Microsoft introduced a new operating business on Thursday as it seeks to provide enterprises with the expertise needed to deploy and integrate AI.
The company is investing $2.5 billion into Microsoft Frontier Company, an effort that will embed 6,000 industry and engineering experts to codesign, co-innovate, deploy and improve AI systems with customers. While the program is meant to accelerate AI initiatives, it’s also recognition that AI integration cannot succeed without humans in the enterprise.
While Microsoft said its more than an investment in forward deployed engineering, the new initiative closely follows in the footsteps of organizations such as Palantir, which has championed embedding software engineers into enterprises, as well as AWS’s $1 billion FDE investment earlier this week. OpenAI also introduced a similar program in February.
Filling a Gap
The push by cloud providers to embed human expertise within customer environments recognizes that, despite the rapid growth in the AI market, gaps exist that prevent enterprises from fully scaling and deploying AI projects.
“A lot of enterprises still struggle with AI adoption,” said Lian Jye Su, an analyst at Omdia, a division of Informa TechTarget. “Even those that adopt it struggle to scale, and those who scale struggle to either maintain it or operate it safely.”
To help close the gap, cloud providers are now providing problem-solving tools Including FDEs.
“What we are seeing in a broader sense is that every single company that used to play in a particular stack within the AI ecosystem is either going up or downstream,” Su added. He pointed to frontier model providers now offering SaaS services and infrastructure, and cloud providers offering integration services and consulting work as additional examples.
No AI Without Humans
The push also suggests vendors are iterating on an earlier stance that AI does not require human helpers.
“All of these AI companies, everyone involved with AI today, has to answer this question: Why are we now being told that you need to embed bodies in organizations so that they can get positive ROI out of AI?” said David Nicholson, an analyst at Futurum Group. “If AI is so good that all you have to do is make it available, and people will license it and use it and get value from it, why would you put yourself in a situation where now you’re going to have to scramble to try to find an incredibly scarce resource.”
The fact that ROI is hard to achieve with automation alone can be seen developments from enterprises such as Ford, which is reportedly rehiring legacy employees after relying on automation.
Ford’s reversal is another example that the go-to-market strategy for AI has shifted from “everything can be automated” to “there is a need for people.”
“In my assessment, they’re admitting that this is a lot more complicated to deploy than we were led to believe,” Nicholson said. “The cost associated is higher, and the ROI is going to take longer.”
For enterprises, it is best to be clear about their vision for AI and then decide how to get there, whether they will use services from Microsoft, go with another cloud provider or combine tools from different vendors and service providers.
“Fundamentally, enterprises need to understand what they are trying to achieve with AI, how they have to achieve it, and then kind of go backward from there,” Su said.
