In AI agent push, Microsoft re-orgs to create 'CoreAI – Platform and Tools' team

Microsoft has revealed it’s created an engineering team that CEO Satya Nadella feels is needed to cope with a potential huge change to software development processes and applications unleashed by AI.

Nadella informed Microsofties of the overhaul in a letter Redmond decided to share on Monday, and which opens with the CEO’s opinion that “it’s clear that we’re entering the next innings of this AI platform shift.

"2025 will be about model-forward applications that reshape all application categories. More so than any previous platform shift, every layer of the application stack will be impacted. It’s akin to GUI, internet servers, and cloud-native databases all being introduced into the app stack simultaneously. Thirty years of change is being compressed into three years!"

The CEO opined that Microsoft is set to “build agentic applications with memory, entitlements, and action space that will inherit powerful model capabilities. And we will adapt these capabilities for enhanced performance and safety across roles, business processes, and industry domains. Further, how we build, deploy, and maintain code for these AI applications is also fundamentally changing and becoming agentic.”

The mention of “agentic” software is a reference to an emerging class of AI application developed to analyze data relevant to a particular business process or task and then suggest or initiate actions by itself.

Salesforce has already built agentic tech that analyzes incoming sales inquiries and “autonomously engages with inbound leads in natural language to answer questions, handle objections and book meetings for human sellers,” or so it claims – all within the CRM giant’s own suite. Salesforce also said it's not hiring any more software engineers in 2025.

Agentic AI may be able to work across applications from different vendors. We’ve seen case studies of it being used to detect fraudulent financial transactions and initiate workflows that deny service to those suspected of conducting them, then initiating investigations.

The agent can drive workflows because it’s connected to a bunch of applications through APIs. Detecting suspected fraud therefore results in instructions being sent to other apps, which may themselves use agents to process the incoming info.

Agent-to-agent communications and the resulting actions are known as “agentic workflows” and in theory see lots of scutwork pushed into applications for processing, freeing humans to review decisions taken by agents and/or handle the really complex matters that agents can’t yet understand well enough to automate.

It's arguably just plain old software talking to plain old software, which would be nothing new. The new angle here, though, is that it's driven mainly by, shall we say, imaginative neural networks and models making decisions, rather than algorithms following entirely deterministic routes. Which is still software working with software.

Nadella thinks building artificially intelligent agentic apps and workflows needs “a new AI-first app stack — one with new UI/UX patterns, runtimes to build with agents, orchestrate multiple agents, and a reimagined management and observability layer.”

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The CEO wants Microsoft to master that app stack so it can build stuff you want to buy: “In this world, Azure must become the infrastructure for AI, while we build our AI platform and developer tools — spanning Azure AI Foundry, GitHub, and VS Code — on top of it. In other words, our AI platform and tools will come together to create agents, and these agents will come together to change every SaaS application category, and building custom applications will be driven by software.”

Nadella reckons Microsoft has learned what it must do to get there, and the job needs a dedicated team.

So that’s what he’s created: An engineering organization called “CoreAI – Platform and Tools.”

The group will comprise some folk in Microsoft’s developer division, others from Redmond’s AI platform team, and even “some key teams from the Office of the CTO.”

The new org has been given a mission “to build the end-to-end Copilot & AI stack for both our first-party and third-party customers to build and run AI apps and agents.”

The team will also take charge of GitHub Copilot, reflecting agentic AI’s potential to automated code creation when allowed to analyze existing code bases and development activity.

Nadella noted that “our internal organizational boundaries are meaningless to both our customers and to our competitors”.

That’s an odd observation given Microsoft published his letter, which concludes with this observation: “Our success in this next phase will be determined by having the best AI platform, tools, and infrastructure. We have a lot of work to do and a tremendous opportunity ahead, and together, I’m looking forward to building what comes next.” ®