What is Microsoft Agent Factory?

What is Microsoft Agent Factory? 

Microsoft Agent Factory is Microsoft’s new enterprise-grade platform for building and running AI agents at scale, not just running pilots. It gives organizations a structured way to design specialized agents around real business processes and workflows, then deploy them consistently across their environment. 

"We're building what we call an agent factory," Parikh explained. "This will allow our customers to create thousands of agents that can help them with various business processes." 

Instead of juggling multiple products and pricing models, Agent Factory introduces a single metered plan that covers building agents with Work IQ, Fabric IQ, and Foundry IQ using Microsoft Foundry and Copilot Studio. Those agents can then be deployed into Microsoft 365 Copilot and other surfaces without upfront licensing or complex provisioning, which shortens the path from idea to production. 

The foundation of Microsoft Agent Factory is the Microsoft Agent Pre-Purchase Plan (P3), a unified commercial model that simplifies how organizations buy and consume AI capabilities. Instead of piecemeal procurement, P3 streamlines buying and removes much of the traditional complexity around SKUs, quotas, and separate agreements. 

With P3, partners can give customers access to 32 Microsoft services through a single, shared pool of funds. That means customers no longer have to juggle multiple contracts or commit to one platform over another; they draw down from one balance as they build and run agents across the stack. 

This single metered plan reduces upfront licensing and provisioning overhead and makes AI investments far more predictable from a budgeting perspective. Organizations know they are operating within one commercial construct as they experiment, scale pilots, and move agents into production. 

Partners then play a critical role in helping customers turn this commercial flexibility into real outcomes. They can guide customers as they design, build, and deploy agents, including those integrated into Microsoft 365 Copilot, while also using availability in the Cloud Solution Provider (CSP) programme and other licensing routes to match different customer profiles. 

Beyond the financial model and partner channel, the programme also includes enablement. Eligible organizations can work directly with Microsoft’s Forward Deployed Engineers (FDEs) for hands-on help with solution design and implementation, and they can access tailored role-based training to lift AI fluency across business, IT, and developer teams. 

Taken together, P3, partner support, FDE engagement, and targeted skilling create a flywheel for AI adoption. They open new growth and innovation opportunities for partners and customers alike, while giving organizations the confidence and structure they need to lean into an AI-driven future. 

Agent Factory at Ignite 2025: Essential Highlights 

Microsoft’s Ignite 2025 underscored a clear shift toward an agent-led workplace. The event reinforced that AI agents are no longer peripheral experiments, but core components of how enterprises will operate. Below are the most important Agent Factory–related updates leaders should track. 

Agents as First-Class Business Workers 

The keynote message was unambiguous: AI agents will sit alongside humans as standard members of every team in the modern enterprise. The International Data Corporation (IDC) figures shared at the Ignite project around 1.3 billion agents in production by 2028, embedded across applications, operating systems, and cloud services. Agent Factory is Microsoft’s structured response to this scale, giving enterprises a formal pathway to design, deploy, and industrialize agents. 

Agent 365: The Governance Layer for All Agents 

Microsoft introduced Agent 365 as the dedicated control plane for managing enterprise agents. In simple terms, Agent Factory is where agents are built, while Agent 365 is where they are governed. It provides a single registry of all agents, central access and policy controls, and behavior monitoring across Microsoft Teams, Microsoft 365, Dynamics, and Azure, ensuring every agent operates within organizational and compliance boundaries. 

Work IQ: The Intelligence Behind Agent Behavior 

Work IQ was also unveiled as the intelligence substrate that shapes how agents understand work inside your organization. It captures job roles, processes, context, and corporate knowledge so that agents built with Agent Factory can act in a way that is context-aware and aligned to how your business actually runs. Instead of following generic prompts, agents can make decisions grounded in real workflows and organizational norms. 

How it works 

Agent Factory is more than a single tool; it’s an integrated framework that brings together build tools, runtime services, expert support, and a unified commercial model. The aim is to give enterprises a coherent way to design, harden, and scale AI agents without assembling the stack themselves. 

On top of this foundation, organizations can create simple task‑based agents, more autonomous agents, and even complex multi‑agent setups where several agents work together towards the same business objective. It includes: 

• Copilot Studio: The environment where you define an agent’s behavior, decision logic, and end‑to‑end orchestration across tasks and systems. 
• Microsoft Foundry: The workspace that equips teams to model agents, run evaluations, and iteratively test and refine how they perform. 
• Work IQ, Fabric IQ, and Foundry IQ: The intelligence layers that inject organizational context, semantics, and domain knowledge so agents can operate in a grounded, business‑aware way. 
• Azure AI Foundry: The production layer responsible for deploying agents, tracking their health, and delivering operational telemetry and analytics at scale. 

Frontier Firms are writing the next chapter of business 

Agent Factory marks the transition from experimental agents to industrial‑scale deployment across the enterprise. It gives organizations a standard way to design, deploy, and operate intelligent agents, shortening time to value and helping close the skills gap between deep technical teams and business stakeholders who just want outcomes. 

In this landscape, advantage shifts to “Frontier Firms” – organizations that move first and learn fastest in applying agentic AI. Now is the time for CIOs and CTOs to deliberately design their agent ecosystem, rather than reacting to piecemeal to individual use cases. By adopting structured frameworks like Agent Factory, enterprises can build an AI foundation that is more resilient, more efficient, and fundamentally smarter over time.  

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