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 four times 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.

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 contextual understanding and refines recommendations based on tone, satisfaction and intent.

#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.

In finance, AI agents can surface real-time insights, provide policy guidance, review deal documents and assist in sourcing suppliers. In sales, agents act as always-on teammates — building pipelines and helping sellers qualify leads and draft personalized outreach.

Dow is using agents to automate shipping invoice analysis and streamline its global supply chain. Autonomous agents scan invoices for billing inaccuracies and surface them for review, helping uncover hidden losses in minutes instead of months.

#5 AI budgets are growing and so is the team behind them

Seventy-one percent 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.

To unlock AI’s transformational potential, organizations are collaborating across functions. Thirty-four percent are adding net new investment, 24% are repurposing existing IT budgets and 13% are reallocating funds from non-IT areas.

IDC projects that the global economic impact of AI will reach $22.3 trillion by 2030, representing 3.7% of global GDP. Measuring ROI requires strong measurement capabilities and a robust business case that models both costs and responsible value creation.

The AI imperative: Act now to lead the future

Among organizations surveyed, 22% are Frontier Firms realizing measurable impact, while 39% risk falling behind. Challenges include security, privacy, governance, ethics and scaling from pilot to production.

The message is clear: organizations that embrace AI gain momentum in efficiency, customer experience and innovation. Leaders should act now and treat AI as a strategic imperative.

Closing the gap: Start your transformation today

Success starts with investment, governance and organizational readiness. Secure, reliable and scalable infrastructure is critical to supporting AI initiatives.

Explore how Microsoft’s AI solutions can transform your organization and begin 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 worldwide.