Microsoft (NASDAQ:MSFT) is seeing enterprise customers move beyond artificial intelligence experimentation toward broader production deployments centered on governance, scalable infrastructure and measurable business outcomes, according to Bill Duff, corporate vice president and CFO of Global Commercial Sales and Marketing, speaking at the Deutsche Bank Technology Conference.
Customers were largely focused a year ago on testing AI technologies and determining how they might help their businesses, Duff said. More recently, discussions have become more concrete as organizations assess how to scale deployments, establish controls and link AI investments to operating results.
Data, Governance and Process Redesign
Duff said companies achieving scaled AI adoption are focused on establishing a sound foundation, including data integrity, governance, security and compliance. Models and agentic solutions are only as good as the data against which they reason, he said, making data structures and controls central to successful deployment.
He also emphasized that companies must reconsider their workflows rather than simply insert AI into existing processes. Organizations should evaluate how employees and agents can work together and potentially re-architect operations around agentic technology, Duff said.
Measurement remains another core consideration. Rather than creating new metrics solely to measure agent performance, finance leaders want to understand how AI improves the business key performance indicators they already use, according to Duff.
Companies are reprioritizing existing IT budgets toward AI-related spending, while some are creating incremental budgets in areas with clearer returns on investment. Duff cited developer productivity, customer service and support, and sales efficiency as areas where customers can more readily identify returns.
Azure Demand Broadens Beyond Frontier Labs
Microsoft continues to view its relationships with OpenAI and Anthropic as important, with both organizations described as major customers investing early in the AI cycle. However, Duff said demand is broadening across the company’s customer base.
Microsoft reported an increase of more than $50 billion in backlog in its most recent quarter, Duff said, adding that the increase was entirely outside of OpenAI and Anthropic. He also pointed to Foundry as an indicator of broader adoption, saying it has more than 100,000 customers that have doubled revenue year over year.
Demand continues to exceed supply, Duff said, and Microsoft expects that imbalance to persist through the remainder of the calendar year. The company is seeking to add capacity and improve efficiency across research and development, first-party services and Azure infrastructure, he said.
Microsoft’s common infrastructure architecture allows Azure customers, the company’s first-party services and its R&D efforts to use the same underlying systems, according to Duff. The company is using that shared environment to dynamically manage capacity and pursue efficiency gains.
Microsoft 365 Copilot Adoption Expands
Duff attributed recent acceleration in Microsoft 365 Copilot seat additions primarily to customer expansions. Many organizations began with department-level or limited deployments last year, testing whether their technology architectures and compliance controls were ready and assessing employee usage and product value.
Those customers are now expanding more broadly, including “wall-to-wall deployments” in which all information workers receive Copilot licenses, Duff said. He added that Microsoft 365 Copilot engagement is on par with Teams and Outlook, which he described as among Microsoft’s most heavily used products.
The company continues to introduce new capabilities and sees Work IQ as a source of differentiated value, Duff said. He said the product has improved significantly over the past year and is expected to continue evolving.
Microsoft is maintaining a high-value chat experience within Microsoft 365 Copilot while using consumption-based pricing for longer-running, task-oriented agentic workloads through Copilot Cowork. Duff said that model more closely aligns customer value with the cost of providing compute-intensive services.
He acknowledged that usage-based pricing introduces added complexity for customers accustomed to predictable per-user software costs. Microsoft has included administration tools in Microsoft 365 E7 to help customers monitor usage, manage costs and evaluate returns, he said.
Frontier Services and Internal AI Deployment
Duff described Microsoft Frontier as a significant change to the company’s go-to-market approach, driven by customer interest in using agentic software to improve specific business outcomes. The effort is intended to combine industry and technical expertise to help customers redesign processes, rather than merely address technology issues, he said.
Microsoft expects partners to be an important component of the initiative, providing specialized skills, customer relationships and their own intellectual property while working alongside Microsoft on customer solutions.
Internally, Microsoft is applying similar approaches across sales operations, finance, compliance and support. Duff said the company has saved hundreds of millions of dollars annually in support by redefining processes and using technology differently.
Within Duff’s finance organization, agents and Copilot Cowork are being used in the financial close process to help teams close more quickly and accurately, while freeing employees to focus on business insights and judgment. The company is also introducing agentic technology in compliance processes to assess risk across its global deal activity, he said.
“Last year, experimentation. Now it is really around production, scale, governance,” Duff said. “How do I drive business outcomes? How do I measure business outcomes?”
About Microsoft (NASDAQ:MSFT)
Microsoft Corporation is a global technology company headquartered in Redmond, Washington. Founded in 1975 by Bill Gates and Paul Allen, Microsoft develops, licenses and supports a broad range of software products, services and devices for consumers, enterprises and governments worldwide. Its operations span personal computing, productivity software, cloud infrastructure, enterprise applications, developer tools and gaming.
Microsoft’s product portfolio includes the Windows operating system and the Microsoft 365 suite of productivity and collaboration tools (Office apps, Outlook, Teams).
