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                                                                        EX 10.14

Private and Confidential
------------------------


July 12, 2001

Katrinka B. McCallum
130 Dennett Street
Portsmouth, NH 03801


Dear Katrinka:

On behalf of the management team and Greg Brown, we are pleased to extend this
offer of employment to you.

1.   Your position title will be Executive Vice President and Chief Operating
     Officer of Micromuse Inc. ("Micromuse" or "Company"). You will report to
     Greg Brown. In addition, at its next meeting, you will be elected by
     members of the Micromuse Inc. Board of Directors ("Board") to serve as a
     member of the Board.

2.   Your start date will be July 18, 2001.

3.   You will be paid a base salary of $10,416.67 semi-monthly, the equivalent
     of $250,000.00 per annum. Additionally, you are offered the opportunity of
     earning $175,000.00 per annum in bonus compensation, thus furthering your
     earning potential to $425,000.00. Bonuses will be paid per quarter based on
     Micromuse evaluation of individual and Company performance and are paid a
     month in arrears of quarter end. During the first year of your employment,
     Micromuse guarantees that you will receive at least eighty percent (80%) of
     your bonus (at least $140,000, paid in quarterly installments). You will
     also receive a sign on bonus of $100,000.00, which you will be required to
     repay to Micromuse should you leave the Company within 12 months. If the
     Company terminates your employment or in the event of a change of control
     as defined in the Company's shareholder approved stock option plan
     ("Plan"), you shall be guaranteed to receive your base salary and pro rated
     target bonus for the year following such termination or change of control,
     provided you are not terminated for good cause (e.g., conviction of, or a
     pleas of nolo contendere with respect to, a crime involving moral turpitude
     or a felony; refusal to perform, or gross negligence in the performance of
     your duties to the Company; or an act of willful misfeasance by you that is
     intended to result in substantial personal enrichment at the expense of the
     Company or its subsidiaries or successor in interest) by the Company or its
     successor in interest.

     Additionally, you are eligible for relocation package assistance on your
     planned move to the San Francisco area. Enclosed for your review is a copy
     of our enhanced Domestic Relocation Policy.

4.   A performance evaluation will be scheduled approximately twelve (12) months
     from your date of hire. At the discretion of the manager, a performance
     evaluation may be conducted six months from the date of hire.

5.   Stock Options: Subject to approval of the Board, you will receive a
     non-qualified option grant to purchase 400,000 shares of the Common Stock
     of Micromuse Inc. at the fair market value of the stock (the closing price)
     on the later of your starting date or the date approved by the


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     Board at a time after your starting date determined by the Board to be
     likely to be more stable in the equity market for the Company's stock (the
     "Vesting Commencement Date"). Of these option shares, 100,000 (one third
     (33 1/3%) of 300,000 shares) are scheduled to vest on the first anniversary
     of the option grant date and the remainder of these 300,000 shares are
     scheduled to vest in equal monthly installments over the following 24
     months. The additional 100,000 option shares shall vest as follows:
     Provided that the Company achieves at least ninety percent (90%) of its
     Board approved EPS target and has at least ninety percent (90%) of the
     Board approved revenue target for the fiscal year ending September 30,
     2002, then the Option shall become exercisable with respect to 50,000 of
     this 100,000 Option Shares in successive equal monthly installments upon
     Optionee's completion of each of the twenty-four (24) consecutive months of
     Service measured from and after October 1, 2002. If the Corporation has
     less than ninety percent (90%) of the Board approved revenue target for
     revenue or less than the approved EPS target for the fiscal year ending
     September 30, 2002, then the Option shall become exercisable with respect
     to such 50,000 Option Shares upon Optionee's completion of forty-eight (48)
     consecutive months of Service measured from and after the Vesting
     Commencement Date. Provided that the Company achieves at least one hundred
     percent (100%) of both its Board approved EPS target and revenue targets
     for the fiscal year ending September 30, 2002, then the Option shall become
     exercisable with respect to the additional 50,000 of this 100,000 Option
     Shares in successive equal monthly installments upon Optionee's completion
     of each of the twenty-four (24) consecutive months of Service measured from
     and after October 1, 2002. If the Corporation has less than targeted
     revenue or less than one hundred percent (100%) of the approved EPS target
     for the fiscal year ending September 30, 2002, then the Option shall become
     exercisable with respect to such 50,000 Option Shares upon Optionee's
     completion of forty-eight (48) consecutive months of Service measured from
     and after the Vesting Commencement Date. In no event shall the Option
     become exercisable for more than the 300,000 and 100,000 shares (total of
     400,000 option shares) described above, nor shall any Option Shares vest
     after Optionee's cessation of provision of Service to the Company. In the
     event of a change of control of Micromuse as defined in the Plan documents,
     grantee will be entitled to accelerated vesting of unvested option shares
     as follows: (a) if the change of control occurs during the first year of
     grantee employment, grantee will vest in 100,000 of the 400,000 option
     shares, and (b) if the change of control occurs after the first anniversary
     of grantee employment, then grantee shall vest in fifty percent (50%) of
     the option shares that are unvested at the time such change of control
     closes. The foregoing option acceleration is conditioned upon grantee being
     a regular, full-time employee in good standing at that time of the close of
     such change of control and that within one year of such change of control
     grantee employment is terminated or grantee duties are substantially
     decreased by Micromuse or by any successor entity.

6.   Employee benefits, effective the first of the month following your date of
     hire, include the following, which are subject to change by Micromuse over
     time:

     .    Group health insurance (medical, dental, vision, EAP) that is fully
          paid by the Company;
     .    Long term disability insurance, paid by the Company
     .    Life insurance and AD&D, equivalent one times your annual base salary,
          paid by the Company;
     .    Flexible Spending Account (pretax dollars for medical and dependent
          care expenses);
     .    401(k) Plan, up to maximum of $10,500 per year (for year 2001).
     .    Accrue up to 10 days vacation per year
     .    10 Holidays per year
     .    Up to 6 days paid time off for sick or personal business

7.   You may participate in the Employee Stock Purchase Plan (ESPP) on either of
     the two entry dates of February 1 or August 1 and may elect contributions
     of up to 15% base pay.

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8.   You are required to work exclusively for Micromuse Inc. and its
     subsidiaries and affiliates and to accept the confidential and proprietary
     nature of our business. A condition of your employment is that you sign and
     follow the terms of the enclosed Proprietary Information, Inventions, and
     Non-Solicitation Agreement.

9.   As an exempt employee, you will not be eligible for overtime pay. It is
     expected that you will adapt your schedule to your level of
     responsibilities and the expectations of the Company and your customers.

10.  Normal business expenses incurred in the execution of your duties will be
     reimbursed in accordance with the Company's policies and procedures.

11.  Micromuse reserves the right to rescind this offer or terminate employment
     upon receipt of unsatisfactory background check information.

You will indicate your acceptance of this offer by agreeing to, signing and
returning the following:

          a.   this offer letter, and
          b.   the enclosed Proprietary Information, Inventions, and
               Non-solicitation Agreement;
          c.   the Micromuse Application Form and accompanying forms;
          d.   the Receipt and Acknowledgment of Policies and Employment At Will
               Agreement.

If you have any questions regarding this offer letter, please feel free to
contact Jim De Golia at 415.817.1086/415.819.8026 or Greg Brown at 917.376.7727.

We look forward to welcoming you to Micromuse.

Sincerely,



Frank Sole
Director of Staffing & Employee Relations
Human Resources

Enclosures