Microsoft joins FDE bandwagon with $2.5bn Microsoft Frontier Company
Announcement comes days after AWS unveiled its $1bn, dedicated Forward Deployed Engineering Organization
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Microsoft has become the latest major organization to unveil a new operating business focused on embedding engineers in customer organizations to support end-to-end AI transformation.
Microsoft Frontier Company is backed with an investment of $2.5 investment and will place 6,000 forward deployed engineers in customer organizations to co-design, co-innovate, deploy and continuously improve AI systems "at scale based on measurable business outcomes".
With more than twice the financial muscle of the FDE venture announced by AWS last week, Microsoft's new operating business is intended deliver "Frontier Transformation through AI" and in doing so will tackle both tech and cultural changes.
Microsoft says it will "provide a unique combination of skills inclusive of deep industry knowledge, change management and continuous improvement experience, and enterprise-grade AI engineering expertise".
In the press statement Judson Althoff, CEO of Microsoft Commercial Business, wrote: "I am excited about all the things that Microsoft Frontier Company will do for our customers to realize the gains of Frontier Transformation. 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."
Rodrigo Kede Lima, the former president of Microsoft Asia, has been appointed president of Microsoft Frontier Company.
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Why is big tech embedding engineers with customer organizations?
Microsoft isn't the first to take this approach. As outlined, last week, AWS announced a new dedicated forward deployed engineering (FDE) organization, backed by a US$1 billion investment during the AWS Summit in Washington DC.
In line with the growing demand for end-to-end AI support, the trend has been building for some time – and it isn't exclusive to tech.
Other organizations that offer an FDE model include Palantir, which pioneered the model in the 2010s, OpenAI, Anthropic and global business consultancy EY. Sierra, which specializes in AI agents, recently worked with ASOS to design and deploy an agentic shopping assistant, designed, tested and launched in six weeks.
When CX Network speaks off the record to practitioners about their AI investment roadmaps, many say they prefer to go with smaller providers over major players like Microsoft, AWS and others, because there is a perception that smaller organizations will offer more tailored and attentive support.
The rise in embedded FDEs directly tackles this concern by giving organizations a dedicated, in-house expert who can lead the AI program end-to-end while ensuring the host organization has the skills and tools to maintain the program once the secondment ends.
What's different about Microsoft's FDE venture?
Rather than forcing a one-size-fits-all approach, FDEs generally support organizations to analyze their data, systems, tech architecture, security and in-house skills when creating custom-built AI systems.
The data tht FDEs – and AI systems – encounter and use can be highly sensitive and under existing data laws, many organizations cannot allow this data to be reprocessed by third parties to train AI models.
Microsoft explicitly states that it will not use proprietary company data obtained during this work to train its AI models "in ways that commoditize what differentiates them in their industry".
Microsoft also said: "We protect that intelligence with a model-diverse, open, heterogeneous AI platform. Customers shouldn't be locked into a single model any more than they should be locked into a single technology vendor. Microsoft's platform gives organizations the flexibility to run the right model for each scenario – whether it comes from OpenAI, Anthropic, Microsoft AI, open source or a specialized model tuned for a specific industry – without ceding control to any one of them."
Microsoft Frontier Company has already worked with London Stock Exchange Group (LSEG) to embed AI in its workspace. It's press announcement also name drops Land O'Lakes, Unilever and Novo Nordisk.
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