Across every industry, leaders are asking: How can AI be used to fundamentally transform our business? At the forefront are Frontier firms — empowering human ambition and finding AI-first differentiation in everything to maximize their potential and impact on society. These firms are redefining what’s possible and setting the pace for the future.
To better understand this transformation, Microsoft commissioned a global study with the International Data Corporation (IDC) of more than 4,000 business leaders responsible for AI decisions. The findings reveal 68% of these companies are using AI today but the real difference lies in how they’re using it. Frontier firms, the ones leading in AI Transformation, report they are achieving returns that are three times higher than slow adopters.
What sets Frontier firms apart
Their success goes beyond efficiency and productivity at scale, driving growth, expansion and industry leadership in a new AI-powered economy. Based on the IDC study, Microsoft has identified five key lessons learned in becoming a Frontier firm and how organizations can transform their business with AI.
#1 EXPANDING AI IMPACT ACROSS EVERY BUSINESS FUNCTION
On average Frontier firms are using AI across seven business functions. Over 70% are using AI in customer service, marketing, IT, product development and cybersecurity. These functions benefit from AI’s ability to automate workflows, generate content and detect anomalies in real time. This broad adoption is translating into measurable business impact: Frontier firms report better outcomes at a rate that is 4X greater than slow adopters across brand differentiation (87%), cost efficiency (86%), top-line growth (88%) and customer experience (85%).
BlackRock is transforming its investment lifecycle with Microsoft AI integrated into its Aladdin platform. Embedded across 20 apps and used by tens of thousands of users, AI tools help client relationship managers save hours per client by generating personalized briefs and opportunity analyses, while portfolio managers access real-time analytics and research summaries through Aladdin Copilot. The result is faster insights, improved data quality and enhanced risk management; helping BlackRock and its clients gain an advantage while enhancing client service, compliance and portfolio management.
#2: UNLOCKING INDUSTRY-SPECIFIC VALUE
While many organizations start their AI journey with personal productivity gains like automating tasks and improving efficiency, Frontier firms are moving further, deploying AI for strategic, industry-specific applications. According to the study, 67% are monetizing industry-specific AI use cases to boost revenue.
Industries at the forefront of this transformation include financial services, healthcare and manufacturing. Each is finding powerful, practical ways to apply AI to its most complex challenges. In financial services, organizations are strengthening fraud detection, accelerating transaction reconciliation and elevating customer support. In healthcare, it is helping clinicians generate accurate documentation, assist in diagnostics and deliver more personalized care. In manufacturing, AI is driving predictive maintenance, optimizing production schedules and automating quality inspections.
Mercedes-Benz is scaling AI across its global production network to advance automotive innovation, stabilize supply chain volatility, simplify production complexity and meet sustainability demands. Its MO360 data platform connects more than 30 car plants worldwide to the Microsoft Cloud for real-time data access, global optimization and analytics. The Digital Factory Chatbot Ecosystem uses a multi-agent system to empower employees with collaborative insights. Paint Shop AI leverages machine learning simulations to diagnose efficiency declines and reduce energy consumption of the buildings and machines — including 20% energy savings in the Rastatt paint shop — and NVIDIA Omniverse on Azure powers digital twins for agile planning and continuous improvement.
#3: BUILDING CUSTOM AI SOLUTIONS FOR COMPETITIVE ADVANTAGE
Today, 58% of Frontier firms are using custom AI solutions. Custom AI solutions allow businesses to embed proprietary knowledge, tone and compliance into every interaction. They can be fine-tuned on proprietary data or industry-specific knowledge, enabling higher accuracy in predictions or content generation and better alignment with business goals and compliance needs.
Within the next 24 months, 77% of Frontier firms plan to use custom AI solutions. This reflects a growing trend that AI leaders are layering in deeper strategic integrations of AI across their business.
As customers seek to use AI more to shop and search for products, luxury lifestyle company Ralph Lauren developed a personal, frictionless, inspirational and accessible solution to blend fashion with cutting-edge AI. Working with Microsoft, Ralph Lauren developed Ask Ralph: an AI-powered conversational tool providing styling tips and outfit recommendations from across the Polo Ralph Lauren brand. Powered by Azure OpenAI, the AI tool uses a natural language search engine to adapt dynamically to specific language inputs and interpret user intent to improve accuracy. It supports complex queries with exploratory or nuanced information needs with contextual understanding; and can discern tone, satisfaction and intent to refine recommendations. The tool also picks up on cues like location-based insights or event-driven needs. With Ask Ralph, customers can now reimagine how they shop online by putting the brand’s unique and iconic take on style right into their own hands.
#4: AGENTIC AI: THE NEW DIFFERENTIATOR FOR BUSINESS LEADERS
Agentic AI — systems that can reason, plan and act with human guidance — is fast becoming the next defining capability of Frontier organizations. In the next two years, IDC estimates the number of companies using agentic AI will triple.
Leaders today face a familiar challenge — teams are operating at full capacity, yet the demand for innovation and impact continues to grow. That’s where AI agents come in. In finance, they can surface real-time insights, provide policy guidance, review deal documents and assist in sourcing suppliers. In sales, agents are becoming always-on teammates — building pipelines, unifying insights across CRM systems, meetings, emails and the web and helping sellers qualify leads and draft personalized outreach. In customer service, AI agents can manage cases, maintain knowledge accuracy and interpret customer intent.
Dow is using agents to automate the shipping invoice analysis process and streamline its global supply chain to unlock new efficiencies and value. Receiving more than 100,000 shipping invoices via PDF each year, Dow built an autonomous agent in Copilot Studio to scan for billing inaccuracies and surface them in a dashboard for employee review. Using Freight Agent — a second agent built in Copilot Studio — employees can investigate further by “dialoguing with the data” in natural language. The agents are helping employees solve the challenge of hidden losses autonomously within minutes rather than weeks or months. Dow expects to save millions of dollars on shipping costs through increased accuracy in logistic rates and billing within the first year.
#5: AI BUDGETS ARE GROWING AND SO IS THE TEAM BEHIND THEM
71% of respondents plan to increase their AI budgets, with funding coming from IT and non-IT sources. These investments are no longer confined to the IT department or the Chief Digital Officer’s office.
To truly unlock AI’s transformational potential, it requires everyone collaborating across functions to drive innovation, adoption and impact: 34% of respondents are adding net new investment, 24% are repurposing existing IT budgets and 13% are reallocating funds from non-IT areas such as operations, HR or marketing. This diversified funding strategy signals that AI is no longer viewed as a niche technology — it’s becoming a core enabler of enterprise-wide transformation.
“IDC is projecting that the global economic impact of AI is projected to reach $22.3 trillion by 2030 (3.7% of global GDP in 2030), estimating the return on AI investments requires both strong measurement capabilities and a robust business case — one that models both cost implications and the potential for responsible value creation,” said David Schubmehl, Vice President AI and Automation for IDC.
The AI imperative: Act now to lead the future
The opportunity to demand more from AI is now. Among organizations surveyed, 22% are Frontier firms, realizing measurable impact and moving with speed, while 39% risk falling behind. Many are navigating challenges around security, privacy, governance and cost, as well as ethical considerations, integration complexity and scaling from pilot to production.
The message is clear: those who embrace AI benefit from momentum in efficiency, customer experience and innovation. To stay competitive, leaders should act now and embrace AI not as an experiment but as a strategic imperative for growth.
Closing the gap: Start your transformation today
Success starts with investment, governance and organizational readiness. Having a robust infrastructure that is secure, reliable and scalable to support AI initiatives is critical. The emergence of Frontier firms shows that customized AI deployment and responsible oversight can drive ROI and innovation.
Explore how Microsoft’s AI solutions can transform your organization. Leverage our resources to innovate with AI and start your journey to becoming a Frontier firm.
Alysa Taylor is the Chief Marketing Officer for Commercial Cloud and AI at Microsoft, leading teams that enable digital and AI transformation for organizations of all sizes across the globe. She is at the forefront of helping organizations around the world harness digital and AI innovation to transform how they operate and grow.
NOTE
IDC InfoBrief: sponsored by Microsoft, What Every Company Can Learn From Frontier firms Leading the AI Revolution, IDC # US53838325, November 2025
The post Bridging the AI divide: How Frontier firms are transforming business appeared first on The Official Microsoft Blog.
This post originally appeared on The Official Microsoft Blog.