<PAGE>
                                                                   Exhibit 10.20


                              [VITRIA LETTERHEAD]


October 29, 2003

Mr. Gregory E. Anderson
Vitria Technologies, Inc.
945 Stewart Street
Sunnyvale, CA 94085

Dear Greg:

We are delighted to offer you the position of Senior Vice President of
Professional Services at Vitria Technology, Inc. (the "Company", "Vitria")
reporting to myself. Your anticipated start date is Monday, November 3, 2003.

Your annual base salary will be $275,000, payable on the 15th and 30th/31st of
each month. In addition, you will be eligible for an (annualized) target bonus
at 100% of plan of $175,000. The target bonus will be paid quarterly (quarterly
target of $43,750) based upon agreed targets and measures established by myself.

<TABLE>
<S>                                           <C>
Annual Base Salary:                           275,000
Annualized Bonus Target:                      175,000
</TABLE>

Bonus Target consists of three components: Revenue 70%, Margin 20%, MBO 10%

EXAMPLE AT 100% OF QUARTERLY BONUS TARGET (43,750):
---------------------------------------------------

<TABLE>
<CAPTION>
Revenue                       Margin              MBO
<S>                           <C>               <C>
70%                              20%              10%
30,625                         8,750            4,375
</TABLE>

50% of your Q4 and Q1 target bonus will be guaranteed, and 50% of your Q4 and Q1
target bonus will be based upon agreed targets and measures established by
myself. You will receive a sign-on bonus of $125,000 less statutory withholdings
provided you start on or before November 3, 2003. You agree that this amount
will be repaid to Vitria in full, if you resign without good reason or are
terminated for cause within the first 12 months of your employment with Vitria.
The sign-on bonus will be paid on the November 30th, 2003 payroll.

In 12 months, we will discuss with you the possibilities of you relocating to
the Bay Area.

Vitria will recommend to the Compensation Committee of the Board of Directors
that you be granted under its Equity Incentive Plan, an option to purchase
200,000 shares of Common Stock (the "Option"), at an exercise price equal to the
fair market value established by the Compensation Committee on the date of grant
which shall be as soon as reasonably practicable following your start date. Such
Option shares shall vest 25% after twelve months of continuous service with the
remaining amount vesting, in equal installments at the end of each calendar
month, over the following thirty-six months.

As a Vitria employee, you will be expected to abide by Vitria's policies and
procedures, and sign and comply with the Proprietary Information and Inventions
Agreement. Your employment at Vitria Technology is at will, that is, not for a
specified term. This means that either you or Vitria may terminate your
employment at any time for any reason, with or without cause or advance notice.
<PAGE>
All new employees must pass an employment verification procedure before they are
permitted to work. This procedure has been established by Vitria and requires
every individual to provide satisfactory evidence of his/her identity and legal
authority to work in the United States within twenty-four (24) hours of his/her
start date. Upon acceptance of this offer, we will forward you an Employment
Eligibility Verification Form indicating the types of acceptable documentation.
Please bring the appropriate document(s) with you on your first day of work.

This letter and the Proprietary Information and Inventions Agreement constitute
the entire and final agreement between you and Vitria regarding your employment
and supersede any other agreements, representations or promises. You understand
that this agreement cannot be changed or amended except in writing signed by you
and by an authorized company representative.

We are looking forward to having you come join the team. Please sign below to
indicate your acceptance of this offer.

Sincerely yours,


/s/ Gary S. Velasquez

Gary S. Velasquez
Chief Executive Officer



I have read, understood, and fully accept the above terms.



/s/ Gregory E. Anderson                                    10/30/03
--------------------------------------                     ---------------------
Gregory E. Anderson                                        Date