Microsoft puts $2.5bn into new ‘Frontier’ division to accelerate enterprise AI
“I am excited about all the things that Microsoft Frontier Company will do for our customers to realise the gains of Frontier Transformation,” Microsoft Commercial Business CEO Judson Althoff says
Microsoft has launched a new operating business with a $2.5bn (£1.9bn) investment to go beyond the forward-deployed engineering trend other vendors have latched onto in recent months, promising that the new business “will work closely with our partner ecosystem to extend this unique value to our customers across all markets and segments globally.”
Leading the new business as president of Microsoft Frontier Co is Rodrigo Kede Lima, previously president of Microsoft Asia.
Microsoft Commercial Business CEO Judson Althoff said in a blog post Thursday that Microsoft system integrator partners including Accenture and Capgemini - plus consulting giants EY, KPMG and PwC - represent robust existing FDE partnerships in the US-based tech giant’s 500,000-plus-member partner ecosystem.
“I am excited about all the things that Microsoft Frontier Company will do for our customers to realise the gains of Frontier Transformation,” Althoff said in the post.
“At the end of the day, it comes down to Intelligence + Trust and empowering our customers to achieve meaningful outcomes and a return on their investments.”
Microsoft launches Frontier Co with $2.5bn investment
CRN has reached out to Microsoft for comment.
But in an interview with CRN for its May cover story, Althoff stressed the competitive differentiator of Microsoft’s ecosystem and how winning the AI race is through delivering a full stack of technology with managed services and customer support.
“AI success really is not about the best model; it’s not about the best silicon,” Althoff said.
“It is about intelligence and trust and unlocking that for our customers. And our partner ecosystem is really the only way we’re going to actually get out there and achieve it. I view it actually as a competitive advantage for Microsoft to have the partner ecosystem that we have.”
How the Microsoft Frontier Co goes beyond FDE
Microsoft Frontier Co functions as a new operating business focused on what the vendor calls “frontier transformation” through AI for customers.
The business is focused on industry expertise, change management, enterprise-grade AI engineering and continuous improvement.
The new business seeks to go beyond the FDE practice perhaps best associated with software provider Palantir through 6,000 industry and engineering experts embedded at customers to co-design, co-innovate, deploy and continuously improve AI systems at scale based on measurable business outcomes.
The engineers will help customers establish intelligence platforms for observing, governing, managing and securing AI products and services across every layer of the technology stack and adopt financial operations (FinOps) practices for measuring returns.
Althoff pledged in his online post that customer data and intellectual property (IP) are not “used to train models in ways that commoditise what differentiates them in their industry.”
The new business will also operate a model-diverse, open, heterogeneous AI platform to avoid lock-in with any one vendor.
The business will leverage models from Microsoft itself, ChatGPT maker OpenAI, Claude maker Anthropic, open-source models, industry-specific specialised models and other options.
The new business goes beyond traditional FDE practices through connecting model output to workflows and key performance indicators (KPIs) in a continuous loop that scales across the client and promises measurable results over time, according to Microsoft.
The group will look at delivering AI benefits inside tools the client already uses.
AWS, OpenAI, Anthropic, Salesforce also invest in FDE
Other vendors have been launching their forward-deployed engineering (FDE) organisations lately in the name of improving customers’ use of AI.
AWS, one of Microsoft’s chief cloud rivals, revealed on Tuesday its own FDE unit backed by $1bn.
AWS positioned its FDE unit as embedding thousands of engineers directly with customers to co-develop and deploy agentic AI.
The vendor also disclosed a new Partner-Led FDE Motion that brings strategic partners a durable, embedded delivery capability, according to the AWS post.
Customers have the option of first-party AWS FDEs; a partner-augmented motion where partners embed engineers and domain experts into AWS FDE pods for additional context, specialised skills and to leverage customer relationships; and a fully partner-led FDE that deliver production systems with AWS engineers inside the partner team.
“Partners already hold the customer relationships, the industry context, and the delivery footprint to operate at that scale,” AWS said in the post.
“What they have not had is a production-grade delivery methodology that compounds with every engagement.”
In partner-led FDE engagements, partners own the domain ontologies, evaluation frameworks, Model Context Protocol (MCP) servers, agent operations tooling and context graph that records the architecture choices, evaluation criteria and domain patterns for each build.
Partners can leverage harnesses built from the initial engagement in subsequent ones and keep the delivery IP and business outcome.
Claude maker Anthropic, ChatGPT maker OpenAI and customer relationship management software giant Salesforce are among the vendors to announce their own dedicated FDE-minded services practices earlier this year.
Anthropic’s AI services company has a total financial commitment of $1.5bn, with funds from outside backers.
The vendor has reiterated its commitment to the Claude Partner Network under development for solution providers - which counts the new company as a member.
The OpenAI Deployment Co is backed by a $4bn-plus initial investment and counts among its investors Capgemini and fellow consulting and system integration giants Bain & Co and McKinsey & Co OpenAI has pledged that DeployCo will work alongside its Frontier Alliance partner ecosystem and the broader consulting industry for AI adoption and change management.
In an interview with CRN in June, Colleen Kapase, VP of global strategic partners and ecosystem for OpenAI, said that the FDE programme is available to its top-tier elite partners working on complex AI enterprise deployments.
Salesforce executives told CRN earlier this year that its FDE Partner Network arms select solution providers with greater technical expertise, and the vendor has made more tools available that can help solution providers bring AI agents to life for customers while also detailing a roadmap for more tools to come.
As for Lima, the Microsoft exec leading its new business, he has been with the technology vendor for about six years, according to his LinkedIn account.
He has served as Microsoft Asia president for about two years and was president of the Americas enterprise business for about a year before that.
He spent more than 20 years with IBM, leaving in 2020 as GM of IBM global integrated accounts.
This article originally appeared on CRN UK sister website CRN.