Glossary
Quick reference for key terms used throughout the Microsoft AI Decision Framework. For detailed documentation links and resources, see Resources. For methodology and decision guidance, see Decision Framework.
Last validated: March 19, 2026. Microsoft’s AI capabilities evolve rapidly - always verify with official sources for production decisions.
Table of contents
A
Agent
An AI system that uses an LLM to interpret user inputs, plan, call tools or MCP servers, and return responses, with optional threads, memory, and middleware to enrich interactions (Microsoft Agent Framework, updated 2026-02-20).
Agent Commit Unit (ACU)
The billing unit for the Microsoft Agent Pre-Purchase Plan (P3). 1 ACU ≈ $1 of retail usage. ACUs are purchased in a single pool and pay down both Copilot Studio Credit consumption and Microsoft Foundry usage, enabling unified budgeting across platforms. See Agent Pre-Purchase Plan (updated 2026-01-15).
Agent Factory
A Microsoft program (not a product) that accelerates enterprise agent adoption through three pillars: the Agent Pre-Purchase Plan (P3) for unified billing, Forward Deployed Engineers (FDEs) for hands-on architecture support, and customized training. See Introducing Microsoft Agent Factory (published 2025-11-18).
Agent Pre-Purchase Plan (P3)
A 1-year Azure reservation that provides Agent Commit Units (ACUs) covering both Microsoft Foundry and Copilot Studio Credit consumption in a single pool. Benefit precedence: Foundry PTU reservations apply first, then Copilot Credit pre-purchase, then P3 covers overflow from both. Purchased via Azure Portal Reservations with tiered volume discounts. See Agent Pre-Purchase Plan (updated 2026-01-15).
Agent2Agent (A2A)
A protocol enabling secure, peer-to-peer communication between AI agents, allowing them to discover peers, negotiate tasks, and collaborate without centralized intermediaries (Advanced development tools for Teams, updated 2025-05-19).
Agent Registry (Preview)
Central inventory in the M365 admin center to publish, activate, deploy, pin, block, remove, delete, transfer ownership, or export agents; enforces governance and visibility across Copilot and custom agents (Agent Registry, retrieved 2026-01-23).
Agent Settings templates (Preview)
Reusable configuration templates in the M365 admin center that let admins apply consistent policies to multiple agents (e.g., enabled channels, publishing scope, owners), managed alongside Agent Registry entries (Microsoft 365 Copilot release notes, November 25, 2025).
Agentic Retrieval (Preview)
An evolution of traditional RAG where AI agents dynamically reason about search queries, plan multi-step retrieval strategies, and adaptively refine results before generation. Unlike static RAG patterns, agentic retrieval enables agents to decompose complex questions, filter sources intelligently, and combine multiple search modes (vector, hybrid, semantic) based on context (Agentic retrieval in Azure AI Search, updated 2026-01-16). When to use: Choose agentic retrieval for complex research scenarios requiring multi-hop reasoning; use traditional RAG for straightforward document lookup. See Decision Framework Q3.
Agent Framework
An open-source development kit for .NET and Python that unifies Semantic Kernel and AutoGen concepts, adding stateful workflows and multi-agent orchestration for production-grade AI solutions (Microsoft Agent Framework, updated 2026-02-20).
Assistant (generic)
A conversational experience that relies primarily on an LLM prompt without owning orchestration, tool calls, or state. Assistants can become agents when they add tools (including MCP), memory, or workflows.
Agent Application
A published agent promoted from a Microsoft Foundry project into a managed Azure resource with its own stable endpoint, Entra agent identity, RBAC scope, and Azure Policy integration. Publishing changes the agent’s identity from the project’s shared identity to a dedicated one, so permissions must be reassigned to the new identity for tool calls to work (Publish and share agents in Microsoft Foundry, retrieved 2026-03-19).
Agent Skills
Portable packages of instructions, scripts, and resources that give Agent Framework agents specialized capabilities and domain expertise. Skills follow an open specification and use progressive disclosure (advertise → load → read resources) to minimize context window usage while providing deep domain knowledge on demand (Agent Skills, retrieved 2026-03-19).
Microsoft Foundry (Azure)
See Microsoft Foundry. The cloud-based implementation of the Microsoft Foundry ecosystem.
B
BYOK (Bring Your Own Knowledge)
Configuring Copilot Studio generative answers with knowledge sources such as SharePoint, Dataverse, connectors, files, and vetted web content so agents ground responses in governed enterprise data (Knowledge sources summary, updated 2026-01-13).
BYOM (Bring Your Own Model)
Connecting custom or fine-tuned language models to Microsoft AI platforms. The term has different meanings depending on context: (1) AI Builder BYOM - bring custom prompts/templates into Power Platform, (2) Copilot Studio BYOM - connect custom language models (e.g., Foundry deployments) to agent experiences, (3) Microsoft Foundry BYOM - deploy and manage fine-tuned models in the Foundry catalog (Bring your own model for your prompts, updated 2026-03-08). When to use: BYOM is appropriate when base models lack domain expertise, require specific tone/format, or must comply with specialized regulatory requirements. See Feature Comparison for platform-specific capabilities.
BXT Framework
A Business, Experience, and Technology evaluation that scores strategic fit, user desirability, and technical feasibility to prioritize AI scenarios with the greatest impact and execution readiness (Evaluate and Prioritize an AI Use Case with Business Envisioning, updated 2024-09-16).
C
Copilot (Microsoft 365)
Tenant-aware AI experience embedded across Microsoft 365 apps, inheriting Graph security and compliance while allowing extensions via declarative or custom engine agents (Microsoft 365 Copilot overview, retrieved 2026-03-25).
Copilot vs. Agent
“Copilot” describes the user-facing experience; “agent” describes the implementation pattern (planning, tools, memory). Many copilots are backed by agents, but a copilot can remain a simple assistant if no tools or state are attached.
Copilot Search API (Preview, Graph /beta)
Microsoft Graph /beta API that delivers hybrid semantic + lexical search over OneDrive content for custom engine agents, returning grounding for Copilot experiences while respecting M365 security trimming (Microsoft 365 Copilot Search API overview, retrieved 2025-10-20).
Copilot Cowork (Frontier Preview)
Long-running, multi-step execution engine in Microsoft 365 Copilot that delegates complex tasks using Anthropic’s agentic model grounded by Work IQ. Breaks requests into plans with visible checkpoints, human steering, and pause/resume capability. Produces coordinated outputs across Word, Excel, PowerPoint, and Outlook. Runs in a sandboxed cloud environment within M365 security and governance boundaries. Currently in Research Preview, available through the Frontier program in late March 2026 (Copilot Cowork, published 2026-03-09).
Computer Use Agent (CUA) (Preview)
Copilot Studio tool that lets agents automate web and desktop applications using vision-based AI models (OpenAI CUA, Anthropic Claude Sonnet 4.5) with virtual mouse and keyboard control. Includes stored credentials (internal or Azure Key Vault), URL/application access control allowlists, human supervision gates via email, Cloud PC pooling for scalable execution, and session replay audit logging. Billed at 5 Copilot Credits per step. US regions only during preview. Best for automating legacy systems or applications that lack APIs (Computer Use, updated 2025-12-19).
Copy to Copilot Studio
Rolling capability to clone Copilot agents into Copilot Studio; copies data sources and actions, but GPTs and custom actions must be reattached after import (Copy an agent to Copilot Studio, retrieved 2026-01-26).
Custom Engine Agent
Microsoft 365 Copilot extension built with pro-code SDKs (M365 Agents SDK, Bot Framework) that provides custom orchestration logic, external API integration, and advanced workflows beyond declarative agent capabilities. Runs on your infrastructure or Azure services while appearing in M365 Copilot as a scoped experience (Custom engine agents overview, updated 2026-01-13). When to use: Choose custom engine agents when you need complex orchestration, multi-step reasoning, external service integration, or full code control. Use Declarative Agents for simpler scenarios with M365 data sources. Can also build custom engine agents in Copilot Studio using Topics and custom connectors. See Decision Framework Q2 for build approach guidance.
D
Declarative Agent
Microsoft 365 Copilot extension that packages instructions, knowledge, and optional plugins in a manifest-driven app so organizations deliver scoped Copilot experiences while inheriting Copilot security and governance controls (Declarative agents for Microsoft 365 Copilot overview, updated 2025-12-01). When to use: Choose declarative agents when extending M365 Copilot with low-code customization, leveraging existing M365 data sources (SharePoint, Graph), and requiring automatic security inheritance. For custom orchestration logic or external APIs, consider Custom Engine Agents instead. See Decision Framework Q2 for build style guidance.
E
Entra Agent ID (Preview)
Identity construct that extends Microsoft Entra controls to AI agents across five pillars: Conditional Access (adaptive policies with Microsoft Managed Policies blocking high-risk agents), ID Governance (entitlement management with required sponsors, time-bound access packages), ID Protection (anomaly detection with risk-based automatic remediation), Network Controls (web categorization, file restrictions, prompt injection blocking, threat intelligence filtering), and an Agent Identity Platform for developers (auto-discovery, A2A/MCP authorization, standard protocol authentication). Part of Microsoft Agent 365; Frontier preview (What is Microsoft Entra Agent ID?, updated 2026-03-25).
F
Fabric Data Agent (Preview)
Conversational analytics agent for Q&A over Fabric OneLake sources (lakehouse, warehouse, semantic models, KQL) that respects user permissions; designed for insights, not for orchestrating other agents (Create a Fabric data agent, updated 2025-09-17).
Frontier (Copilot Frontier)
Early access program for experimental and preview Copilot features across web apps, desktop apps, and agents. Organizations enable access in the Microsoft 365 admin center under Copilot > Settings > User access > Copilot Frontier; by default, no users have access (Manage Microsoft 365 Copilot scenarios in the Microsoft 365 admin center, retrieved 2026-03-16).
Foundry Local
A component of Windows AI Foundry that brings Microsoft Foundry (Azure) models and capabilities to local devices (Windows 11, MacOS), enabling offline inferencing and hybrid AI scenarios (Foundry Local overview, updated 2025-05-19).
Fireworks Models (Preview)
Third-party model provider available on Microsoft Foundry, offering additional model options through the Foundry model catalog. See Fireworks models on Microsoft Foundry.
Foundry Agent Service
An optional managed PaaS runtime WITHIN Microsoft Foundry (Azure) that hosts and orchestrates agents with built-in infrastructure for compute, memory, and thread state. Provides 15+ built-in tools, connected agents (multi-agent systems), BYO storage (Cosmos DB, AI Search, Blob), RBAC, VNet isolation, and Azure Monitor tracing. GA since May 2025. Supports three agent types: Prompt Agents (GA), Workflow Agents (Preview), and Hosted Agents (Preview). Key distinction: You can use Microsoft Foundry WITHOUT Agent Service by deploying custom code with Agent Framework, LangChain, or other SDKs (Foundry Agent Service Overview, updated 2026-01-21). When to use: Choose Agent Service for managed hosting with built-in tools and orchestration. Choose self-hosted deployment when you need full infrastructure control or have existing Azure landing zones. See Hosted Agent for runtime details and Decision Framework Q4 for platform guidance.
Foundry IQ (Preview)
Managed knowledge layer within Microsoft Foundry that provides agents with permission-aware, citation-backed responses grounded in enterprise data. A knowledge base groups one or more knowledge sources (Azure Blob Storage, SharePoint, OneLake, web via Bing) under a single MCP endpoint, with automatic chunking, vector embedding, ACL synchronization, and Purview sensitivity label enforcement. Agents connect via MCP tool calls. Foundry IQ is standalone but complements Work IQ (M365 collaboration context) and Fabric IQ (analytics context) (Foundry IQ overview, retrieved 2026-03-19).
Content Understanding (GA)
Multimodal AI service in Foundry Tools that extracts semantic content from documents, images, audio, and video files. Provides prebuilt analyzers (RAG, domain-specific, content extraction), custom analyzers, and GA SDKs for Python, .NET, Java, and JavaScript/TypeScript targeting API version 2025-11-01. RAG analyzers (prebuilt-documentSearch, prebuilt-videoSearch, prebuilt-audioSearch, prebuilt-imageSearch) are optimized for retrieval-augmented generation scenarios (Azure AI Content Understanding, retrieved 2026-03-19). Note: Content Understanding is not available in the new Foundry portal at GA; use the Foundry (classic) portal for Content Understanding workloads.
G
Graph Connector
Copilot connector that ingests external content into Microsoft Graph’s semantic index so Copilot and Microsoft Search can ground answers in authenticated enterprise data, with semantic indexing and inline results requirements managed by admins (Microsoft 365 Copilot connectors overview, updated 2025-07-21).
H
Hosted Agent
One of three Foundry Agent Service agent types (alongside Prompt Agents and Workflow Agents). A code-based agent built with any framework — Agent Framework (.NET, Python), LangGraph (Python), or custom code — and deployed as a container on Agent Service. You own the orchestration logic; Foundry manages runtime, scaling, and infrastructure. Currently in Preview with framework support via adapter packages (azure-ai-agentserver-core, azure-ai-agentserver-agentframework). Billing starts no earlier than April 1, 2026 (Hosted agents overview, updated 2026-03-23). Deployment alternative: Self-hosted agents using Agent Framework, LangChain, or custom code in Azure Container Apps, AKS, or Azure Functions. See Decision Framework Q4 and Implementation Patterns for deployment strategy guidance.
M
MCP (Model Context Protocol)
Open protocol for tools and resources that lets agents connect to external systems in a structured, stateful, and secure manner; supported by Microsoft via MCP servers (for example, Azure MCP Server) and client integrations (What is the Azure MCP Server (Preview)?, retrieved 2026-02-18). Copilot Studio can both consume and produce MCP servers (custom MCP server authoring, Preview → Apr GA).
Model Router (GA)
Foundry model that selects among multiple underlying chat models based on routing profiles (quality vs. cost) and model subsets. GA version 2025-11-18 added Anthropic models and reasoning_effort support; March 2026 updates add gpt-5.2, gpt-5.2-chat, Deepseek-v3.2 (Preview), and claude-opus-4-6 (Preview), plus automatic failover when a routed model experiences instability (What’s new in model router in Microsoft Foundry Models?, updated 2026-03-24).
Microsoft Discovery
An enterprise agentic platform designed to accelerate scientific research and discovery through hypothesis formulation, candidate generation, and simulation orchestration (Microsoft Discovery, updated 2025-05-19).
Microsoft Agent 365 (Frontier Preview)
Frontier-preview governance layer that assigns each agent a Microsoft Entra Agent ID for identity, lifecycle, and access management, with centralized observability in the Microsoft 365 admin center. Developers extend agents using the Agent 365 SDK, and the Agent 365 CLI supports deployment and management workflows in preview (Overview of Microsoft Agent 365, retrieved 2025-12-15; Agent 365 SDK, retrieved 2026-01-09; Agent 365 CLI, retrieved 2026-01-13).
Microsoft 365 E7 (The Frontier Suite)
Enterprise bundle announced March 2026 at $99/user/month (GA May 1, 2026) that unifies M365 Copilot, Agent 365 ($15/user/month standalone), Microsoft Entra Suite, and M365 E5 with advanced Defender, Entra, Intune, and Purview security. Designed for organizations scaling AI across the workforce with unified productivity, identity, and security. Available with and without Teams (Wave 3 announcement, published 2026-03-09).
Microsoft Foundry
The unified brand for Microsoft’s AI development and management platforms, spanning Cloud (Microsoft Foundry (Azure)), Client (Windows AI Foundry), and Edge (Foundry Local). It provides a consistent toolchain for model selection, agent orchestration, and observability across all environments (Microsoft Foundry overview, updated 2025-05-19). The new Foundry portal reached general availability in March 2026 for core scenarios (model discovery, agent development, evaluations, fine-tuning, red teaming, quota management). Platform note: Microsoft Foundry (Azure) is available in two versions: Classic Foundry and Next Gen Foundry (same platform capabilities, different API name under the hood). Documentation uses ?view=foundry-classic or ?view=foundry-nextgen parameters. Service distinction: Microsoft Foundry is the PLATFORM (portal, model catalog, prompt flow, evaluations). Foundry Agent Service is an OPTIONAL managed runtime within the platform for hosting agents. You can use Foundry without Agent Service by deploying custom code. See Decision Framework Q4 for platform vs service guidance.
Multi-Agent Orchestration
Coordination patterns for multiple AI agents working together to solve complex problems. Microsoft supports three primary patterns: (1) Connected Agents - independent agents collaborating peer-to-peer through handoffs and shared context, (2) Sub-Agents - parent agents delegating specialized tasks to child agents in a hierarchy, and (3) Agent Workflows - sequential or concurrent agent execution managed by orchestration engines. Implemented through Agent Framework workflows, Foundry Agent Service, or custom orchestration logic (Agent Framework Orchestration Patterns, updated 2026-02-13). Cross-reference: See Visual Framework Diagram 7 for multi-agent architecture patterns.
N
NLWeb
An open project where web endpoints act as MCP servers, allowing websites to provide conversational interfaces and be easily discoverable by AI agents (NLWeb, updated 2025-05-19).
O
Orchestration
Coordinating agents, workflows, and function calls to execute multi-step solutions, often implemented with Agent Framework workflows that provide routing, state management, and human-in-the-loop checkpoints (Microsoft Agent Framework, updated 2026-02-20).
P
Planetary Computer Pro
A managed platform for geospatial insights that allows customers to ingest, manage, and analyze private geospatial data within Azure, integrating with Fabric and third-party tools (Microsoft Planetary Computer Pro, updated 2025-05-19).
Plugin
A term largely superseded by Tool or MCP Server. Originally referred to extensions for ChatGPT/Copilot; the ecosystem has shifted toward the Model Context Protocol (MCP) for standardized interoperability.
Prompt Flow
Microsoft Foundry (Azure)’s visual DAG environment for orchestrating LLMs, prompts, and Python tools, comparing prompt variants, collaborating across teams, and deploying flows as managed endpoints (Prompt flow in Microsoft Foundry portal (classic), updated 2026-02-27). Note: Prompt Flow is available only in the Foundry (classic) portal. For new projects, use Agent Framework Workflows.
Prompt Agent
A Foundry Agent Service agent defined entirely through configuration (instructions, model, tools) without custom code. Created in the Foundry portal or via SDK. Agent Service manages orchestration and hosting. GA. See Agent types.
R
RAG (Retrieval Augmented Generation)
A design pattern that pairs Azure AI Search retrieval with LLMs, now optimized by agentic retrieval that plans subqueries, runs hybrid search with semantic ranking, and returns structured grounding for high-fidelity answers (Retrieval Augmented Generation (RAG) in Azure AI Search, updated 2026-01-15). When to use: Choose RAG when agents need current or proprietary data not present in the model’s training set. RAG is preferred over fine-tuning when data changes frequently or when you need explicit source citations for compliance. For complex multi-hop reasoning, consider Agentic Retrieval instead. See Decision Framework Q3 for data strategy guidance.
Researcher Agent (GA)
Pre-installed agent in Microsoft 365 Copilot Chat that performs multi-step research across web and work data sources. Admins can connect specialized declarative agents to Researcher for domain-specific task delegation, creating multi-agent workflows within the M365 trust boundary. GA since July 2025 (Researcher and Analyst GA, published 2025-06-02).
Responses API
The modern API primitive that replaces the Assistants API in Microsoft Foundry. Uses Conversations (instead of Threads) and Response Items (instead of Runs) with stateful context retained automatically across calls. Supports background mode for long-running tools, durable streams for disconnect/reconnect, and serves as the invocation protocol for published Agent Applications. The Assistants API is deprecated and sunsets August 26, 2026 (Use the Azure OpenAI Responses API, retrieved 2026-03-19; Migration guide, retrieved 2026-03-19).
S
Skills/Tools
Function tools, hosted services, or built-in capabilities that agents attach at construction or per run, enabling actions like web search, file retrieval, or code execution within Agent Framework ChatClientAgent and ChatAgent implementations (Agent Tools, updated 2026-02-13).
W
Work IQ (Preview)
The intelligence layer that powers Microsoft 365 Copilot, now available to your agents. Work IQ applies an extensive understanding of how your organization works (Data), builds persistent memory of priorities and work patterns (Memory), and reasons and acts through governed MCP tools under the Agent 365 control plane (Inference). Beyond the built-in MCP server catalog (Copilot, Calendar, Mail, SharePoint, OneDrive, Teams, User, Word, Dataverse/Dynamics 365), the MCP Management Server enables custom servers using 1,500+ connectors, Graph APIs, and REST endpoints. Extends into business data via Dataverse intelligence. Requires M365 Copilot license. Complements Foundry IQ (enterprise knowledge) and Fabric IQ (analytics context) (Work IQ MCP overview, retrieved 2026-03-19; Dataverse intelligence, retrieved 2026-03-19).
Workflow Agent (Preview)
A Foundry Agent Service agent that orchestrates multiple agents or action sequences using declarative YAML definitions, with visual builder support in the Foundry portal and VS Code. Supports branching, human-in-the-loop, and group-chat patterns. See Workflow agents.
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