
                                    transfer (other than for estate planning
                                    purposes) that expire two years from the
                                    valuation date (or upon termination of
                                    employment, if earlier). No fractional
                                    shares will be issued.

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6.    PAYMENT OF BONUSES

      Funded bonus will be payable (and restricted stock issued) not later than
      sixty days after the end of the period in which the bonus was earned
      provided that the results for the period have been issued to the public.
      The foregoing notwithstanding, if a participant's employment by the
      Company is terminated for any reason prior to the actual issuance of
      stock, the Company may in its discretion elect to make such payment in
      cash in lieu of stock. All shares of Company stock issued hereunder shall
      be issued pursuant and subject to the terms and conditions of the
      Company's Amended and Restated 1999 Equity Incentive Plan.

7.    TERMINATION OF EMPLOYMENT

      If a Participant's employment by the Company is terminated, the
      participant's entitlement to payment under this Plan shall be as
      determined under the terms of the Company's Severance Pay Plan, as amended
      to and in effect as of the date of termination.

8.    BENEFICIARY DESIGNATIONS

      8.1   If a Participant's employment with the Company is terminated by his
            death or if he dies after termination of his employment but prior to
            the distribution to him of all amounts payable to him under the
            Plan, any amounts otherwise payable to him hereunder shall be
            distributed to his designated beneficiary or beneficiaries. For the
            purposes of this plan a Participant's beneficiary will be the
            beneficiary designated under Company provided life insurance
            coverage. However, a Participant may from time to time revoke or
            change any beneficiary designation on file with the Company.

            If there is no effective beneficiary designation on file with the
            Company at the time of a Participant's death, distribution of
            amounts otherwise payable to the deceased Participant under this
            Plan shall be made to the Participant's estate. If a beneficiary
            designated by the Participant to receive his benefits shall survive
            the Participant but die before receiving all distributions
            hereunder, the balance thereof shall be paid to such deceased
            beneficiary's estate, unless the deceased beneficiary designation
            provides otherwise.

      8.2   The Company shall deduct from the distributions to be made to a
            Participant or his designated beneficiary or beneficiaries under
            this Plan any federal, state or local withholding or other taxes or
            charges which the Company is from time to time required to deduct
            under applicable law and all amounts distributable under this Plan
            are stated herein before any such deductions. The Company may rely
            on a written opinion from its legal counsel regarding any questions
            which may arise in connection with any such deductions.

9.    RIGHTS, PRIVILEGES AND DUTIES OF PARTICIPATION

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      9.1   No participant or other person shall have any interest in any fund
            or in any specific asset or assets of the Company and its
            Subsidiaries by reason of being a Participant under this Plan nor
            any right to receive any distributions under the Plan except as and
            to the extent expressly provided in the Plan.

      9.2   The Company shall have the right, but shall be under no obligation,
            to segregate cash to fund bonuses payable under the Plan. However,
            any such segregated amounts shall at all times remain Company
            assets, subject to the claims of its creditors.

      9.3   Each Participant shall be entitled to receive a current copy of the
            Plan upon his designation as a Participant if a written request for
            a copy of the Plan is provided to the Chief Executive Officer or the
            Chairman of the Board. Thereafter, as long as he remains a
            Participant, he shall be entitled to receive copies of any
            amendments to the Plan within sixty (60) days after their adoption.

      9.4   The designation of any employee as a Participant under this Plan
            shall not be construed as conferring upon such employee any right to
            remain in the employ of the Company and each such Participant shall
            remain an employee at will. The right of the Company to discipline
            or discharge an employee shall not be affected in any manner by
            reason of such employee's designation as a Participant under this
            Plan.

      9.5   To the extent permitted by law, the right of any Participant or any
            beneficiary to receive any payment hereunder shall not be subject to
            alienation, transfer, sale, assignment, pledge, attachment,
            garnishment or encumbrance of any kind. Any attempt to alienate,
            transfer, sell, assign, pledge or otherwise encumber any such
            payment whether presently or thereafter payable, shall be void. Any
            payment due hereunder shall not in any manner be subject to any
            debts or liabilities of any Participant or his beneficiary.