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                                                                    EXHIBIT 10.3


                            Stock Option Agreement
                           Onyx Software Corporation


I.   OPTION GRANT. ONYX SOFTWARE CORPORATION, a Washington corporation (the
     "Company") hereby grants a nonqualified stock option to purchase a total of
     105,282 shares of Common Stock of the Company, par value $0.01 per share,
     (the "Common Stock") as of January 5, 2001 ("Grant Date") to KEVIN CORCORAN
     (the "Optionee"), subject in all respects to the terms and provisions of
     this Stock Option Agreement (the "Option"). This Option shall be governed
     by, and construed in accordance with, the laws of the state of Washington
     without regard for principles of conflict of laws.

II.  VESTING SCHEDULE. The Vesting Initiation Date shall be January 5, 2001.
     This Option shall vest and become exercisable as to 22% of the total number
     of shares of Common Stock covered by this Option on the one year
     anniversary of the Vesting Initiation Date and an additional 1/54 of the
     total number of shares originally covered by the Option shall vest each
     month thereafter, with the result that the Option shall be fully vested and
     exercisable four and one-half years after the Vesting Initiation Date.
     Notwithstanding the foregoing, if (i) Optionee's employment with the
     Company is terminated without Reasonable Cause (as defined in the
     Employment Agreement by and between the Company and Optionee dated of even
     date herewith (the "Employment Agreement")) or (ii) Optionee resigns for
     Good Reason (as defined in the Employment Agreement) before the eighteen-
     month anniversary of January 5, 2001 (the "First Milestone"), this Option
     shall, upon such termination or resignation, automatically vest and become
     exercisable for a total of 33% of the total number of shares of Common
     Stock originally subject to the Option. In addition, if the Optionee is
     still employed by the Company as of the First Milestone, but thereafter is
     (i) terminated without Reasonable Cause (as defined in the Employment
     Agreement) or (ii) resigns for Good Reason (as defined in the Employment
     Agreement), the Option shall, upon such termination or resignation,
     automatically vest and become exercisable for an additional 11% of the
     total number of shares of Common Stock originally subject to the Option (in
     addition to the portion already vested and exercisable at the time of
     termination. Notwithstanding the foregoing, in the event of either (i)
     Optionee's death or (ii) Optionee's Permanent and Total Disability (as
     defined below), this Option shall automatically vest and become immediately
     exercisable for a total of 100% of the total number of shares of Common
     Stock originally subject to the Option. "Permanent and Total Disability" is
     defined as if the Optionee is unable to engage in any substantial gainful
     activity by reason of any medically determinable physical or mental
     impairment which can be expected to last for a continuous period of not
     less than 12 months. Optionee shall not be considered to be considered to
     have a Permanent and Total Disability unless he furnishes proof of the
     existence thereof in such form and manner, and at such times, as the
     Company Secretary may require.

III. PRICE. The Option exercise price per share (the "Exercise Price") as
     determined by the Board of Directors (the "Board") of the Company is
     $5.957. The Exercise Price shall be paid by delivery of cash or, subject to
     the discretion of the Board, by delivery of an approved equivalent to cash.
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IV.  PURCHASE FOR INVESTMENT. This Option may not be exercised if the issuance
     of shares of Common Stock pursuant to an exercise would constitute a
     violation of any applicable federal or state securities or other law or
     valid regulation. Any other provision of this Option notwithstanding, the
     obligation of the Company to issue shares pursuant to an exercise of the
     Option shall be subject to all applicable laws, rules and regulations and
     such approval by any regulatory body as may be required. The Company
     reserves the right to restrict, in whole or in part, the delivery of shares
     prior to the satisfaction of all legal requirements relating to the
     issuance of such shares, to their registration, qualification or listing or
     to an exemption from registration, qualification or listing. The Optionee,
     as a condition to his exercise of this Option, shall sign a Letter of
     Investment satisfactory to the Company's counsel and represent, among other
     things, to the Company that the shares of Common Stock that he acquires
     under this Option are being acquired by him for investment and not with a
     view to distribution or resale and that he understands that such shares of
     Company Common Stock may not be sold until (a) there is an effective
     registration statement under the Securities Act of 1933, as amended (the
     "Act")and applicable state securities laws covering any such transaction
     involving such shares of Common Stock or (b) the Company receives an
     opinion of legal counsel for the holder of such shares of Common Stock
     (concurred in by legal counsel of the Company) stating that such
     transaction is exempt from registration.

V.   NON-ASSIGNABILITY. The Option may not be transferred or hypothecated in any
     manner and shall only be exercisable by the Optionee or his legal
     representative. The terms of this Option shall be binding upon the
     executors, administrators, heirs, successors, and assigns of the Optionee.

VI.  EXERCISE.

     A.   This Option shall be exercisable, to the extent of the number of
          shares purchasable by Optionee at the date of termination, only (a)
          within one year after such termination if the Optionee's termination
          is coincident with the Optionee's death or Permanent and Total
          Disability or (b) within three months after the date that Optionee
          ceases to be an employee, director, officer, consultant, agent,
          advisor or independent contractor of the Company or a subsidiary if
          Optionee's employment is terminated for any reason other than the
          Optionee's death or Permanent and Total Disability, but in no event
          later than the remaining Term of the Option. Any portion of this
          Option exercisable at the time of the Optionee's death may be
          exercised by the personal representative of the Optionee's estate or
          the person(s) to whom the Optionee's rights under the Option have
          passed by will or the applicable laws of descent and distribution.
          This Option may be exercised only for whole shares of Common Stock.

     B.   This Option may not be exercised more than ten (10) years from the
          date hereof (the "Term"), and may be exercised during the Term only in
          accordance with the terms and provisions set forth herein. In case of
          termination of the Optionee's employment for Reasonable Cause or Good
          Reason (as each is defined in the Employment Agreement), the Option
          shall automatically terminate upon the Company's first notification to
          the Optionee of such termination (or, in the case of

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          termination for Good Reason, upon the Optionee's first notice to the
          Company of such termination), unless the Board determines otherwise.
          If the Optionee's employment with the Company is suspended pending an
          investigation of whether the Optionee shall be terminated for
          Reasonable Cause (as defined in the Employment Agreement), all the
          Optionee's rights under the Option likewise shall be suspended during
          the period of investigation.

     C.   In the event of a Corporate Transaction (as defined below) involving
          the Company, any portion of this Option that is at the time
          outstanding shall automatically accelerate so that such Option shall,
          immediately prior to the specified effective date for the Corporate
          Transaction, become 100% vested and exercisable, except that such
          acceleration will not occur if, in the opinion of the Company's
          outside accountants, it would render unavailable "pooling of interest"
          accounting for a Corporate Transaction that would otherwise qualify
          for such accounting treatment. This Option shall not so accelerate,
          however, if and to the extent that such Option is, in connection with
          the Corporate Transaction, either to be assumed by the successor
          corporation or parent thereof (the "Successor Corporation") or to be
          replaced with a comparable option or award for the purchase of shares
          of the capital stock of the Successor Corporation. The determination
          of option comparability shall be made by the Board, and its
          determination shall be conclusive and binding. If the foregoing
          applies, this Option shall terminate and cease to remain outstanding
          immediately following the consummation of the Corporate Transaction,
          except to the extent assumed by the Successor Corporation. If this
          Option is assumed or replaced in a Corporate Transaction and does not
          otherwise accelerate at the time of the Corporate Transaction, it
          shall be accelerated in the event that the Optionee's employment or
          services should subsequently terminate within two years following such
          Corporate Transaction, unless such employment or services are
          terminated by the Successor Corporation for Successor Cause (as
          defined below) or by the Optionee voluntarily without Successor Good
          Reason (as defined below). A "Corporate Transaction" means any of the
          following events: (a) consummation of any merger or consolidation of
          the Company in which the Company is not the continuing or surviving
          corporation, or pursuant to which shares of the Common Stock are
          converted into cash, securities or other property, if following such
          merger or consolidation the holders of the Company's outstanding
          voting securities immediately prior to such merger or consolidation
          own less than a majority of the outstanding voting securities of the
          surviving corporation; (b) consummation of any sale, lease, exchange
          or other transfer in one transaction or a series of related
          transactions of all or substantially all of the Company's assets other
          than a transfer of the Company's assets to a majority-owned subsidiary
          corporation of the Company; or (c) approval by the holders of the
          Common Stock of any plan or proposal for the liquidation or
          dissolution of the Company. Ownership of voting securities shall take
          into account and shall include ownership as determined by applying
          Rule 13d-3(d)(1)(i) (as in effect on the date hereof) under the
          Securities and Exchange Act of 1934, as amended. "Successor Cause"
          means dishonesty, fraud, misconduct, unauthorized use or disclosure of
          confidential information or trade secrets, or conviction or confession
          of a crime punishable by law (except

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          minor violations), in each case as determined by the Board, and its
          determination shall be conclusive and binding. "Successor Good Reason"
          shall mean the occurrence of any of the following events or conditions
          and the failure of the Successor Corporation to cure such event or
          condition within 30 days after receipt of written notice from the
          Optionee: (a) a change in the Optionee's status, title, position or
          responsibilities (including reporting responsibilities) that, in the
          Optionee's reasonable judgment, represents a substantial reduction in
          the status, title, position or responsibilities as in effect
          immediately prior thereto; the assignment to the Optionee of any
          duties or responsibilities that, in the Optionee's reasonable
          judgment, are materially inconsistent with such status, title,
          position or responsibilities; or any removal of the Optionee from or
          failure to reappoint or reelect the Optionee to any of such positions,
          except in connection with the termination of the Optionee's employment
          for Successor Cause, for Disability (as defined below) or as a result
          of his death, or by the Optionee other than for Successor Good Reason;
          (b) a reduction in the Optionee's annual base salary; (c) the
          Successor Corporation's requiring the Optionee (without the Optionee's
          consent) to be based at any place outside a 35-mile radius of his or
          her place of employment prior to a Corporate Transaction, except for
          reasonably required travel on the Successor Corporation's business
          that is not materially greater than such travel requirements prior to
          the Corporate Transaction; or (d) the Successor Corporation's failure
          to (i) continue in effect any material compensation or benefit plan
          (or the substantial equivalent thereof) in which the Optionee was
          participating at the time of a Corporate Transaction, or (ii) provide
          the Optionee with compensation and benefits substantially equivalent
          (in terms of benefit levels and/or reward opportunities) to those
          provided for under each material employee benefit plan, program and
          practice as in effect immediately prior to the Corporate Transaction.
          "Disability" means "disability" as that term is defined for purposes
          of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended.

     D.   This Option may be exercised for all or part of the shares eligible
          for exercise by presenting a written notice (the "Notice") to the
          Company that this Option is exercised in strict accordance with the
          terms and provisions of this Option. The Company shall determine
          whether or not the Notice complies with the terms and provisions of
          this Option. Such Notice shall identify this Option, state the number
          of shares as to which the Option is exercised and be signed by the
          Optionee. Delivery of the cash or cash equivalent in payment for the
          shares to be purchased pursuant to the exercise of this Option shall
          accompany the Notice. The Letter of Investment, representations and
          such other documentation required by Section IV hereof shall also
          accompany the Notice. If the Optionee is deceased, the Notice shall be
          signed, and if the Optionee has a Permanent and Total Disability, it
          may be signed, by the Optionee's legal representatives or
          beneficiaries, and in all instances shall be accompanied by evidence
          satisfactory to the Company and its transfer agent of the right of
          such person or persons to exercise this Option.

     E.   The Optionee shall make arrangements satisfactory to the Company for
          the satisfaction of any withholding tax obligations that arise in
          connection with his

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            Option. The Company shall not be required to issue any shares of
            Common Stock until such obligations are satisfied.

VII.   MARKET STANDOFF. In connection with any underwritten public offering by
       the Company of its equity securities pursuant to an effective
       registration statement filed under the Securities Act, Optionee shall not
       sell, make any short sale of, loan, hypothecate, pledge, grant any option
       for the purchase of, or otherwise dispose or transfer for value or
       otherwise agree to engage in any of the foregoing transactions with
       respect to, any shares issued pursuant to this Option without the prior
       written consent of the Company or its underwriters. Such limitations
       shall be in effect for such period of time as may be requested by the
       Company or such underwriters and agreed to by the Company's officers and
       directors with respect to their shares; provided, however, that in no
       event shall such period exceed 180 days. Holders of shares issued
       pursuant to this Option shall be subject to the market standoff
       provisions of this paragraph only if the officers and directors of the
       Company are also subject to similar arrangements. In the event of any
       stock split, stock dividend, recapitalization, combination of shares,
       exchange of shares or other change affecting the outstanding Common Stock
       effected as a class without the Company's receipt of consideration, then
       any new, substituted or additional securities distributed with respect to
       the purchased shares shall be immediately subject to the provisions of
       this Section VII., to the same extent the purchased shares are at such
       time covered by such provisions. In order to enforce the limitations of
       this Section VII., the Company may impose stop-transfer instructions with
       respect to the purchased shares until the end of the applicable standoff
       period.

VIII.  EFFECT OF CHANGE IN COMMON STOCK SUBJECT TO OPTION. If the outstanding
       shares of Common Stock shall at any time be changed or exchanged by
       declaration of a stock dividend, split-up, combination of shares, or
       recapitalization, the number and kind of shares subject to this Option,
       and the Exercise Price, shall be appropriately and equitably adjusted so
       as to maintain the proportionate number of shares subject to this Option
       and the Exercise Price in relation to the change in stock; provided,
       however, that no adjustment shall be made by reason of the distribution
       of subscription rights on outstanding stock.

IX.    AMENDMENT OR ALTERATION. The Board may amend or alter this Option, except
       that no amendment or alteration shall be made which would impair the
       rights of the Optionee hereunder, without his consent, and, except
       further, this Option shall be subject to the requirement that, if, at any
       time the Board shall determine, in its discretion, that the listing,
       registration or qualification of the stock issuable or transferable upon
       exercise thereof upon any securities exchange or under any state or
       federal law or the consent or approval of any governmental regulatory
       body is necessary or desirable as a condition of, or in connection with,
       the granting of this Option or the issue, transfer, or purchase of shares
       hereunder, this Option may not be exercised in whole or in part unless
       such listing, registration, qualification, consent, or approval shall
       have been effected or obtained free of any conditions not acceptable to
       the Board.

X.     OPTION NOT A SERVICE CONTRACT. This Option is not an employment contract
       and nothing in this Option shall be construed as giving Optionee any
       right to be retained

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     in the employ of the Company or limit the Company's right to terminate the
     employment or services of Optionee.

XI.  NO RIGHTS AS A SHAREHOLDER. The Optionee, or a transferee of the Optionee,
     shall have no rights as a shareholder with respect to any Common Stock
     covered by the Option until such person becomes entitled to receive such
     Common Stock by filing a Notice and paying the Exercise Price pursuant to
     the terms of this Option.

                                          ONYX SOFTWARE CORPORATION


                                          By:   /s/ Brent Frei
                                             -----------------------------------
                                                       Chief Executive Officer

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If the following acknowledgment and acceptance is not executed within ten (10)
days of the effective date of this Option, it shall lapse and be treated for all
purposes as if it were never granted.

The Optionee acknowledges and represents that he is familiar with and
understands the terms and provisions of this Option. The Optionee hereby accepts
this Option subject to all the terms and provisions contained herein. The
Optionee hereby agrees to accept as binding, conclusive, and final all decisions
and interpretations of the Board upon any questions arising under the Option.

Dated: 1/18/01

WITNESS:                                       OPTIONEE:

  /s/ Scott Padlick                               /s/ Kevin J. Corcoran
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