AI agents are being built everywhere, from simple customer service bots to complex supply chain automators. Yet, despite their proliferation, most agents still struggle with a fundamental problem: context. Without deep, reliable access to enterprise knowledge, agents are just clever conversationalists—not effective workers.
Enter Microsoft Foundry IQ. Announced recently as a breakthrough in the Microsoft Foundry ecosystem, Foundry IQ serves as a unified knowledge and semantic intelligence layer designed specifically for agentic AI. For IT and automation leaders, this marks a critical shift from building tool-centric AI to designing context-centric AI ecosystems.
In this article, we’ll explore what Foundry IQ is, its key capabilities, why it matters for your enterprise strategy, and how you can prepare for this new layer of intelligence.
What Is Microsoft Foundry IQ?
At its core, Foundry IQ is a unified knowledge layer that enables AI agents to access enterprise context across disparate sources, manage retrieval logic, and ground their responses in reality. It moves beyond the “traditional RAG (Retrieval-Augmented Generation) pipelines” that many organisations have been hand-coding for the past year, evolving into a managed, scalable knowledge system.
Key aspects of Foundry IQ include:
- Knowledge Bases: These are topic-centric, reusable collections of data that can be shared across multiple agents, rather than being siloed within a single bot.
- Agentic Retrieval Engine: A sophisticated engine that doesn’t just search; it plans, iterates, and synthesises information to answer complex queries.
- Enterprise-Grade Security & Governance: Built-in permissions, data classification, and federated source management ensure that agents only access what they are authorised to see.
Key Capabilities & Highlights
Foundry IQ is designed to remove the heavy lifting of data engineering from the AI development lifecycle.
- Automatic Ingestion & Indexing: It handles data from Azure Blob, OneLake, SharePoint, and the web with minimal custom setup, automating the “chunking” and vectorisation process.
- Federated Knowledge Sources: Agents can query across different systems without needing bespoke integration code for every single data source.
- Configurable Retrieval-Reasoning Effort: Developers can dictate the “effort” an agent should apply—choosing between a quick, low-latency lookup or a deep, reasoned search depending on the query’s importance.
- Microsoft Foundry Integration: It fits seamlessly into the broader stack, working alongside multi-agent workflows, memory, and the model router.
- Enterprise Governance: Identity management via Microsoft Entra and deep integration with Purview ensures that audit logs and observability dashboards are available from day one.
Why Foundry IQ Matters for Agent-Driven Enterprises
The primary barrier to effective AI isn’t the model—it’s the context. Agents fail when they lack the specific business knowledge required to make a decision. Foundry IQ addresses this by ensuring agents are grounded in rich enterprise context, delivering more accurate and relevant outcomes.
Furthermore, it solves the scalability crisis. Instead of every development team building their own custom retrieval stack, organisations can now rely on a shared knowledge layer. This centralisation offers significant cost and time savings while enforcing consistent governance. As agents become more autonomous, having these built-in controls is essential for maintaining trust.
Use-Cases & Scenarios
How does this look in practice?
- Knowledge Worker Assistants: An agent uses Foundry IQ to access historic project documents, chat logs, and analytics to answer complex questions like, “What were our recurring blockers in Q3?”
- Service Desk Agents: Grounded in technical manuals, past tickets, and compliance policies, these agents can drastically reduce resolution times.
- Cross-Function Automation: In multi-agent workflows, one agent might draw knowledge from Foundry IQ while another executes a task based on that intelligence.
- Data-Driven Insights: An agent can access data via Fabric IQ and context via Foundry IQ to deliver strategic forecasting.
For instance, Ontario Power Generation used agentic retrieval to sift through 40 years of nuclear operating experience, unlocking data-driven decision-making that was previously buried in static documents.
How to Get Started with Foundry IQ
For IT and automation leaders, the path forward involves a few strategic steps:
- Audit your knowledge estate: Determine where your critical context is stored—documents, chats, or apps.
- Identify candidate knowledge bases: Select high-value data sets like policies or product documentation to align with the Foundry IQ model.
- Evaluate the stack: Familiarise yourself with the Microsoft Foundry ecosystem, including the agent service and memory capabilities.
- Define governance: Establish security and access controls using Purview and Entra ID.
- Pilot an agent: Build a prototype grounded in Foundry IQ and measure its accuracy and user satisfaction.
- Scale: Expand to multiple knowledge bases and multi-agent orchestrations.
Because Foundry IQ is currently in public preview, early adopters have a unique opportunity to build expertise and competitive advantage before the market catches up.
Challenges & Considerations
While powerful, adopting Foundry IQ requires careful planning. Data quality remains paramount; unstructured data may require enrichment before it is useful. Additionally, as with any public preview technology, leaders must evaluate licensing costs and readiness.
Perhaps the biggest challenge is change management. Shifting from a “tool” mindset to an “agent + knowledge layer” mindset requires cultural and operational adjustments. Governance complexity also increases—more powerful agents carry higher risks if left unmanaged.
Summary & Key Takeaways
Foundry IQ represents the “knowledge brain” for the agent-first era. It provides agents with the necessary enterprise context to deliver high-quality outcomes, making it critical for any organisation aiming to deploy AI at scale. For those in IT strategy and automation, the message is clear: foundations matter. Invest early in your knowledge layers, not just your models.
The Future is Context-Aware
We are moving past the novelty phase of AI into the utility phase. Agents won’t work well until they understand the context they operate in; Foundry IQ makes that understanding possible. Start thinking beyond individual bots and begin designing agent ecosystems grounded in deep enterprise knowledge.
Explore Microsoft Foundry (Foundry IQ), map your data estate, and start your pilot today. The future belongs to those who can effectively harness their enterprise intelligence.
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