Image of Emily He at Microsoft

Emily He, CVP Microsoft

The entire software market is going through a rather substantial change based on advancements such as generative AI. After Microsoft’s Build, Charles Lamana and Emily He of Microsoft shared an update with industry analysts on the state of AI across Microsoft’s portfolio. Many remember Marc Andreessen’s famous quote saying that software was eating the world. Lamana described how the software evolved from green screens to browser-based SaaS applications but that, as an industry, we hadn’t fundamentally changed the software industry’s economics, workflow, and operations. In a revised take on Andreessen’s quote, Lamana said, “AI is eating software.” It aptly describes how we’re entering a new era of software and technology rapidly changing by adding AI capabilities.

The market experienced a seismic shift in AI innovation in the past six months focused on how foundation models change what’s possible in software through natural language understanding, image, and video generation, and simplification of software programming. These large-scale transformer models can also deliver new functions, such as Windows UI automation.

AI has the potential to change the way a company tracks its financials, delivers goods and how it services to its customers. AI will also launch new applications, experiences, and data-driven products. To that end, Microsoft announced a plethora of assistive tools that it calls Copilots across its suite of products. The idea behind a copilot is that it will assist, not replace, an individual by providing the right data within the task context. AI copilots accelerate an individual’s productivity by collecting information, automating workflows, and accelerating task completion.

Microsoft shared many examples of how it anticipates generative AI will change workflows and processes across the business. For example, a copilot can assist a customer service agent by surfacing the latest information found across a company from a vast set of internal documents, including previously resolved case notes and published knowledge articles. It shared a real-world example based on its use of the technology.

Today all of Microsoft Azure’s thousands of support engineers use the Dynamics 365 customer service Copilot to provide Azure support to Azure customers. With this software, the agent doesn’t have to spend time searching for information. Dynamics 365 customer service knows the context from the company’s internal data, including customer names and relevant knowledge articles. It can surface all the relevant information and timelines for the case an agent is working on. The Copilot expands on the right side of an agent’s screen and can help the agent draft a reply to a customer with just one click using generative AI.

In sales, a copilot can summarize a call with a prospect and generate a draft of a follow-up email. Across the general business, an AI-enhanced workspace suite can help employees draft emails, prepare for meetings, and explore data. Marketing teams will benefit from content ideas, data inspiration, and social media post suggestions. For supply chain and finance teams, it can assist with items such as status reports.

Lopez Research describes these as right-time experiences because it provides the right information and insights at the point of need. Today’s artificial intelligence services are different from what we discussed three years ago, which had focused more on the automation of routine. Three years ago, the technology wasn’t there to build copilots from an infrastructure and AI foundation model perspective. Lamana described this as “AI before foundation models, and AI after foundation models’ as the pivot point for why we can offer AI-assisted applications today.

Emily He shared a business update demonstrating that the concepts resonated with customers. While the technology had been in limited preview, Microsoft said that it had over 40,000 organizations using these generative AI capabilities in Microsoft business applications, which surprised me. At one point, the company said 600 customers were trialing various features. Whether it’s prompt engineering or even figuring out how a company can create custom-tune versions of chat GPT, Microsoft said its latest announcements were driven by customer feedback.

One item that has surprised the market is the rapid cadence of Microsoft’s co-pilot releases across its software portfolio. During Microsoft Build, we learned that Microsoft created a co-pilot framework to scale the design of new copilots. It has also invested heavily in engineering, AI infrastructure, Microsoft-created AI models, and partnering with Open AI for several years. Coupling its AI investments with OpenAI’s foundation models has proven a successful strategy, given the myriad announcements Microsoft has made since March of 2023.

Yet, AI is not without its challenges for organizations. Companies must design data strategies that allow them to use a combination of open source and more private generative AI models without compromising security, privacy, and regulatory compliance. It’s a crucial question that many IT buyers have asked Lopez Research. To alleviate these concerns, Microsoft offers Azure OpenAI Services allowing an organization to use its data with OpenAI and Azure storage encrypted at rest with Microsoft Managed Keys within the same region as the resource. This structure preserves all the security and permissions without placing proprietary data directly into open-source models.

For years I’ve been discussing the potential of AI for business, but it always lacked the connection to the applications and the workflow. Today, Microsoft and other technology vendors are pulling these core capabilities into their applications to seamlessly integrate AI into business workflows to make individuals more productive without needing to learn how to use AI. This is a great step for the industry.