Providers and deployers of AI systems: You only have a couple of weeks left until you must explicitly inform users when they are interacting with AI content.

To assist in the effort, the European Commission (Commission) has published guidelines to help AI deployers get in line with the AI Act’s transparency obligations, which will begin to go into effect on August 2.

After that, companies providing AI systems must alert users when they are interacting with AI. They must also tell users when they have been exposed to deepfakes, “emotion recognition,” or biometric categorization systems, or when they are given AI-manipulated content in matters of “public interests without human review or editorial control.”

Henna Virkkunen, the Commission’s executive VP for tech sovereignty, security and democracy, said in a statement, “with today’s guidelines, the Commission supports the smooth and effective application of the AI Act to make AI systems interacting with people such as chatbots and AI agents and AI content more transparent and trustworthy. These guidelines support providers and deployers in meeting their obligations under the AI Act, while helping citizens know when they are interacting with AI.”

Systems must include machine-readable markers to reveal such content, to reduce “the risk of deception and manipulation” and build public trust in AI.

“Generative systems have collapsed the cost of producing convincing content while the cost of judging it stands where it always stood,” said Sanchit Vir Gogia, chief analyst at Greyhound Research. This requirement is “an attempt to restore friction to that imbalance.”

A company’s non-compliance could result in fines anywhere from €750K (about $856K) to €15M (about $17 million), or even up to 3% of its total worldwide annual revenue.

Transparency requirements

The EU AI Act’s transparency requirements apply to “natural or legal persons,” public authorities, agencies, or other bodies that develop AI systems, or have them developed, and place them on the EU market or into use under their name or trademark. This means all companies, regardless of whether or not they are EU-based.

“Systems placed on the European market, put into service there, or producing outputs used there are inside the field, wherever the developer sits,” Gogia noted.

Applicable systems must be intended to interact directly with “natural persons”; these systems include AI-enabled chatbots or conversational agents, AI companions, or coding agents. However, AI-enabled tools like recommender systems, spam filters, authentication, search and retrieval, transcription, text and code auto-completion, or predictive maintenance do not fall under the rule.

Specific outputs such as AI-generated text, images, video, and audio must contain a machine-readable mark. Deepfakes and public interest-related text created by AI without human review or control must be clearly labeled, however, deepfake content that is “artistic, creative, satirical, or fictional” is largely exempt.

AI content must be marked with one of three labels: “AI,” “Fully AI-generated,” or “Partially AI-modified.” For instance, “Fully AI-generated” applies when news summaries, music, art, or videos have been created without any human oversight (apart from prompting), while “partially AI-modified” could mean a person’s face is swapped into an authentic photograph to create a deepfake.

The three icons are publicly available for free use; enterprises can download zip files in PNG and SVG formats.

Most of the Act’s transparency rules begin to go into effect on August 2. But AI systems placed on the market before then will have some leeway; they must be in compliance by December 2.

However, a four-month allowance “on one obligation, for one population of systems, contingent on one procedural step, is not a strategy,” Gogia emphasized. Enterprises should plan to comply by August 2 and “treat any relief that arrives as margin.”

A consistent code of practice

Along with the transparency guidelines, the Commission has introduced a code of practice that essentially serves as a gesture of good faith. When signed, it can provide “legal certainty” and a “simple and practical” way to demonstrate compliance with the AI Act, according to the Commission. Signatories can also collaborate through the ‘Signatory Taskforce,’ which will share practices and advance technologies around marking and labeling practices.

Providers that choose not to sign must comply through other methods and demonstrate that those methods are “adequate” through assessment by surveillance authorities, according to the Commission.

Non-signatories “keep their flexibility, and will face more case-by-case scrutiny for it,” said Gogia.

Criteria for compliance

Shashi Bellamkonda, principal research director at Info-Tech Research Group, pointed out that the transparency requirements apply to content only when three criteria are met: It has been published, is informative to the public, or is on matters of public interest.

B2B business content or blogs may not need an AI disclosure if they do not meet these criteria, he noted. Also, published text that has undergone human review or is under editorial control does not need to be labeled. Editorial control means that a person must hold the ultimate legal responsibility for the publication of the content.

Many companies like Google, Adobe, and LinkedIn have already established ways to identify images marked as AI-generated. Meta has made it a requirement, but the creator has to add the AI-generated label, Bellamkonda said.

“This is a good move for guardrails around public information, and companies with good compliance and ethical oversight may not have to worry about this,” he noted. But as a general practice, companies should disclose AI-generated content and state whether it has been human reviewed.

Creating a transparency pipeline

Establishing full transparency means identifying who carries the responsibility for the content, whether the marking survives real use, not just testing, and what evidence will defend the decision, Gogia said.

Concerns cluster around responsibility, durability and evidence. Several organizations usually touch one piece of content, and none controls the whole chain, which is why contracts become the “pressure point,” he said. Most current agreements were written to deliver software and say “almost nothing” about provenance persistence, verification access, or evidence retention.

The durability concern is the most difficult, Gogia noted, because marking performs well in controlled settings but “badly in ordinary life.” Meta, for one, said its invisible watermark was designed to survive cropping; a published test, however, found the company’s preview detector missed 55% of cropped images.

“CIOs should ask which platform can actually provide evidence before believing its dashboard,” said Gogia.

Disclosure of AI use must be “clear, distinguishable and accessible,” he emphasized. “A notice buried in lengthy terms, or reachable only through determined clicking, satisfies nobody, least of all a market surveillance authority.”

Sustained compliance is a “living control” requiring a central record of systems, duties and evidence; testing taking place where the user meets the control rather than where the developer built it; and continuous supplier assurance. Enforcement will vary by country, so keep one common baseline with local overlays, Gogia said.

His advice: Inventory every system that talks to people, generates content, or gauges sentiment; classify provider and deployer roles; place disclosures at first interaction; define substantive human review; keep the evidence.

Marks and provenance signals should be tested after content undergoes cropping, compression, translation, transcription, and other editing, Gogia said. A useful audit starts from a real output and follows its “pulse” through generation, editing and publication, identifying at “each beat” the responsible party, the surviving mark, and evidence for exceptions. Missed labels should also be traced for root cause and recurrence.

To ensure compliance, before August 2, enterprises need a prioritized inventory, live disclosures on the highest-risk use cases, and a “named owner for every control,” he noted. In the first 30 days, they should stabilize and test; in the first 90 days, push requirements into procurement processes as a standing discipline. Procurement must secure commitments on marking methods, known failure modes, and evidence access, with explicit notice if/when any of them change.

“The sensible architecture is a common transparency baseline carrying traceability, responsibility, and evidence, with jurisdictional overlays for language, sector rules, and local practice,” Gogia said.

This article originally appeared on CIO.com.

Healthy software companies typically don’t suddenly eliminate one-fifth of their workforce, but monday.com is doing just that as it bets on flatter teams, AI agents, and customer implementation expertise as the winning combination in the AI era.

Monday.com co-founder and co-CEO Eran Zinman today announced the “very difficult decision” to reduce the AI work platform company’s global workforce by about 20%, or 620 people.

The move has nothing to do with increasing margins or replacing humans with AI, he insisted in his post on LinkedIn; rather, it’s a calculated decision to trim down and hone the company’s focus as AI becomes integral to day-to-day workflows.

“This is not a distress signal; it is a deliberate reset, disclosed with its price attached,” said Sanchit Vir Gogia, chief analyst at Greyhound Research. “The industry has quietly swapped the meaning of productivity, and this filing is the clearest exhibit yet.”

A ‘significant opportunity’ in technology

In a SEC filing this week, monday.com said its restructuring plan reflects the “ongoing transformation of its product, marketing, and go-to-market strategy.” The move is intended to support a “leaner, more focused operating model” as the company continues to invest in its AI-driven strategy.

Zinman noted in his post that the company has shifted to “doing the work with AI and not just managing it,” and is focused on building environments where “people and AI agents [work] together in one workspace.”

In recent months, monday.com has evolved its products, strategy, and the way it serves its customers, and Zinman contended that “the organization we built for our previous chapter is not the organization that fits the new AI era.” Monday.com needs to “execute more decisively,” take on new challenges, and quickly respond to market changes, he said.

“We have never seen such a significant opportunity in software, driven by such exciting technology,” Zinman noted. He emphasized that the reduction is not to replace people with AI, nor to improve margins; the “vast majority” of savings will be reinvested into talent, products, and AI.

The restructuring will result in a “flatter organization” with fewer management layers and smaller, more autonomous teams, and monday.com also has a new go-to-market model, Zinman explained. Customers expect “deeper implementation support” as they deploy AI, and the company will work more closely with customers, increase its on-site presence, create new roles, and “adapt many existing ones.” In its SEC filing, the company said it expects to continue hiring in “key strategic areas” throughout 2026.

Workers will be expected to work better, “not harder,” Zinman noted. He pointed to several past examples where work could have been done in a few days, but instead took many months with “multiple meetings and endless friction.”

“This wasn’t people’s fault and everyone was frustrated by this,” he said. “Our new org changes ownership to allow people to make decisions and move fast.”

A spokesperson for monday.com declined to comment further on the staff reductions.

Monday.com’s key market advantages

Monday.com certainly isn’t struggling; the company expects 19% to 20% year-over-year growth in 2026.

“Companies in that position do not restructure because they must,” Greyhound’s Gogia noted. “They restructure because they have decided to become something else.”

Melody Brue, VP and principal analyst at Moor Insights & Strategy, pointed out that organizational redesign is important for real AI transformation, but while it can signal confidence to the market, it can still be “devastating” to humans.

While the company looks as though it’s trying to do right, that ultimately remains to be seen, she said. “There are often hidden internal bruises that can surface long after layoffs.”

Monday.com’s advantage is in its “structured substrate,” Gogia noted; its boards, permissions and typed workflows give agents something firmer to act on than just documents and chat history. The company highlights its natively built agents that can be configured by any team member, as well as connectors with Claude, Microsoft Copilot, and ChatGPT, and dedicated routes for external agents to authenticate and operate.

“For some time, the sharper enterprise question has been shifting from who has an agent to who owns the governed runtime in which an agent can safely act,” he said. “Structured work is a serious claim on that runtime.”

But parts of monday.com’s agent estate remain in staged release, and its product is ultimately “mid-transition,” Gogia pointed out; its agent builder carried a beta label as recently as March,. Also, the company’s pricing model changed in May to a hybrid model charging for seats as well as mandatory AI credits. And, while its AI-powered no-code builder monday vibe passed $1 million in annual recurring revenue within two and a half months, monday.com has not released subsequent outcomes, usage volumes, or attach rates.

Further, there’s an element of “gravity” with its competitors, he observed. Asana is reorganizing teams around agents, Atlassian is wiring agents into the developer estate, and others are simply bundling them into their offerings: Microsoft is doing so across the productivity stack, and ServiceNow across enterprise operations, each with identity and procurement built in.

“Their pull is strongest exactly where monday.com wants to grow, in the largest accounts, where control-plane depth and administrative reach decide the deal,” said Gogia.

Actions for the near-term

Going forward, buyers should focus on operating risk, not headline risk, Moor’s Brue noted. In practice, that’s continuity of service, roadmap consistency, and strength of enterprise support. Productivity should be valued as better outcomes per unit of organizational effort, not mere activity.

“It should be a measure of how much smoother, faster, and more effective the operating model becomes when AI is built into the work,” said Brue.

Gogia noted that strain surfaces first in customer service, and monday.com’s attention is being redistributed. The company’s annual report disclosed that its focus is now concentrated on the largest accounts, with support for medium-sized clients moved to an AI-first and human-supported model.

During the first month of the transition, buyers should track named account continuity and escalation times, he advised. By the first quarter, keep an eye on whether credit governance and admin controls mature on schedule, and if the roadmap beyond the AI estate keeps pace. By the half-year mark, determine whether promised implementation depth is producing outcomes or “simply more billable engagement.”

Support tiers should be enumerated in writing before renewal, and buyers should contract for “side exits,” Gogia emphasized, with overage pricing fixed in advance, the right to pause consumption, and portability for workflows and agent configuration “if the relationship sours.” Finance should also insist on monthly consumption reporting by capability. Further, integration efforts, partner dependency, and change management should be considered first-class costs of the agent era, “not as afterthoughts to a license.”

“A license was a known cost,” said Gogia. “A meter is a behavior, and behavior is harder to forecast than headcount.”

This article originally appeared on CIO.com.

AMD executives took to the stage at its Advancing AI 2026 event in San Francisco today to detail the company’s next generation of AI infrastructure solutions, from Instinct MI455X AI accelerator GPUs and 6th Gen EPYC “Venice” CPUs, to Pensando networking, ROCm.AI software and its Helios rack-scale platform that ties it all together.

AMD has been working towards rack-scale AI system solutions for years. Its ZT Systems acquisition last year added valuable engineering talent and intellectual property that is now finally bearing the real fruits. Its Helios AI platform is a major platform evolution for AMD, with shipments scheduled to begin in the second half of this year (which is here and now).

The announcements at Advancing AI show how the company has engineered its AI platform solutions for large reasoning models, sustained inference and agentic workflows. These workloads pressure memory capacity, data movement, networking and CPU orchestration. AMD’s approach is to keep as much data close to the compute engines as possible and move it more efficiently throughout the system, but there’s deeper nuance here that’s obvious versus AMD’s chief rival, NVIDIA.  

AMD’s MI455X targets the AI memory wall

The Instinct MI455X GPU is the compute engine that fuels the Helios rack, and the first GPU based on AMD’s new CDNA 5 architecture. Built with a modular mix of 2nm and 3nm chiplets, it carries 432GB of HBM4 and 23.3TB/s of peak memory bandwidth.

Compared to AMD’s current MI355X, the MI455X offers 1.5 times the memory capacity, up to 2.9 times the peak memory bandwidth and up to four times the peak matrix performance with MXFP4 and MXFP8 data types, which are lower-precision numerical formats designed to accelerate AI processing while reducing memory demands. With MXFP6 (6-bit floating point), performance is rated at up to twice that of MI355X.

AMD also shared some actual, measured internal results using production silicon. The company claims MI455X delivers 3.8 times higher FP8 decode performance, 3.5 times more measured FP4 compute performance and between 2.5 and 3.5 times more networking bandwidth than MI355X, depending on the transfer path tested. Those figures provide more context than just numerical specifications, though they remain AMD-provided comparisons that will need independent validation.

AMD

The architectural choices behind the numbers are important. Reasoning models and long context windows require sizeable KV caches for maintaining AI attention states, while mixture-of-experts models frequently move large amounts of data across accelerators. MI455X should let more model data, activation states and cache remain local. New dedicated IP in hardware can transfer data while the GPU continues processing, and expanded cache and multicast capabilities are designed to reduce redundant data movement to further improve efficiency.

The aforementioned lower-precision formats can also raise throughput and reduce memory use, but model developers still have to determine where they can be applied without unacceptable accuracy loss.

AMD’s Helios rack takes aim at Vera Rubin

Dave Altavilla

Helios is AMD’s primary rack-scale competitor to NVIDIA’s Vera Rubin platform. Each liquid-cooled rack combines 72 MI455X GPUs, 18 single-socket Venice host CPUs and Pensando networking technologies.

In its most complete, premium configuration, AMD rates Helios for 2.9 exaflops of low-precision AI compute, with 31TB of aggregate HBM4 capacity, 1.7PB/s of memory bandwidth, 260TB/s of bidirectional scale-up bandwidth and 43TB/s of scale-out bandwidth.

These are formidable figures, but they are technical specifications rather than actual application benchmarks. The more consequential development is AMD’s move from collections of eight-GPU servers to a 72-GPU shared-memory domain. Models too large for one node can operate across the rack without treating every exchange as a scale-out networking transaction, which benefits large-model inference as well as training.

AMD uses UALink over Ethernet, or UALoE, for an open standard scale-up fabric. Each MI455X provides 3.6TB/s of bidirectional scale-up bandwidth, while the complete rack delivers all-to-all connectivity through a single switch layer. AMD also claims six times more scale-out bandwidth per GPU than MI355X when MI455X is configured with three Pensando Vulcano 800 AI NICs.

While open standards give cloud providers more control over suppliers and system design, AMD and its partners now have to prove those components can deliver the predictable performance, reliability and deployment experience customers expect from a tightly controlled, more vertically integrated platform.

Finally, AMD designed Helios with automatic rerouting around failed links, virtual rack partitions, tray-level serviceability and rack-wide power, cooling and health monitoring. Major hyperscalers and potentially large-scale enterprise customers will likely key in on these capabilities, which can affect the availability, total cost and consistency of the AI services they consume.

Kind of like cowbell, AMD Venice gives agentic AI more CPU

AMD

AMD’s agentic CPU messaging regarding its upcoming Venice-based EPYC processors is mostly marketing speak, but the underlying requirement is very real. An AI agent can invoke retrieval, databases, security checks, code execution and other tools before a GPU generates a response. Running many agents concurrently increases the amount of conventional compute requirements surrounding the accelerators.

Venice scales to 256 Zen 6 cores with support for 512 threads, 16 memory channels, up to 1GB of L3 cache per socket, along with PCIe 6.0 and CXL 3.1 connectivity. AMD is also offering several Venice configurations for other applications, including general-purpose servers, high-frequency workloads, GPU hosts and high-density CPU sandbox systems used to execute agent tools.

Treating the CPU solely as a GPU host understates its role. Gateways, tokenization, vector search, databases and short-lived code execution stress different mixes of per-core performance, thread count, memory bandwidth and I/O. Specifically, AMD’s internal testing shows Venice significantly outperforming its current EPYC 9965 Turin CPU across five parts of the agentic AI pipeline, including gateway processing, context assembly, vector search, enterprise applications and short-lived tool execution. Individual gains vary by workload, but AMD details the overall generational improvement at up to a 1.7 times lift. As with the MI455X figures though, these comparisons come from AMD and will require independent validation.

Pensando networking and ROCm software advance

Keeping GPUs fed with data and coordinating traffic across racks directly affects utilization and operating costs. In fact, GPU utilization is a pretty sad state of affairs currently for some of the major frontier model providers.

As such, Pensando networking has become central to AMD’s roadmap. Helios can connect each MI455X to as many as three 800Gbps Vulcano AI NICs, while Salina DPUs handle front-end networking and infrastructure services.

On the software side, which is an equally critical component, AMD also introduced ROCm.AI, an AI-assisted development layer due to arrive in August. It includes reusable skills for coding agents, simplified management and Hyperloom, which can profile workloads, tune serving configurations, modify kernels and validate results.

These tools address two persistent AMD challenges: developer efficiency and ease of use, and software tuning. Automated optimization still has to produce repeatable gains without creating hard-to-maintain code, however. And while ROCm has progressed significantly over the last few years, NVIDIA’s CUDA retains an advantage in maturity, tooling and developer familiarity.

Customer commitments underscore rack-scale confidence

AMD now has commitments that give its MI450 generation and Helios considerably more weight. Meta and OpenAI have announced multi-generation agreements composed of up to 6GW of AMD compute capacity, with initial 1GW deployments planned for the second half of 2026.

Oracle plans a 50,000-GPU public cloud cluster beginning in the third quarter, while Microsoft will deploy Helios for Azure AI inference. Finally, just before the AMD event, Anthropic announced a strategic partnership for up to 2 Gigawatts of AMD-fueled AI compute, with its first gigawatt expected online in the first half of 2027.

Commitments of this scale reflect confidence in more than just MI455X performance. These customers are evaluating the complete architecture, including Venice CPUs, Pensando networking, ROCm software, rack integration, serviceability and AMD’s ability to deliver and execute across multiple product generations.

There is some financial alignment behind the agreements as well. AMD issued OpenAI performance-based warrants and committed to investing up to $5 billion in Anthropic. That context matters when evaluating these deals as market validation, but these planned deployments are substantial nonetheless and put Helios on a much stronger foundation as it begins shipping.

AMD expands its robotics and embedded foundation

AMD also expanded its physical AI portfolio, building on credible traction from its Xilinx-derived Kria adaptive system-on-modules and embedded technologies that are already powering robotics, machine vision and industrial automation applications.

The new Ryzen AI Embedded X100 combines up to 16 Zen 5 CPU cores, integrated Radeon graphics, a second-generation NPU and as much as 128GB of unified LPDDR5X memory shared across its compute engines. To me this looks a lot like a repackaging and optimization of the company’s Strix Halo platform, but with specific optimizations for the embedded space. Regardless, AMD is pairing X100 with the Kria AI Robotics Developer Platform, which includes a System Module or SOM, and a new Robotics Partner Network spanning hardware, software and platform providers.

Samples began shipping in June, with full production expected in the fourth quarter. This broader objective is to give developers a path across AMD x86 CPUs, GPUs, NPUs and FPGAs for real-time autonomous systems, rather than requiring them to assemble those hardware engines and software components independently.

Execution for AMD is now the test

AMD has assembled a credible platform for the burgeoning agentic AI market that’s blowing up currently with no signs of stopping. MI455X addresses memory and data movement, Venice handles dense agentic CPU workloads, Pensando networking connects global system resources, and ROCm.AI addresses software complexity. Finally, Helios assembles these components into a true competitive threat for NVIDIA’s latest Vera Rubin platform.

AMD’s open architecture may appeal to customers seeking supplier choice, but openness must also translate into reliable deployments, competitive total cost and software that does not require a significant rip-up. NVIDIA enters this cycle with a stronger ecosystem and far more rack-scale deployment experience. The true test will be how easily and reliably customers can integrate, operate and maintain these AMD solutions at scale.

As it stands, AMD now has major customers and a clearly defined architecture with systems engineering expertise behind it. Delivering Helios on schedule and showing that its performance claims translate into a real production workload throughput advantage and total cost of ownership gains will determine how much the competitive gap narrows. And of course, this is in a market that is clamoring for ever-more compute resources with a seemingly insatiable demand for AI services and capacity. That’s an environment for big iron success. Now AMD just has to deliver optimized, turnkey AI platforms. This is far easier said than done, but time will soon tell as deployments take shape this year.

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Enterprise Architecture (EA) Tools unterstützen Unternehmen und Organisationen dabei, mit ihren IT-Strategien die Geschäftsziele optimal zu unterstützen. Sie sorgen ebenfalls dafür, dass Unternehmen ihre Roadmaps für die digitale Transformation geordnet vorantreiben können. EA Tools bieten dafür unter anderem Collaboration-, Reporting-, Testing- und Simulationsfunktionen. Mit deren Hilfe lassen sich Modelle implementieren, die Geschäfts- und IT-Prozesse gezielt verbessern.

Um die beste Lösung für Ihr Unternehmen zu finden, sollten Sie zuerst prüfen, ob sich das jeweilige Tool mit Ihrem Technologie-Stack integrieren lässt. Anschließend gilt es abzuwägen, ob die Informationen, Diagramme und Tabellen, die die Software zur Verfügung stellt, für das Unternehmen auch einen echten Nutzwert haben.

Empfehlenswerte Enterprise-Architecture-Tools

Nachfolgend finden Sie einen Überblick über die wichtigsten Enterprise-Architecture-Tools – in alphabetischer Reihenfolge. Sie stellen einen Mix aus Visualisierungs-, Collaboration- und Project-Management-Funktionen bereit und unterstützen eine Vielzahl von Enterprise Architecture Frameworks.

Ardoq

Nachdem zuerst über einfache Formulare Informationen von Usern, Entwicklern und sonstigen Stakeholdern im Unternehmen eingesammelt wurden, lässt sich mithilfe von Ardoq ein digitaler Zwilling der gesamten Organisation erstellen. Der Ansatz setzt also darauf, die Menschen, die in ihren Rollen mit den verschiedensten Systemen arbeiten, realistisch in ihrer Arbeitswelt abzubilden.

Jede Mitarbeiterin und jeder Mitarbeiter im Unternehmen kann später von den Netzwerkvisualisierungen und Datenfluss-Diagrammen profitieren, um seine eigene Rolle optimal zu unterstützen und den Arbeitsplatz immer wieder anzupassen und zu modernisieren. Das Tool lässt sich mit den wichtigsten Cloud-Plattformen integrieren. Es bietet eine API, die individuelle Anpassungen in allen wichtigen Programmiersprachen (Python, C#, Java, etc.) ermöglicht.

Wichtigste Use Cases:

• “Architektonischen Stress” bei Lastspitzen simulieren, falls größere Veränderungen bevorstehen;

• Verstehen, wie verändertes Nutzerverhalten neue Anforderungen generiert;

• Application Portfolio Management, um besser strategisch zu planen.

Atoll Group SAMU

Das EA-Tool SAMU macht die Enterprise Architecture sichtbar, indem es tiefe Verknüpfungen zwischen On-Premises-Systemen, dem Cloud-Layer und Tools für das Business Process Management aufzeigt. Das Tool der Atoll Group bietet vielfältige Integrationsmöglichkeiten, zum Beispiel mit Monitoring-Tools (etwa Tivoli, ServiceNow), Configuration-Management-Datenbanken (zum Beispiel CA, BMC) oder Service-Organisations-Tools (BMC, HPE). Alle Informationen fließen in ein zentrales Datenmodell ein, das um den zusätzlichen Input der Stakeholder weiter angereichert wird.

Wichtigste Use Cases:

• Enterprise-Architektur visualisieren;

• strategische Planungsprozesse und Architektur-Reviews mit Informationen unterfüttern;

• mithilfe einer visuellen Verständnisgrundlage die Kommunikation verbessern.

Avolution Abacus

Dieses Tool erfasst die Breite und den Umfang der Unternehmensarchitektur mit Hilfe eines auf Diagrammen basierenden Dashboards. Die Integration mit gängigen Tools wie SharePoint, Excel, Visio, Google Sheets, Technopedia oder ServiceNow vereinfacht die Nutzung. Abacus wurde inzwischen auch um einen Machine-Learning-Layer ergänzt, der es Anwendern ermöglicht, ein Modell zu trainieren, das ihnen beispielsweise hilft zu erkennen, wer im Unternehmen für welches System verantwortlich ist.

Wichtigste Use Cases:

• die IT für das gesamte Unternehmen “öffnen”, um ein allgemeines Verständnis der Datenflüsse zu erzeugen;

• umfassendes Enterprise Modeling, um eine Roadmap für künftige Entwicklungen zu erstellen;

• Business-Metriken tracken, die mit der Unternehmens-Performance zusammenhängen.

BOC Group ADOIT

ADOIT soll Teams dabei unterstützen, Ressourcen zu verwalten, Bedarfe vorherzusagen und Assets zu tracken. Dazu mappt das Tool jedes System oder Softwarepaket mit einem Objekt. Die Datenflüsse zwischen den Systemen werden in Beziehungen umgewandelt, die von diesen Objekten mithilfe eines anpassbaren Metamodells erfasst werden. Geschäftsprozesse können auf ähnliche Weise über ein gut integriertes Begleitprodukt namens ADONIS modelliert werden. ADOIT ist Web-basiert und lässt sich auch mit Tools wie Atlassian Confluence integrieren, um die Datenerfassung und -entwicklung zu beschleunigen.

Wichtigste Use Cases:

• ein unternehmensweites Modell erstellen, das bei sämtlichen Teammitgliedern ein Verständnis über den Stack schafft – und wie man diesen verbessern kann;

• vollständiger Zugriff auf EA-Daten über eine Mobile-Anwendung;

• bei Fusionen und Übernahmen den Tech-Bereich durch genaues Asset-Mapping orchestrieren.

Bizzdesign Hopex

Nach der Übernahme von Mega International zählt die Hopex-Plattform zum Portfolio von Bizzdesign. Sie soll dabei unterstützen, Unternehmensanwendungen zu modellieren und dabei ein Verständnis der von ihnen unterstützten Geschäfts-Workflows schaffen. Dabei liegt ein Schwerpunkt auf den Bereichen Data Governance und Risikomanagement. Hopex basiert auf Microsoft Azure und stützt sich auf eine Reihe offener Standards wie GraphQL und REST Queries, um Informationen aus Komponentensystemen zu sammeln. Das Reporting ist mit den Office-Tools von Microsoft sowie mit grafischen Lösungen wie Tableau und Qlik integriert.

Wichtigste Use Cases:

• datengestützte Erkenntnisse herbeiführen, um Cloud- und Anwendungsbereitstellung zu steuern;

• akkurate Nutzungsmodelle erstellen, um Architekturanforderungen zu verstehen;

• eine Bedarfsschätzung mit Umfragen und anderen Tools vornehmen, um für die Zukunft zu planen.

Bizzdesign Horizzon

Das Tool dient dazu, Business Workflows und den zugrundeliegenden Tech-Stack zu modellieren. Dazu bietet Horizzon ein Graph-basiertes Modell, das Daten von sämtlichen Stakeholdern einsammelt und diese an eine Analytics-Engine weitergibt. Im Ergebnis entstehen Diagramme, die den aktuellen Systemzustand widerspiegeln. Wichtige Schwerpunkte dieses Tools sind Change Management und Zukunftsplanung: Horizzon ist nicht zuletzt dafür konzipiert worden, die Risiken eines Redesigns zu minimieren. Das Toolset unterstützt die wichtigsten Frameworks ArchiMate, TOGAF und BPMN. Neben Mega hat Bizzdesign im Januar 2025 auch den EA-Geschäftsbereich der Software AG – Alfabet – übernommen.

Wichtigste Use Cases:

• Vorhersage zukünftiger Anforderungen durch Predictive Modeling;

• Orchestrieren von Workflows auf der Basis der technischen und der Business-Architektur;

• Antizipieren von Risiken sowie Security- und Governance-Problemen durch die Modellierung von Datensicherheitsanforderungen.

Capstera

Das Tool von Capstera fokussiert darauf, die Business Architecture selbst abzubilden. Value und Process Maps helfen dabei, die Rollen der verschiedenen Unternehmensbereiche zu definieren und nachzuverfolgen. Dabei können im laufenden Prozess Verknüpfungen mit den zugrundeliegenden Softwarprodukten und Tools hinzugefügt werden.

Wichtigste Use Cases:

• Reports erstellen, die sich erst einmal mit der Business-Architektur selbst beschäftigen;

• Beziehungen zwischen Menschen, Abteilungen und Rollen analysieren;

• die langfristige strategische Planung vorantreiben.

Clausmark Bee360

Teammitglieder, die Clausmarks Flaggschiffprodukt Bee360 (früher Bee4IT) verwenden, wollen eine einfache “Single Source of Truth” über die Workflows im Unternehmen. Ziel ist es, verschiedenen betrieblichen Rollen intelligentere Entscheidungen zu ermöglichen. Das Modul Bee360 FM (Finanzmanagement) bietet etwa die Möglichkeit, Kosten nachzuvollziehen und zuzuordnen. Die Anwender können verschiedene solcher Module miteinander verknüpfen, um EAM, Finanzmanagement, Portfolio Management und Agile Planning nahtlos zu integrieren – bei maximaler Transparenz.

Wichtigste Use Cases:

• C-Suite-Ebene befähigen, Projekte zu managen und Assets zuzuweisen;

• präzise digitale Zwillinge entwickeln, um ein Verständnis über Datenflüsse zu schaffen und künftige Erweiterungen zu planen;

• integrierte Wissensdatenbank aufbauen, um alle digitalen Workflows zu tracken.

EAS

Das Essential-Paket von EAS (Enterprise Architecture Solutions) nahm als Open-Source-Projekt seinen Anfang und hat sich inzwischen zu einer kommerziell verfügbaren Cloud-Lösung weiterentwickelt. Das Tool erstellt ein Metamodell, das die Interaktionen zwischen Systemen und Geschäftsprozessen beschreibt. Ebenfalls enthalten sind Pakete, um gängige Business Workflows wie Datenmanagement oder DSGVO-Compliance zu tracken.

Wichtigste Use Cases:

• den technischen Reifegrad der eigenen Architektur evaluieren;

• Sicherheit und Governance durch besseres Asset Tracking optimieren;

• wachsende Systemkomplexität kontrollieren und managen.

OrbusInfinity

Orbus Software hat Anfang 2025 die Akquisition seines Konkurrenten Capsifi abgeschlossen. Der Anbieter stellt mit OrbusInfinity eine Enterprise-Transformation-Plattform auf KI-Basis zur Verfügung, die schnellere, bessere Entscheidungen, Kosteinesparungen und Risikominimierung verspricht. Architecture-Teams sollen mit Hifle von OrbusInfinity mit einer Vielzahl von Stakeholdern interagieren können, um eine “digitale Blaupause” ihres Unternehmens zu generieren, die eine einheitliche Sicht auf das aktuelle und künftige Geschäft realisieren soll. Diverse Drittanbieter-Tools lassen sich außerdem mit der Plattform integrieren, darunter etwa von Microsoft, Flexera, ManageEngine oder ServiceNow.

Wichtigste Use Cases:

• Stakeholder-Management;

• Enterprise-Landschaften visualisieren;

• Entscheidungsfindung und Datenanalyse automatisieren.

Planview Enterprise One

Planview bietet eine ganze Reihe von Produkten, mit denen Unternehmen Teamwork, Prozesse und die Enterprise Architecture nachvollziehen können. Die Enterprise Tools sind in drei Kategorien unterteilt: strategisches Portfolio-Management, Produktportfolio-Management und Projektportfolio-Management. Im Zusammenspiel entstehen hardware- und Software-übergreifende Layer, die rollenbasierte Perspektiven für Führungskräfte und Teammitglieder eröffnen. Das Toolset integriert mit gängigen Ticket-Tracking-Systemen wie Jira, um Workflow-Analysen und Reports zu erstellen. Inzwischen hat Planview nach einer Übernahme neue Tools in sein Portfolio integriert, die früher unter den Namen Daptiv, Barometer und Projectplace bekannt waren.

Wichtigste Use Cases:

• eine langfristige, strategische Vision für die Architekturentwicklung aufbauen;

• Entwicklungsarbeit auf Projektebene tracken und in eine beliebige Strategie integrieren;

• mit Fokus auf die Customer Experience und die Produktstruktur den Change vorantreiben.

QualiWare Enterprise Architecture

Das Enterprise Architecture Tool von QualiWare ist Teil einer größeren Sammlung von Modellierungswerkzeugen, die darauf abzielt, sämtliche Geschäftsprozesse zu erfassen. Beispielsweise ist es möglich, einen digitalen Zwillinge zu bauen, mit dem sich Customer Journeys nachvollziehen lassen. Qualiware hat diverse KI-Algorithmen integriert, um Dokumentation und Process Discovery zu optimieren.

Wichtigste Use Cases:

• ein kollaboratives Ökosystem für Business Manager aufbauen, das ein Verständnis von der Enterprise Architecture vermittelt;

• architektonische Designelemente erfassen, um ein Wissens-Ökosystem rund um den Stack aufzubauen;

• eine breite Beteiligung in Sachen Dokumentationserstellung und -überprüfung fördern.

Quest Erwin Evolve

Das Erwin Evolve Tool von Quest hat sich von einem Datenmodellierungs-Tool zu einem System für Enterprise-Architecture- und Geschäftsprozess-Modellierung weiterentwickelt. Um die Komplexität moderner, ineinandergreifender Softwaresysteme und der von ihnen gemanagten Geschäftsprozesse zu durchdringen, können Anwender auf benutzerdefinierte Datenstrukturen zurückgreifen. Das Web-Tool erstellt Modelle, rollenbasierte Diagramme und andere Visualisierungen, die in allgemein zugängliche Dashboards einfließen. Zum Paket gehört ein KI-basiertes Modellierungs-Tool, das Whiteboard-Skizzen integrieren kann.

Wichtigste Use Cases:

• einen digitalen Zwilling für die strategische Modellierung der Enterprise Data Architecture erstellen;

• Customer Journeys verstehen;

• Services und Systeme mit Application Portfolio Management tracken.

SAP LeanIX Enterprise Architecture Suite

Die Tool-Sammlung von LeanIX umfasst unter anderem Enterprise Architecture Management und andere Bereiche, die für Aufgaben wie SaaS– und Value-Stream-Management wichtig sind – etwa um Cloud-Deployments und darauf laufende Services zu tracken. Die Daten die dabei über die IT-Infrastruktur gesammelt werden, fließen in ein grafisches Dashboard ein. Das Tool ist eng mit wichtigen Cloud-Workflow-Tools wie Confluence, Jira, Signavio und Lucidchart integriert. Das ist für Teams von Vorteil, die diese Tools bereits nutzen, um ihre Entwicklungsstrategien zu planen und umzusetzen. Seit November 2023 ist LeanIX Teil von SAP.

Wichtigste Use Cases:

• Anwendungsmodernisierung und Cloud-Migration managen;

• Obsoleszenz von Software-Services evaluieren;

• Kosten kontrollieren und managen.

ServiceNow

Die Tool-Sammlung von ServiceNow lässt sich auf verschiedene Architekturtypen herunterbrechen, darunter Assets, DevOps, Security und Service. Die Tools katalogisieren die unterschiedlichen Hardware- und Softwareplattformen, um Workflows und Datenflüsse im Unternehmen abzubilden und zu verstehen. Ausführliche Reportings und detaillierte Dashboards ermöglichen Analysen, auf deren Grundlage Risiken minimiert und die Ausfallsicherheit der Systeme erhöht werden können.

Wichtigste Use Cases:

• Tracken von Assets, Services und Systemen, die das Unternehmen ausmachen;

• Governance-Themen, Risikobegrenzung, IT-Management und Security Operations werden in einer Plattform zusammengeführt;

• durch die Integration von CRM-Tools lassen sich auch kundenorientierte Services managen.

Sparx Systems

Um Teams und Projekte verschiedener Größe und Komplexität zu unterstützen, hat Sparx vier Versionen seines EA-Tools entwickelt. Allen gemeinsam ist eine UML-basierte Modellierung, mit der sich die Komponenten komplexer Systeme tracken lassen. Eine Simulations-Engine ermöglicht “War Gaming” und vermittelt ein Verständnis darüber, wie sich Fehler ausbreiten und kaskadieren können. Sparx stellt zudem eine Vielzahl von vorgefertigten Design Patterns bereit, um Teams bei der Modellierung zu unterstützen.

Wichtigste Use Cases:

• Nachfrage- und Lastveränderungen zur Prognose künftiger Anforderungen simulieren;

• (potenzielle) Probleme durch eine Verbindungs-Matrix im Auge behalten;

• Dokumentation erstellen.

Unicom System Architect

System Architect ist eines der Angebote aus Unicoms Team Blue. Es handelt sich um ein Tool, das ein Metamodell verwendet, um automatisiert so viele Daten wie möglich über die laufenden Systeme zu sammeln – manchmal auch durch ein Reverse Engineering von Datenflüssen. Dieses systemweite Datenmodell kann über benutzerdefinierte Dashboards Teammitgliedern aller Rollen zugänglich gemacht werden. Ein weiteres erwähnenswertes Feature: Die Ressourcenzuweisung lässt sich mit Hilfe von Simulationen optimieren.

Wichtigste Use Cases:

• Was-wäre-wenn-Fragen zum Architekturmodell stellen;

• ein Metamodell von Daten und Systemen aufbauen;

• Migrations- und Transformationspläne erstellen.

ValueBlue BlueDolphin

Dieses EA-Tool sammelt Daten auf dreierlei Art:

1. Es importiert Basisdaten auf der Grundlage standardgesteuerter Automatisierung (ITSM, SAM).

2. Es arbeitet mit den Dateiformaten von Architekten und Systemdesignern – etwa ArchiMate oder BPMN.

3. Es gibt Fragebögen an andere Stakeholder heraus, die auf anpassbaren Vorlagen basieren.

Die aufbereiteten Informationen werden in einer visuellen Umgebung bereitgestellt, die Auskunft über die historische Entwicklung von Systemen gibt.

Wichtigste Use Cases:

• systemweite Daten von internen und externen Stakeholdern automatisiert und formularbasiert erfassen;

• zukunftsorientierte Reportings erzeugen, um den Change zu überwachen und voranzutreiben;

• Kooperation und Zusammenarbeit durch offenes Data Reporting fördern.

(fm)

Dieser Artikel ist im Original bei unserer Schwesterpublikation CIO.com erschienen.

Every CIO I speak with today is wrestling with some version of the same question: How do we move faster with AI and deliver on our commitments?

It’s an understandable concern. Boards and CEOs are asking about AI. Business leaders are experimenting with use cases. Employees are discovering tools daily, while technology vendors promise unprecedented gains in productivity, innovation, and competitive advantage.

After hundreds of conversations with technology executives over the past year, I’ve become convinced that speed isn’t the real issue. The organizations pulling away from the pack aren’t necessarily adopting AI faster than everyone else. They’re executing more effectively — a subtle distinction that represents one of the defining leadership challenges of the AI era.

Technology has never been the hardest part of transformation. People, priorities, culture, and operating models are the biggest challenges. The ability to translate bold boardroom aspirations into thousands of thoughtful decisions made every day by architects, engineers, product managers, analysts, and business leaders is where competitive advantage is created. AI may be accelerating the pace of change, but it hasn’t changed that fundamental truth.

I’ve met plenty of executives who are exceptional in the boardroom. They know how to frame a vision, influence a board, and build confidence among investors and business leaders. I’ve also met remarkable technologists who instinctively understand the architectural decisions, engineering tradeoffs, and implementation details that determine how great ideas become reality. Modern CIOs, however, must move comfortably between both worlds. Afshean Talasaz is one who stands out among this rare breed.

Long before becoming CIO of Colonial Pipeline, Talasaz built his career from the ground up as a business professional, data scientist, and technologist. He has designed enterprise platforms, built AI capabilities, led technology organizations, and partnered closely with executive leadership teams on business transformation. Today, as an executive in residence with our Practitioners for Practitioners (P4P) community, he helps CIOs and business leaders navigate one of the most significant technology shifts of our generation.

While Talasaz brings deep knowledge of data and AI to the table, his greatest strength is his ability to create strategy and connect it with execution. He can spend the morning discussing enterprise reinvention with the board and the afternoon debating architectural principles with the teams responsible for bringing that vision to life.

That versatility gives Talasaz a unique lens on how CIOs can deliver value with AI.

Software companies have a term for engineers who understand every layer of the technology stack: full-stack developers. Listen to Talasaz and it becomes evident that the AI era requires something similar from technology leaders: a full-stack CIO.

The full-stack CIO: Leading with clarity

A full-stack CIO understands how every layer of the enterprise influences the next. They recognize that every strategic priority becomes a portfolio investment, every investment shapes an operating model, every operating model influences architecture, every architecture choice informs product decisions, every product decision shapes engineering priorities.

The best CIOs understand both ends of that journey. The extraordinary ones understand everything in between.

And those who execute best lead with clarity, Talasaz says.

“Everyone, from executives to middle managers to the people writing code, should be able to explain what we’re trying to achieve,” he emphasizes. “Clarity isn’t that we’ve handed out the PowerPoint. It’s that people genuinely understand where we’re going and can articulate it in their own language.”

One of the unintended consequences of the AI boom is that organizations are beginning to confuse activity with alignment. They have AI councils, AI governance committees, AI innovation labs, AI centers of excellence, AI pilots, and AI roadmaps. Yet if you stop ten people in the hallway and ask a deceptively simple question, What business problem are we actually trying to solve? you’ll often hear ten different answers.

As a result, architects optimize for one objective while product teams optimize for another. Business units pursue opportunities that seem perfectly reasonable from their perspective. Engineers make thoughtful technical decisions based on the information available to them. Individually, none of those decisions are necessarily wrong. Collectively, however, they create organizational drift. AI doesn’t create that problem. It simply accelerates the consequences.

And while AI can be a force multiplier for the positive when every decision is guided by a shared understanding of where the organization is headed, it can also be a force multiplier for the negative, resulting in an organization simply moving faster in different directions.

“When we have the fundamentals right, the tech infrastructure, the operating models, the nuances of how our business actually runs, we get the impacts of AI in a positive way,” Talasaz says. “When we don’t have those in place, AI can amplify the gaps or mute the benefits.”

At a time when so much of the conversation surrounding AI is focused on algorithms, agents, and automation, it’s an important reminder that organizations don’t execute strategy; people do.

Reducing organizational friction

Most executives are familiar with the concept of VUCA that characterizes today’s business environment. But Talasaz stresses the importance of turning this concern inward: “If the world outside our organizations is becoming more volatile, uncertain, complex, and ambiguous, what are we, as leaders, doing to the inside of our organizations?”

Leaders spend enormous amounts of time helping their organizations respond to external disruption but comparatively little time asking whether they are inadvertently re-creating those same conditions internally in response to those external needs. Are we reducing uncertainty or introducing more of it? Are we simplifying work or adding unnecessary complexity? Are we helping people focus on what matters most, or asking them to navigate competing priorities and shifting expectations?

Talasaz refers to this phenomenon as double VUCA — something I’ve witnessed repeatedly while working with CIOs over the past decade. Organizations often assume they’re struggling because of technology limitations when the real constraint is organizational friction. Teams wait for decisions. Priorities shift faster than roadmaps. Governance grows heavier. New committees are formed to solve problems created by existing committees. Everyone is working harder, yet the organization somehow feels slower.

AI amplifies both outcomes. Organizations with clarity become dramatically more effective because AI accelerates good decisions. Organizations without clarity simply accelerate confusion.

Operating model as strategy enabler

AI governance is one way to achieve greater clarity, but as Talasaz says, governance shouldn’t primarily exist inside policy manuals that few people read.

Instead, AI governance should be embedded in the daily rhythms of the organization, shaping how teams collaborate, how decisions are made, how products move from ideas into production, and how innovation happens safely without requiring constant escalation. In other words, it’s all about your operating model.

“If you had to pick one thing that isn’t technology, your operating model is the most important element for executing data and AI at scale,” he says.

The best operating models create enough clarity that capable people can make thousands of decisions independently and confidently, without having to wait for permission. By embedding good governance into the way it works, the organization becomes faster.

This advice echoes something I’ve heard repeatedly from some of the world’s most respected CIOs: High-performing organizations aren’t built on tighter control; they’re built on greater trust, supported by clear principles, shared expectations, and operating models that enable responsible decision-making at every level of the enterprise.

Talasaz points out that technology leaders tend to speak in terms of transformation. He suggests CIOs consider a different word: reinvention.

As he explains, transformation implies replacing what exists today with something new. Reinvention starts with a more clear-eyed and practical premise: Some things absolutely must change; others represent years, sometimes decades, of accumulated expertise, customer trust, operational discipline, and competitive advantage.

Reinvention is about building on those strengths while also creating new ways to deliver value. The leaders making the greatest progress in their AI journeys seem to recognize that it’s less about abandoning the past than thoughtfully preparing the organization for the future.

Closing the gap between strategy and execution

Full-stack CIOs must be able to map out the various layers of execution and planning that need to be done at every level of the organization to be successful. To help with this, Talasaz has developed a data and AI framework that draws on his own experiences “from the keyboard to the boardroom.”

As Talasaz sees it, too many organizations have been doing good work in isolation. “They’re doing a lot of the right things,” he says. “They’re just not connected.”

Boards may be discussing growth while business leaders redesign customer experiences. Product teams may be prioritizing new capabilities while architects modernize platforms. Data teams may be improving quality while engineers focus on delivery. Every group makes meaningful progress within its own domain, yet somewhere between strategy and execution, the connective tissue begins to disappear. Talasaz’s framework brings those connecting points to the forefront.

Crucially, the framework doesn’t begin with technology or AI or even with data. It begins with the experiences the organization hopes to create for its customers, employees, or partners. Many AI initiatives start with the question, “What can this technology do?” And indeed, we need to be inspired by the possibilities and challenged to think differently by what the technology can do. But, Talasaz emphasizes, we also need to ask what experiences we need to deliver for our business and how the technology can make that a reality.

The framework challenges CIOs to answer that question first. Only after the experiences are clearly defined does the conversation move to the capabilities required to deliver it, the business activities that support those capabilities, the AI and data products that enable them, and finally the data foundation that makes everything possible.

This shift in perspective ensures that, rather than allowing technology investments to search for business value, the business experience defines the technology required to deliver it. For CIOs, that’s more than a planning exercise. It’s a fundamentally different way of leading.

Over the coming months, the P4P community will be convening a series of small CxO roundtables to explore these issues and work more deeply with Afshean Talasaz’s 6×6 Data and AI Framework. CIOs and other enterprise leaders interested in participating are welcome to reach out to me directly.

When it comes to building an effective AI stack, context is king and power isn’t everything it’s cracked up to be.

“Smaller, smarter, safer — this is a bet our company has taken in how we deploy AI internally,” said Ricky Thakrar, head of sales and account management at Zoho, provider of a suite of popular cloud-based software solutions for sales, marketing, and finance.

“I’m on the business side, and so decisions made by our CIO and IT folks affect me directly, and my teams’ workflows and processes,” he added.

Speaking to a room of tech leaders at the CIO 100 Leadership Live New York event last week, Thakrar explained that every company wants the speed of AI-generated work wedded to the quality of human work, even though these two are diametrically opposed. No amount of model upgrades or spend will close that gap, so the only way forward is to architect your way out. Thakrar encapsulated this idea in a simple formula:

• Smaller: Stop deploying maximum firepower on every task. Many tasks don’t need it.
• Smarter: The system around the model decides more than the model does.
• Safer: Verify at the point a mistake gets locked in, not just downstream of it.

He noted that organizations that win with AI won’t be those deploying the biggest, most powerful models or the most sophisticated architecture, but the ones that figure out that the model is the easy part and the right architecture is harder. That means understanding the hardest element, and the biggest differentiator, is building a human system that learns and compounds alongside agentic systems.

To get it right, organizations need to prioritize the context layer. The size of frontier models like the GPT series, Claude, and Gemini mostly exist to compensate for missing context, Thakrar explained. Without enough context, models need to be able to reason harder and infer more about what a user actually means because it doesn’t know the user’s account, process, or history. A rich context layer makes it possible for enterprises to run workloads on much smaller, lower-power models.

“The intelligence moves from the model into the architecture around it,” he said.

A steep learning curve

One of Zoho’s earliest AI agents was a churn management agent to help the account management team detect churn in customer subscriptions. So when a subscription became inactive, the agent would collect context from notes, meeting recordings, and Zoho’s data enrichment tool, then create a summary of reasons the account might have churned, and schedule a call.

“What happened was I got this churn agent a couple months later, already embedded in our CRM, and within a week my team no longer trusted that agent,” Thakrar said. “The reason is we forgot to collect one very key point.”

In Zoho’s CRM, when a customer buys a bundle of products, that bundle is represented as a single line item. That means the status of any products the customer may have previously purchased individually changes to inactive as they’re moved to the bundle. That’s not churn, but it was interpreted it that way. Zoho fixed it in the second version of the agent.

Then a new problem arose. Many potential customers first purchase Zoho products as pilots or sandboxes. As those customers move from pilot to live instance, they close down the pilot versions. And again, the CRM would record that as subscriptions going inactive.

“The trust deteriorates again because everyone got excited for version 2,” Thakrar said.

Sometimes, a certain product might not be the best fit for a customer and Thakrar’s team will suggest the customer move to another product. That’s deliberate churn, not a churn risk.

“You may have a similar story like this where the agent sounds so good, it’s going to do something quick and add value, but it’s missing context from the account managers, and there are so many more pieces we’re still building out,” Thakrar said. “It’s been almost a year and the problem I have is my team still doesn’t trust it. They’ll see [a message from the agent] and go out and do all the research anyway to make sure it gave the correct answer.”

The team is more on top of potential churn, though, but the promised productivity gains have yet to materialize because the agent has to earn back lost trust due to a lack of context.

“My goal for this year is having an AI-assisted customer journey from sales to account management where the handoff is clean, the context flows, and every piece of information we gather about a customer is weighed, identified, and coached so the sales team can close more deals,” he said.

Zoho’s early experience with agents has led to the idea that constrained, context-rich, deterministic architectures consistently outperform expensive models bolted onto fragmented systems. It all comes down to three pillars: routing, harness, and specialization.

Routing

Routing is about sending workloads to the proper model for the job, which entails providing enough context to a given task that a small, cheap model can handle it without the need for spare reasoning capacity to fill gaps.

Frontier models are expensive and companies can burn through a year’s budget worth of tokens in months. But most tasks can be handled by much smaller, more constrained models at a fraction of the cost.

“You don’t always have to pay the frontier guys for every task,” he said. “We’ve observed with some clients that we could save them 95% with a 3 billion parameter model.”

Harness

An AI agent harness is the software infrastructure scaffolding around an LLM that differentiates an agent from a chatbot. It’s what enables an agent to act on tasks rather than simply respond to prompts. A model reasons through a problem and decides what to do about it. The harness connects the model to the tools, systems, memory, guardrails, and execution environments required to perform the actions determined by the model. The term is frequently used more or less interchangeably with orchestration layer.

“It’s the process around the model, which matters way more than the model itself,” Thakrar said.

In benchmark tests, a superior harness on a less powerful model produces better results than an inferior harness on a much bigger model.

For the best results, Thakrar said, it’s essential to understand the deterministic and non-deterministic elements of a given workload, and build that into the architecture. Machines can read, organize, and validate, and they excel at deterministic tasks. Humans, on the other hand, are exceptional at non-deterministic tasks like judging, synthesizing, and deciding.

Those non-deterministic tasks in a process are the ideal point for AI agents to incorporate a human in the loop, what Thakrar calls human harness. He pointed to a stakeholder mapping agent Zoho built for sales as an example, which takes the context of an initial meeting and third-party enriched data like a LinkedIn profile, weighs probabilities, and makes an educated guess about the stakeholder map.

“The initial goal was just to eliminate that task completely from the human workflow,” he said. “The stakeholder map is done, it’s in the folder, and you can look at it.”

But the agent would struggle to capture nuance. The meanings of titles in organizations always vary, and the politics and dynamics of any given meeting can be difficult for an AI agent to discern. Rather than keep feeding the agent data to try to make it intelligent enough to make those determinations, it was simpler and more efficient for the agent to create a proposed stakeholder map and hand it over to a human who could make changes and explain why those changes were necessary.

Ultimately, Thakrar said the agent still saved human team members time because the stakeholder map was usually pretty close, and the corrections also helped the model grow smarter by adding richer context.

Specialization

Specialization is transitioning a process from testing on a frontier model to production on a much narrower, smaller model. Once you’ve proven that an agent can do a job well, you want to stop paying master-craftsman rates to keep doing that one job well.

Specialization is all about capturing your subject matter experts’ best judgement and pattern recognition to build an open-weight, open source, trained, and fine-tuned model that can be deployed in your own data center.

“The true enterprise bet is to keep that orchestration layer, which is your IP and knowledge, in house,” Thakrar said. “You don’t want to host that on someone else’s model. The goal of everyone in enterprise should be to run, train, and host their own models.”

The traditional methods of measuring success no longer tell the full story. Here’s what should replace them — and why.

In brief:

• AI is transforming software as a service (SaaS), and the old ways of keeping score no longer apply.
• Smart companies are evolving new metrics that provide deeper insight into how AI-native software is performing in a new marketplace.
• These changes impact everything from pricing to valuations.

The transformation of the software-as-a-service (SaaS) industry toward AI-native operating companies is rapidly changing the unit of value across the industry.

The traditional metric of seats — which measured access — is rapidly giving way to credits designed to measure work performed. This evolution is upending the industry in multiple ways, impacting everything from pricing to enterprise valuations.

While many companies still cling to seat-based metrics to measure growth, efficiency and durability, the future is likely to be one in which companies utilize a credit-centric metrics framework, with seats and outcomes as the bookends of a spectrum.

Why do software companies need new metrics?

Why the rethink, and why now? There are five major forces that are driving this shift:

1. The unit of value is changing. Seats measured who could access software, and credits measure what the software actually does. But in an AI-native world, agents don’t have seats; they have workloads. Over the past 18 months, every major SaaS platform has moved to some forms of credit or consumption unit.
2. The cost of goods sold (COGS) is exploding. AI inference adds real per-unit costs that scale with usage. In an AI-native world, software companies can’t scale to infinite users at near‑zero marginal cost as before.
3. Buying is moving up the org chart. AI-native applications shift purchasing to higher-level operators — such as line-of-business leaders or chief operating officers — which expands the market from software budgets to labor budgets. And because AI agents replace services as well as software, the total market opportunity is 3x to 10x larger than traditional SaaS.
4. Time to value (TTV) is collapsing. With AI-native tools, customers start seeing meaningful results in weeks rather than quarters. Onboarding and setup are fast, workflows are pre-built, and there’s no need for extensive customer success or professional services — dramatically reducing implementation time and costs.
5. Retention is bifurcating. AI forces clarity in a way that traditional SaaS couldn’t. Products that can provide value become even “stickier” and retain customers. Those that don’t churn faster. In an AI-native marketplace, the middle disappears.

How this shift is impacting pricing

Given how AI-native software is transforming the market, the shift to more variable pricing options is inevitable.

Seats won’t go away completely. Subscription pricing based on the number of users is stable and predictable and will continue to work for some customers. Tokens — the use of pass-through pricing for underlying compute — will fit those customers where the AI feature is commoditized or the buyer wants transparency into costs.

Credits will likely become the dominant architecture because they provide a simple metric for both customers and providers. The vendor sets the conversation ratio between credits and underlying compute, shielding the customer from inference cost details. Credits are easy to understand and can be packaged into annual contracts for multiple features and products.

Finally, the industry will likely see some move toward outcome-based pricing for results such as resolved tickets, recovered revenue or qualified leads. This strategy will mostly be limited to verticals where it is easy to prove AI impacted the result.

Where a software vendor sits on this spectrum is a signal of differentiation and pricing power. Credits are where most defensible AI-native businesses are landing because they balance customer predictability with vendor margin control.

How AI upends classic SaaS metrics

When SaaS was in its infancy, companies settled on key metrics designed to answer a small set of core questions. Are we growing? Are customers using the product? Are we retaining and expanding accounts?

But as AI upends software itself, it is also requiring companies to adopt new metrics to track success. These new metrics fall into three primary buckets, rebuilt around the pricing spectrum described earlier and the trend toward credits as the primary frame:

Revenue composition

• Committed credit annual recurring revenue (ARR) vs. burndown ARR: Measuring the credits sold on annual commitment vs. those consumed and replenished. This is the single most important split for valuation. Committed credits behave like subscription and burndown behaves like usage.
• Credit utilization rate: The percentage of purchased credits consumed per period. This is a leading indicator of renewal sizing.
• Credit burn velocity: How fast is a customer consuming their credits, and is that consumption increasing or decreasing quarter over quarter? This metric predicts expansion or contraction before it shows up in ARR.
• Effective price per credit: The real revenue per credit after discounts, overage and rollover, which can detect revenue leakage and help companies set smarter guide rails.

Margin reality

• Credit margin: The gross profit the company earns per credit after subtracting inference costs. This is the core economic unit for AI-native, usage-based businesses — the replacement for gross margin per seat used in SaaS.
• Inference-adjusted gross margin: By carving out AI inference costs separately in the P&L statement, you can see true AI margins, avoid hiding deterioration inside blended SaaS margins, and clearly distinguish AI economics from legacy SaaS economics.
• Compute leverage ratio: This metric measures how efficiently the business converts compute spend into revenue. It shows whether your AI margins are improving as you scale.
• AI-adjusted “Rule of 40”: This updated metric recalibrates the traditional growth and profitability benchmark to account for AI’s lower gross margins and variable inference costs, giving a more accurate picture of business health for AI-native companies.

Behavioral and value signals

• Time-to-first outcome: Replaces traditional onboarding metrics. Tracks how fast a customer reaches their first measurable result.
• Adoption: AI-native adoption is measured by workflow penetration and active agent density, not seat count. As AI replaces human-driven usage, the unit of adoption shifts from people to automated workflows and agents.
• Net credit retention (NCR): Credit-volume retention across the customer base, tracked separately from net recurring revenue to avoid price-change impact.

Along with these new metrics, the industry’s transformation is prompting companies to retire or recalibrate old SaaS measures, including per-seat ARR as a primary key performance indicator (KPI), traditional magic number calibrated to subscription dynamics, unadjusted Rule of 40, customer success metrics tied to human touchpoints, and blended gross margin without AI COGS carve-outs.

What does this mean for enterprise value calculations?

As the internal metrics of success change, so do the ways the investment community measures growth and long-term viability.

Increasingly, a company’s valuation multiple depends on whether its revenue behaves like committed subscription ARR or volatile usage ARR, and the commit‑to‑burndown ratio is the metric investors use to decide where the company fits.

For example, a business with 80% committed credit ARR could trade closer to subscription comps and one with 80% burndown could trade closer to usage comps even though both have the same types of customers. Being able to proactively explain the commit‑to‑burndown mix can help companies avoid undervaluation.

In addition, utilization is expected to replace net promoter scores and seat usage as the primary predictor of churn or expansion. Low utilization guarantees downsizing at renewal, so companies must track utilization cohorts the same way SaaS tracks logo retention cohorts today.

We’re also seeing an inversion of the operating model, with R&D and COGS moving up the P&L and sales and marketing (S&M) and customer success (CS) moving down or sideways. The net operating leverage profile is structurally different from classical SaaS, and the cost-to-scale curve looks different too.

Finally, credit margin engineering is a hidden value-creation lever. The gap between price per credit and cost per credit is set by the software vendor and can be optimized. Most operators have barely started managing this rigorously, and the ones who do will pull away on margin.

What this means for leaders, boards and investors

The shift from classic SaaS metrics to new AI‑native measures isn’t cosmetic. It represents the seismic change the industry is experiencing as AI matures and transforms products and organizations.

While these metrics — and perhaps others yet to be determined — may evolve over time, there is no doubt they are already changing how AI companies allocate capital, price products, incent sales teams, evaluate performance and communicate with investors.

It’s important to remember that SaaS metrics were practical tools for a specific era of software. As that era draws to a close, winning companies will choose new metrics that shape behavior and drive smart decision-making.

The views reflected in this article are the views of the author and do not necessarily reflect the views of Ernst & Young LLP or other members of the global EY organization.

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Over the past few years, I have learned that basic prompts produce inconsistent, hallucination-prone results that no executive would trust in production. What turned the tide was my move to advanced prompting techniques. These weren’t theoretical experiments; they became a practical foundation for reliable, measurable outcomes. I want to share the techniques that consistently delivered the biggest gains in my projects, complete with real before-and-after examples, copy-paste templates, lessons from failures and guidance on when to evolve beyond prompting to agentic systems.

Why advanced prompting still matters in enterprise settings

Sophisticated prompting remains essential for control, reliability and compliance. If you “ask nicely” and hope for the best, you need deterministic behavior, auditable reasoning and minimal risk of hallucination. Here’s what worked for me.

1. Chain-of-Thought (CoT) and its variants: Unlocking step-by-step reasoning

The problem: Models would jump to conclusions on complex analysis tasks, especially involving data interpretation or multi-step logic.

What I did: I started explicitly instructing the model to “think step by step” and show its reasoning.

Before (basic prompt): “Analyze last quarter’s sales data and recommend three actions.”

After (CoT prompt):

“You’re a senior business analyst. Analyze the following sales data step by step: [data]. First, identify the key trends. Second, calculate the rates and anomalies. Third, link findings to business context. Finally, recommend the three prioritized actions with expected impact. Explain your reasoning at each step.”  

Results: Accuracy and depth improved dramatically.

Variants that worked well: Self-consistency. I ran the same CoT prompt multiple times and took the majority consensus. This reduced variability significantly.

Template you can use:

You are [expert role]. Solve this problem by thinking step by step.

[Task or question]

For each step:

1. State your observation or calculation.

2. Explain the implication.

3. Proceed only when confident.

Final answer in this format: [structured output]

2. Tree-of-Thoughts (ToT): Exploring multiple reasoning paths

For truly complex decisions such as resource allocation or risk assessment, linear CoT isn’t enough. Tree-of-Thoughts lets the model generate and evaluate multiple branches.

Example: I was helping a client evaluate three potential vendor platforms for an AI deployment. A standard prompt gave a superficial comparison. With ToT

Prompt Snippet:

Explore three different reasoning paths for selecting the best vendor platform:

Path 1: Focus on cost and scalability.

Path 2: Focus on security, compliance and integration.

Path 3: Focus on innovation and long-term roadmap.

For each path, evaluate pros/cons against our requirements [list].

Then, compare the paths and recommend the strongest overall option with justification.

Outcome: The model surfaced nuanced trade-offs (e.g., one vendor had superior security, but higher integration cost).

When to use: Strategic planning, troubleshooting or scenarios with high uncertainty and multiple viable approaches.

3. ReAct (Reason+ Act) and prompt chaining: Moving toward agentic behavior

One of the biggest leaps I have noticed comes from combining reasoning with tool use and chaining prompts.

ReAct example: (used in data analytics workflow)

You are an AI analyst with access to tools. For the query below:

1. Reason about what information you need.

2. Choose the appropriate tool or action.

3. Observe the result.

4. Repeat until you can answer confidently.

Query: [user request]

In practice, I chained this with retrieval tools. One automated quarterly compliance reporting; the system reasoned about required data, pulled relevant records, validated them, and generated the reports.

4. Meta-prompting and self-reflection: Letting the model improve itself

Use the model to refine its own prompt. This is a huge time-saver.

You are an expert prompt engineer. Improve the following prompt for clarity, structure and effectiveness with [target model]. Make it more precise while preserving intent.

Original prompt: [paste]

Provide the improved version and explain your changes.

Self-reflection loops (asking the model to critique its own output and revise) are a game-changer for content generation and code-review tasks.

5. Multimodal and structured output techniques

With vision-enabled models, I started combining text with images (e.g., uploading architecture diagrams or dashboards).

Tip from experience: Be extremely specific in describing what the models should focus on.

Best practices I learned the hard way

• Start simple, then layer complexity: Over-engineered prompts from Day One usually backfire.
• Model specific tuning: Some models respond better to XML delimiters; others to explicit reasoning.
• Evaluation and versioning: Treat prompts like code if you track versions and run automated evals.
• Security guardrails: Always include instructions against prompt injections and respect data boundaries.
• When to stop prompting: For repetitive, high-stakes workflows, move to full agents or an orchestration framework.

Final takeaways for technical leaders

Advanced prompt engineering has now become a core competency for anyone responsible for enterprise AI outcomes. Start by picking one technique and apply it rigorously to a real business problem. Document before/ after and you will notice why it’s worth mastering.

The field continues evolving towards more automated and agentic systems, but the ability to precisely direct AI reasoning remains foundational.

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I have worked alongside enterprise technology for more than 30 years and watched AI evolve from a lab experiment into the modern boardroom’s core focus. However, the last few years of implementing AI alongside our customers have delivered our most profound reality checks.

The initial hype has faded, leaving CIOs to drive real enterprise value. Based on my experience implementing Google, OpenAI and Anthropic technologies, here are the fundamental, technology-agnostic lessons every leader must anchor their strategy around.

AI as a leadership multiplier

The most common tactical error we see is treating AI as an isolated technology project. What I have observed among our customers is that true success does not come from organizations that define a standalone “AI strategy,” but rather from those leaders that integrate AI into their business strategy.

When our customers isolate AI and define an AI strategy, it inevitably treats it like a “technological toy” to experiment with. This approach yields fragmented, orphaned initiatives that fail to scale because they are fundamentally disconnected from their core corporate objectives. What I learned is that AI is not the ultimate destination; it is a powerful catalyst. We have replaced “What can AI do for our customers?” with a more strategic question, “How does AI accelerate their existing business goals?”

Think of AI like electricity. No modern corporation designs a standalone “electricity strategy.” Instead, all companies route it invisibly across the entire organization to illuminate offices, power production lines and drive communication. AI must be woven into the enterprise fabric in the exact same way, acting as an underlying utility that supercharges your existing operational model.

Integrating AI into the broader business strategy also dictates how we measure success. It forces a shift away from short-term tech vanity metrics and anchors the technology into a long-term roadmap.

When AI remains trapped within the IT department of our customers, we notice that it is relegated to a mere “software experiment.” To become a true competitive advantage, we observed that AI requires intense cross-functional orchestration. This perspective does not diminish the merit of the technical team; their expertise is fundamental for establishing the architecture, data governance and tools your enterprise requires. However, while IT builds the foundational infrastructure, it lacks the organizational authority to decide what should be built on top of it. Only the CEO or the owner of the company can step in to ensure AI leaves the “toy project” phase and integrates into the DNA of the organization.

The requirement for top-down, executive ownership stems from three critical realities observed in the field:

• Silo-smashing and data collaboration: True enterprise AI is data-hungry and that data lives across disparate business lines, finance, operations, marketing and customer service. Only the CEO possesses the cross-functional authority to demand that data silos be dismantled.
• Cultural transformation and fear mitigation: AI triggers widespread anxiety over job displacement across all industries and hierarchies. When relegated to an “IT project,” resistance spikes as teams view it as a threat to their livelihoods. When I saw the CEO lead this cultural shift directly is when I noticed the best results.
• C-Suite education and strategic alignment: The mandate for AI capability cannot just be delegated downward; the transformation must begin at the very top. I have conducted more than 70 presentations for the Board of Directors and C-Level teams. These people need to be actively educated not on technical code, but on specific business use cases, return on investment (ROI) frameworks and how AI resolves core organizational bottlenecks.

PwC’s data found that only 12% of enterprises have achieved both cost and revenue benefits from AI. Those elite 12% succeeded precisely because their CEOs embedded AI extensively across strategic decision-making and cross-functional workflows. AI is simply too disruptive and too critical to be left exclusively in the hands of technical experts. If AI is not on the CEO’s weekly agenda, it is fundamentally missing from the company’s true strategy.

AI as a new operational framework

Traditional IT systems have operated on strict algorithmic certainty: if you input a specific set of data, the system executes an immutable line of code and guarantees the same, predictable output every single time.

AI completely breaks this paradigm. Because modern AI is built on probabilistic models, it does not execute static formulas; instead, it predicts the most likely correct response based on mathematical probabilities. This means that AI solutions carry an inherent, small percentage of uncertainty and variability. A prompt entered today might yield a slightly different, though contextually valid, output tomorrow.

Executive leadership and organizational cultures must be actively educated to accept and navigate this fundamental shift. Traditional quality assurance frameworks for software are designed for a 100% success rate. Applying this rigid standard to AI will paralyze your initiatives, keeping 80% of your projects trapped eternally in the pilot phase. This happened to us in a food and beverage company in Latin America a couple of years ago. After this experience, we started to include conditions in our contracts that tolerate statistical margins of error and still define the project as a success.

In terms of cost calculation, we had to teach CIOs and business managers to forget the monthly subscription model for AI and learn to manage the primary unit of exchange in modern AI: the token.

To understand AI costs, executives must understand how large language models process data. AI models do not read full words; instead, they break text, images or code down into “pieces” called tokens. As a baseline, every 100 words process as approximately 130 to 140 tokens. Because the major AI providers use the token as their currency, your business is billed dynamically based on the exact volume of tokens consumed by every query submitted (input) and every response generated (output).

Many leaders believe AI costs are fixed due to flat-rate enterprise tiers ($25–$30/user). This is a temporary illusion. These venture-capital-subsidized rates mask true operational costs and come with dynamic usage limits. Modeling long-term ROI on them guarantees a severe budget shock when true consumption pricing takes over.

The solution is not to halt AI adoption; doing so means losing your competitive edge. Instead, the cost per token must cease to be treated as a technical footnote relegated to the IT department. It must be elevated to a core business variable.

Risks in the AI adoption model

Since the beginning of the AI boom, I have seen all our customers making a critical tactical error that could cost them heavily in the medium term: they are focusing only on operational efficiency (reducing costs with AI).

I have observed that an alarmingly high percentage of companies remain trapped in pilot phases focused exclusively on short-term cost reduction. Bain & Company’s global Automation and AI Pathfinder Survey found that the largest share of companies measuring their AI initiatives (exactly 40%) realized cost reductions of 10% or less, heavily missing their internal targets. Our customers are putting too many resources and effort into marginal financial gains and in doing so, they are jeopardizing their most valuable assets: service quality, resilience and customer trust.

Utilizing AI solely to slash headcount or cut operational corners is a dangerous trap that introduces severe field liabilities. A financial service organization in Latin America announced that they saved $1 million in customer support by replacing humans with AI chatbots. However, the mid-term reality revealed a different story: a damaged brand reputation due to AI errors and an influx of frustrated clients fleeing because the automated system cannot handle special cases.

Putting a company on an extreme AI diet might make it look leaner on next quarter’s financial statement, but over-indexing on cost-cutting will ultimately leave the business too weak to compete when market dynamics shift. We are now inviting our customers to change the question from “How much money will AI save us?” to “How will we leverage AI to exponentially increase the long-term value of our enterprise?”

Deploying enterprise AI is a marathon, not a sprint, and the terrain changes with every mile. The organizations that thrive in this next era will be those that transition from fascination to discipline, treating AI not as a magic bullet for immediate savings, but as a core capability that demands rigorous governance, architectural foresight and cultural maturity. Navigating this shift requires moving past the theoretical hype and anchoring decisions in raw, field-tested reality.

As we continue to deploy these technologies across industries, the blueprint for success is being rewritten in real time. Let’s keep this conversation going as we map out the future of business intelligence together.

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Late in a large enterprise SAP transformation, the strategic governance conversations began to drift. Instead of executive decisions, we found ourselves debating whether the program needed dedicated testing, whether cutover required a full weekend, whether twenty Agile teams really needed coordination support and whether offshore resources were adding value at all.

The questions were not coming from the delivery teams. They were coming from the executive sponsor.

The sponsor had recently been elevated into a senior leadership role and had never sponsored a technology transformation at this scale. The challenge was not authority. The sponsor had every right to ask any question they wanted. The challenge was that strategic governance had quietly turned into a debate about delivery practices, because the sponsor did not yet have the transformation context to focus the conversation anywhere else.

This is not a story about a bad sponsor. The executive in this case was a capable senior leader with strong judgment and authentic intent. They had been placed into a role they had not yet been prepared for, and the pattern that followed was structural, not personal. It is one of the more common patterns I have observed across enterprise transformation programs, and one of the most consistently misdiagnosed.

Most program failures are not execution failures. They are sponsor mismatches.

When governance becomes a debate about delivery practices

When the sponsor does not understand what an enterprise transformation actually requires, governance forums stop functioning as decision bodies and start functioning as practice debates.

You see it in the questions that get asked. Why do we need a dedicated testing phase? Can the Build timeline be compressed? Why does cutover need a full weekend? Why do we need more Scrum Masters across 20 product teams? Can the US team simply work longer hours instead of using offshore resources? On one program, the sponsor suggested shifting the entire project’s working hours to India time, despite roughly 85 percent of the delivery organization being based in the United States.

None of these questions are unreasonable in isolation. Each one targets a real cost or timeline pressure. The problem is what is missing underneath them: an understanding of the operational risks the original choices were designed to mitigate.

When sponsors ask delivery-practice questions without that context, the program leadership team ends up defending the work instead of advancing it. Decision velocity drops. Trust between the program and its sponsor erodes. Senior delivery talent disengages from governance forums where the conversation never reaches the decisions they need made. What looks from the outside like an active sponsor producing engagement is, from inside the program, an active drain on the cycles needed to deliver.

The compounding cost is not unique to any single program. PMI’s research on executive sponsorship consistently identifies sponsor engagement quality, rather than sponsor presence alone, as one of the strongest predictors of project success. The visible symptom is debate. The actual cost is unmade decisions.

Authority is rarely the issue. Literacy is

When transformations stall under a mismatched sponsor, the diagnostic instinct is to question the sponsor’s authority. Are they senior enough? Do they have the cross-functional reach? Can they unblock?

In most of the programs I have led or advised, authority was not the limiting factor. The sponsor in the SAP program above had ample authority. They could unblock any decision the program needed. What had not been developed was the transformation literacy to know which decisions mattered, which were technical noise and which were execution risks that should not be optimized away.

This is what I have come to think of as the literacy problem. Sponsors elevated into transformation roles often have deep functional expertise (finance, operations, business unit leadership) but limited exposure to the distinct functions of PMO, organizational change management, agile delivery, testing and cutover, and how each one reduces a specific category of implementation risk. They are not expected to be SAP configuration experts. But they need enough transformation literacy to recognize which questions actually belong in a steering committee.

Harvard Business Review’s research on effective executive sponsorship has emphasized that sponsorship effectiveness depends as much on judgment as on authority. Judgment is where literacy becomes operational. A sponsor with authority but limited transformation literacy will optimize for speed and cost in ways that consistently underestimate risk. A sponsor with both will make the tradeoffs the program actually needs.

Prosci’s longstanding benchmark studies on change management have ranked active and visible executive sponsorship as the single greatest contributor to change success for two decades. The word that matters in that finding is active. Active sponsorship without transformation literacy can introduce real cost. Not because the sponsor is acting against the program, but because the optimization choices they make are based on incomplete information about what the program is built to protect against.

Shift the conversation from delivery practices to business risk

When the sponsor relationship is already in place and cannot be changed, the program leadership team has one move that consistently works: shift the conversation.

On the SAP program above, we stopped explaining why the testing phase existed. We started explaining the business risk of reducing it. We stopped debating the number of Scrum Masters. We started connecting delivery capacity to coordination across more than twenty Agile teams and the business cost of losing that coordination. We reframed offshore support as a way to maintain delivery momentum around the clock rather than asking the U.S. team to sustain fifteen-hour days.

The shift is from defending delivery practice to explaining business risk. The sponsor does not need to understand why testing takes the time it does. They need to understand what the program is exposed to if testing is compressed. They do not need to know how many Scrum Masters are statistically optimal for twenty Agile teams. They need to know what coordination breaks when the number is wrong.

This reframing accomplishes two things. First, it brings the conversation back to the level at which sponsors actually make decisions: tradeoffs between business outcomes and business risks. Second, it builds transformation literacy in the sponsor over time, almost as a byproduct. By the third or fourth iteration of business-risk-framed conversations, the sponsor begins to ask the right questions on their own.

In practice, this happens through small but deliberate moves. When the sponsor asks why a phase needs the time it takes, the program lead names two or three things that could go wrong if the time is cut and what each would cost the business. When the sponsor asks why a role is needed, the program lead names the work that would not get done without it. Every delivery-practice question gets converted into a business-risk answer.

The program leadership team’s job is not to make the sponsor an expert in SAP delivery. It is to provide enough transformation context so that executive decisions reflect both business priorities and implementation realities.

There are a few phrases I have used with executive sponsors over the years that capture the underlying issue. The sharpest one:

If the decision has to go above the sponsor, they are not the sponsor.

Sponsorship is defined by what the sponsor can decide without asking someone else. That is the test. Anything else is the appearance of sponsorship, not the substance.

For CIOs supporting enterprise transformation, the implication is direct. Sponsor selection, or sponsor preparation when selection is not an option, is not a hierarchy question. It is a transformation capability question. The same execution discipline that goes into defining decision rights, structuring governance and protecting delivery momentum should apply, with equal rigor, to assessing sponsor fit and building sponsor literacy before the program begins.

A sponsor does not need to be the technical expert. They do need to know when to trust the people who are.

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Model Context Protocol (MCP), the emerging standard for connecting AI models to external tools and enterprise data, is undergoing its biggest architectural overhaul yet.

The latest release candidate, scheduled for release on July 28, removes protocol-level sessions in favor of a stateless architecture, a change which industry experts say is intended to make MCP easier to deploy across standard cloud infrastructure as enterprises move AI pilots into production.

“The session-based model made sense when MCP servers were local processes on a developer’s laptop. In production, it became an operational tax,” said Muskan Bandta, cloud associate at ZopDev.

“When your infrastructure team asks whether MCP services can scale like other cloud applications, the answer used to be ‘not quite.’ With the move to a stateless architecture, the answer is now yes,” Bandta added.

Earlier versions of the protocol maintained information about every client connection, meaning servers had to keep track of each session throughout an interaction. While that approach worked well for local development, it complicated deployments across multiple servers because requests often had to be routed back to the same machine, limiting scalability and making MCP a less natural fit for modern cloud architectures.

“Under the new stateless design, every request contains the information needed for any available server to process it independently. Applications that need to maintain context across multiple requests can still do so, but developers must now manage that state explicitly rather than relying on the protocol itself,” she said.

This transition to a stateless design goes beyond simplifying infrastructure by fundamentally changing how AI applications manage and share context across tools, according to Amit Jena, AI development manager at IT consulting firm Kanerika.

Instead of keeping application state hidden inside protocol sessions, the new design makes it explicit, allowing AI models to access, reason over, and pass that information between tools, giving developers greater control over how context is preserved and shared across tools, Jena said.

It should also make AI workflows more portable, resilient, and easier to orchestrate across distributed environments, he said.

MCP’s new features

Other changes to MCP include the addition of a Multi Round-Trip Requests (MRTR) mechanism that changes how AI agents request additional information they need to complete a task.

Instead of relying on a persistent connection between the client and server throughout the interaction, the new mechanism lets the server request additional input through a standard request-response exchange before continuing the task, Jena said.

Routable transport headers, another addition, enable API gateways and other networking infrastructure to identify and route MCP requests without inspecting their contents.

They reduce processing overhead, lower latency, and let enterprise teams enforce routing, rate-limiting and security policies more efficiently using existing API management infrastructure, Jena said.

MCP is also getting an updated authorization framework built around OAuth 2.1 and OpenID Connect; interactive MCP Apps; and deterministic caching of tool and resource listings to improve LLM prompt-cache hit rates, potentially saving on token costs.

Rebuilding the trust boundary

The MCP release steering committee also decided to deprecate some legacy features, including Roots, Sampling, Logging, the older HTTP+SSE transport and Dynamic Client Registration, although these will continue to work in this version and any other released over the next year.

The deprecation of Sampling is likely to have the biggest impact because it changes who is responsible for interacting with foundation models, said Jena.

“Sampling let MCP servers invoke the LLM through the client, which meant the server had a callback path into the model without owning that connection. Deprecating it means rebuilding that trust boundary,” Jena said. “Your server now calls the model provider directly. That changes your network architecture, your auth model, and depending on how you’ve built cost attribution, your billing flow.”

The year-long transition period will be enough for teams to audit their sampling dependencies now, said Jena: “The risk is that teams who haven’t implemented sampling themselves won’t know if a third-party MCP server they’re depending on uses it.”

Updated MCP SDKs

To accompany the protocol update, there are updated MCP SDKs for Python, Typescript, Go, and C#. These support both the old and new protocol versions, so new clients can continue communicating with older servers, while updated servers will also support older clients, reducing the risk of immediate disruptions.

That backward compatibility should make the transition largely incremental, except for enterprises that built custom infrastructure around MCP’s earlier session-based architecture, Bandta said.

Identifying and auditing those session dependencies may not be easy, Jena warned.

“Session management complexity tends to be hidden across multiple layers — the gateway config, the deployment scripts, the monitoring dashboards. The code change is small; finding everywhere the assumption lives is what takes time,” he said.

This article first appeared on InfoWorld.

Agentic AI has advanced from the promises-and-pilots phase of 2025 to reality and rollouts in 2026. In the process, agentic AI is transforming virtually every aspect of customer relationship management (CRM), the platform that manages sales, marketing, and customer service.

“Last year, everybody was dipping their toes into the water,” says Keith Kirkpatrick, research director at The Futurum Group. This year, agentic AI has built momentum from the boardroom down, with companies recognizing that having an AI strategy is imperative. “They feel like if they don’t embrace it now, their competitors will.”

Harry Datwani, a principal at Deloitte Digital, adds that enterprise CRM customers have transitioned from “proof of concept” to “scale and execution.”

“Across sales, service, marketing, even in the commerce space, enterprises are really using AI and agentic,” he says.

“CRM in 2026 is undergoing a structural shift, not just an incremental evolution,” says Forrester analyst Kate Leggett, noting that AI is becoming a core part of CRM infrastructure, not just a feature or an add-on. According to Forrester data, around 70% of companies are already using AI in their CRM systems, she says.

Here are the hot AI-driven trends in CRM this year.

CRM becomes an action hero

CRM platforms have traditionally served as passive, static systems of record. Now, agentic AI is transforming CRM into a powerful, real-time solution that can act autonomously.

“Organizations that rethink CRM as a real-time, AI-powered system of action — and embrace agentic AI to handle complex, unpredictable work — are better positioned to deliver exceptional customer experiences,” says IDC analyst Neil Ward-Dutton. “This approach not only enhances satisfaction and loyalty but also drives operational efficiency and business agility.”

Forrester’s Leggett says that AI-powered CRM platforms have advanced from simple data capture to real-time decision-making and execution. Standard capabilities include next-best action recommendations, call summaries, automated updates, generated emails, knowledge creation, predictive forecasting, and deal scoring.

She adds that AI agents can now execute workflows, such as routing cases, sending follow-ups, and updating records (with human oversight). They can also handle end-to-end service and sales tasks autonomously, including case resolutions and sales development activities.

Agentic drives workforce changes

AI use in CRM systems is also impacting workforce strategies.

“We used to hire for deep expertise,” says Constellation Research analyst Liz Miller. “AI has commoditized expertise because I can take all that data from my CRM and train my AI models to go deep, to know everything about any product I’ve ever sold, from what has worked, what hasn’t, every price, every sale.”

Now, instead of hiring candidates with deep expertise, organizations are looking for candidates who can go wide. “I can train a model to have deep expertise. What I can’t train for is experience, because experience is what happens when a person has gone broad across a lot of different scenarios and faced complexity across that broad scenario,” says Miller.

For example, AI systems can automate many aspects of marketing, Miller notes, but there’s no substitute for creativity: people who can interrogate the data and come up with innovative marketing campaigns that connect with customers.

Terence Chesire, group vice president of ServiceNow CRM and industry workflows, says that organizations are using agentic AI to free up team members from repetitive, lower-value activities. Those employees have now moved to higher-level roles “where they’re working on transformational deals rather than just building a spreadsheet.”

“That’s what we’re seeing as super-exciting as organizations not just free up people, but the speed and effort reduction and the friction reduction in what they can do,” he adds.

Data layer takes center stage

AI’s promise to deliver actionable customer and marketing intelligence has placed even greater emphasis on the importance on sound data management practices for CRM.

“The light bulb has flashed on very brightly for our clients,” says Deloitte’s Datwani. “Everyone is talking about AI agents, but your ability to really extract value is inextricably linked to the quality of your data and the ability to make that data accessible. What we’re finding is that despite large investments over time our clients still have fragmented data. And so, they are data rich and insight poor.”

The good news, says Datwani, is that AI agents themselves can help clean up and organize data. And vendors such as Snowflake and Databricks, along with the traditional CRM powerhouses, are offering powerful data analytics solutions. “Everyone is battling for that data layer,” Datwani says.

Forrester’s Leggett adds that CRM platforms are converging with customer data platforms (CDPs), real-time event streams, and external data sources to create connected customer data networks. These real-time, connected data models can help organizations deliver hyper-personalization at scale.

Agentic ushers in pricing complexity

The shift from license- or subscription-based pricing to an outcome or consumption pricing model has the potential to help CIOs tie their CRM costs to specific business metrics, such as the number of customer service calls resolved per hour. But it has also introduced a new level of complexity when it comes to budgeting for CRM costs.

For example, Chesire says ServiceNow’s CRM pricing plan starts with a baseline subscription model, and on top of that, customers get a certain number of AI tokens per user and can buy additional tokens as AI usage ramps up.

Meanwhile, Salesforce has rolled out pay-per-resolution pricing with its recently unveiled AI Help Agent and last month acquired usage-based billing specialist m3ter. Oracle is also piloting outcome-based AI pricing.

All these approaches undercut the predictability of the subscription model, which will complicate CIOs’ cost calculus, Deloitte’s Datwani says. “Now, as you start to think about consumption and tokens, costs might look different. As folks are opening up the architecture with things like headless CRM, what will the cost model look like for API calls or MCP server calls? So, there’s many more variables,” he adds.

The rise of multi-agent orchestration

To act autonomously, agents need to access multiple data sets and software platforms seamlessly. As a result, the proliferation of agents, some embedded within specific vendor platforms and some created in-house, is going to require an orchestration layer, Futurum’s Kirkpatrick says.

He points out that organizations need to monitor and manage agents, enforcing the same type of policy-based access control that exists for people. Organizations also need to set limits on what domains a specific agent can get into, what types of data they can access, what lines can’t they cross.

Kirkpatrick predicts that a new class of orchestration tools will emerge, although it’s not clear whether that orchestration layer will be provided by the leading CRM vendors, hyperscalers, or third parties.

Datwani agrees. “The orchestration layer is an interesting area, where the traditional vendors are in on it, the hyperscalers are also offering it, and there are third parties. It’s my belief that there’s not going to be a clear winner.”

The interface becomes conversational

Enterprise users who have traditionally had to manually wrangle with CRM systems are likely to find the ability to employ voice commands using a natural language interface to be a game changer. For starters, a salesperson can say, “I have a meeting today with Customer X. Help me prepare.” The agent will collect relevant data, ingest it, and provide a summary with recommendations.

ServiceNow’s Chesire says voice-enabled CRM systems have an “almost magical” ability to record, transcribe, and understand the content of a call between a salesperson and a customer or potential customer. The system can then “build a quote” based on that conversation.

On the customer service side of the equation, AI-driven voice technology enables customers to speak to an AI agent, describe the problem using natural language, and get a response. The agent has the capability to, for example, solve a credit card dispute, order a replacement product, send out a service rep, or do whatever is needed to resolve the issue, says Chesire.

Beyond that, agentic technology is capable of understanding the underlying business process flaws that led to the product snafu, and make recommendations for ways to fix whatever led to the issue in the first place, he adds.

Agentic drives business process transformation

With the emergence of outcome-based pricing, organizations are taking a fresh look at how they measure the benefits of CRM systems. That conversation is leading to an even more important analysis of underlying business processes. Or, as Constellation’s Miller says, “The old adage of applying new technology to old processes only gets you more expensive old processes.”

“When we survey customers, we hear time and time again that the reason why they want to apply AI into their organizations is to foster exponential opportunity and exponential growth,” she says. “How do we get there with CRM has started to become the new conversation.”

According to Miller, AI systems breach the walls of siloed data and can take a fresh look at legacy workflows. They also don’t get sucked into turf wars between marketing and sales teams. As a result, they often recommend new actions that can lead to better processes. “I think it’s starting to happen. You’re starting to see applications where AI is beginning to accelerate decision-making and decision velocity,” she says.

“The next phase of maturity is going to be, how do we start to spread AI across our platforms so that we are seeing that holistic end-to-end relationship that we have always wanted to optimize. How do we thread that across platforms and across solutions. We’re starting to see organizations on the leading edge really start to pull those strategies together,” says Miller.

For CIOs, learning from the startup ecosystem has never been more critical.

As pressure mounts to transform business operations with AI and agentic systems, IT leaders should be looking to those on the AI vanguard for insights into the strategic and technical decisions necessary to launch, grow, and thrive in today’s AI-disrupted business environment.

So why not immerse yourself in Silicon Valley’s most famous firehose of hyper-accelerated fail-fast and dream-big culture by registering for TechCrunch Disrupt 2026?

Three packed days of 200-plus sessions across six stages will spark new ideas for reshaping your AI strategy, provide fresh perspectives on the architectural, workflow, and resource decisions involved in moving AI from pilots to scale, and give you a sneak peek of business disruptions to come.

Get 10% off your TechCrunch Disrupt pass with the exclusive code CIO10. 

This year’s TechCrunch Disrupt, held Oct. 13-15 at San Francisco’s Moscone West, will feature big-picture conversations on what’s next in AI; discussions on how AI agents are rewriting SaaS, enterprise workflows, software pricing, and security; and demonstrations of AI’s future across robotics, manufacturing, defense, and industrial operations; and more.

Over 10,000 attendees will hear from 250-plus startup founders, technology executives, and enterprise IT leaders about how the future of programming is being rewritten, what enterprise AI security requires, how startups are orchestrating workloads across models while managing cost and reliability at scale, why creating a safety culture is essential for AI deployment, and how startups are deciding what work humans should own versus what should be delegated to AI as they work to build hybrid teams without losing speed, accountability, or culture.

And of course, the rising tide of enterprise-focused startups will be there seeking to bring agentic systems to your business workflows, as well as vendors familiar to your enterprise IT portfolios, such as AWS, Google, and Databricks, and enterprise IT colleagues creating mutually beneficial partnerships with the startup community, such as American Express.

That’s not to mention TechCrunch Disrupt’s signature Startup Battlefield, in which 200 standout companies showcase their innovations to compete for a $100K equity-free prize. The battlefield will give CIOs a rapid-fire, broad view of what’s possible — and a possible early look at the next big enterprise player. After all, Dropbox, Trello, and Cloudflare, among others, roamed that same battlefield before the world knew their names.

And with M&A now an early-stage startup strategy for many from day one, TechCrunch Disrupt’s exhibition floor provides IT leaders not just an opportunity to discuss the nuts and bolts of innovation architecture or how an upstart product can enhance your workflows, but a chance to find your next innovation partner, or more.

Leading-edge startups are figuring out how to make AI work at scale. Shouldn’t you be?

Don’t miss your chance to experience TechCrunch Disrupt 2026. Book your pass today and use the exclusive code CIO10 to save 10% before prices increase.

For CIOs, learning from the startup ecosystem has never been more critical.

As pressure mounts to transform business operations with AI and agentic systems, IT leaders should be looking to those on the AI vanguard for insights into the strategic and technical decisions necessary to launch, grow, and thrive in today’s AI-disrupted business environment.

So why not immerse yourself in Silicon Valley’s most famous firehose of hyper-accelerated fail-fast and dream-big culture by registering for TechCrunch Disrupt 2026?

Three packed days of 200-plus sessions across six stages will spark new ideas for reshaping your AI strategy, provide fresh perspectives on the architectural, workflow, and resource decisions involved in moving AI from pilots to scale, and give you a sneak peek of business disruptions to come.

Get 10% off your TechCrunch Disrupt pass with the exclusive code CIO10. 

This year’s TechCrunch Disrupt, held Oct. 13-15 at San Francisco’s Moscone West, will feature big-picture conversations on what’s next in AI; discussions on how AI agents are rewriting SaaS, enterprise workflows, software pricing, and security; and demonstrations of AI’s future across robotics, manufacturing, defense, and industrial operations; and more.

Over 10,000 attendees will hear from 250-plus startup founders, technology executives, and enterprise IT leaders about how the future of programming is being rewritten, what enterprise AI security requires, how startups are orchestrating workloads across models while managing cost and reliability at scale, why creating a safety culture is essential for AI deployment, and how startups are deciding what work humans should own versus what should be delegated to AI as they work to build hybrid teams without losing speed, accountability, or culture.

And of course, the rising tide of enterprise-focused startups will be there seeking to bring agentic systems to your business workflows, as well as vendors familiar to your enterprise IT portfolios, such as AWS, Google, and Databricks, and enterprise IT colleagues creating mutually beneficial partnerships with the startup community, such as American Express.

That’s not to mention TechCrunch Disrupt’s signature Startup Battlefield, in which 200 standout companies showcase their innovations to compete for a $100K equity-free prize. The battlefield will give CIOs a rapid-fire, broad view of what’s possible — and a possible early look at the next big enterprise player. After all, Dropbox, Trello, and Cloudflare, among others, roamed that same battlefield before the world knew their names.

And with M&A now an early-stage startup strategy for many from day one, TechCrunch Disrupt’s exhibition floor provides IT leaders not just an opportunity to discuss the nuts and bolts of innovation architecture or how an upstart product can enhance your workflows, but a chance to find your next innovation partner, or more.

Leading-edge startups are figuring out how to make AI work at scale. Shouldn’t you be?

Don’t miss your chance to experience TechCrunch Disrupt 2026. Book your pass today and use the exclusive code CIO10 to save 10% before prices increase.

Cisco and AMD have expanded their partnership with a new package of hardware and security software that’s designed to help enterprise customers protect, deploy, and manage distributed AI resources.

During AMD’s Advancing AI event this week, Cisco’s president and chief product officer Jeetu Patel took to the stage during AMD CEO Lisa Su’s keynote to talk about how AI inference will be widely distributed and will require an architectural stack of software and tools that Cisco and AMD are partnering to develop.

The joint architecture combines AMD’s compact, high-performance Ryzen AI Halo hardware and a variety of Cisco networking, observability, governance, and security technologies. “AMD provides the deskside/local AI platform. At the foundation is AMD Ryzen AI Halo hardware, an isolated agent sandbox and the services needed for local-first inferencing, including model routing and token limits via AMD’s Semantic Router and local inference on Lemonade,” wrote Cisco’s Yash Sheth, senior director, engineering and research, in a blog post about the new package.

Ryzen AI Halo (pictured below) is designed to support local AI inference on an AI PC using its CPU, GPU, and XDNA neural processing unit (NPU), according to AMD. A resilient AI platform should continue delivering useful AI services even when connectivity is limited, models need to change, or workloads shift, AMD stated.

Cisco then wraps that platform in a secure harness that includes its Splunk Agent Observability plus Splunk Infrastructure Monitoring to provide full-stack observability, tracking agent behavior, tokenomics and compute operation, according to Sheth.

Cisco also brings its AI Defense for model and agent security; DefenseClaw for security policy enforcement, so guardrails are enforced directly on-device, within the agent harness; and Cisco Cloud Control offering a single pane of glass for unified policy and control, Sheth stated.

“To make deskside and local AI computing work at enterprise scale, every AI node must be treated as a secure, managed node in the enterprise network,” Sheth wrote.

“The need for token efficiency and data sovereignty is driving a new class of computing, deskside computing, with users and teams putting AI agents right by their sides,” Sheth wrote. “Inference is moving to a hybrid architecture with thousands of ambient deskside agents in an enterprise helping employees have 24×7 productivity. That’s an extraordinary opportunity. It’s also a brand-new operating challenge.”

As agentic AI moves from experimentation to real enterprise workflows, organizations need more than powerful endpoints. AI agents can run continuously and act on enterprise data, but create new requirements for network infrastructure, tokenomics, agent behavior, and security, according to a statement from AMD.

“Running more AI locally can help improve responsiveness, keep sensitive data closer to users, and reduce dependence on cloud-only approaches, but enterprises also need a way to monitor and manage these systems at scale. AMD and Cisco are addressing that gap by collaborating to pair high-performance local AI compute with the observability, governance, and control infrastructure needed for enterprises to deploy it responsibly,” AMD stated.

“By combining AMD Ryzen AI Halo systems and our broader local AI software capabilities with Cisco’s enterprise networking, observability and security technologies, we are helping customers deploy AI in a way that is performant, secure, observable and manageable at scale,” said Jack Huynh, senior vice president and general manager, computing and graphics group with AMD, in a statement.

A few other interesting statistics and trends cited in AMD CEO Su’s keynote include:

• AI adoption is accelerating across all industries, with agentic AI driving a surge in compute demand and shifting workloads from training to inference, which accounts for 60% of global AI compute capacity in 2026.
• AI is moving beyond the cloud, with edge and personal devices becoming critical for real-time, distributed intelligence.
• The AI accelerator market is projected to reach $1.4 trillion by 2030, nearly tripling previous forecasts, with GPUs expected to dominate but CPUs gaining new growth vectors due to agentic AI.
• Server CPU market is forecasted to grow over 50% to $200 billion by 2030, fueled by rapid agentic AI adoption and the need for massive CPU infrastructure.

Enterprises typically operate separate systems for internal and external DNS because the two serve different audiences. Public DNS resolves names for services meant to be reached from the internet. Private DNS resolves internal resources, such as databases and internal applications, that should never be visible outside the corporate network. 

While public DNS is usually a single system, private DNS is often scattered across on-premises appliances, cloud-native resolvers, and split-horizon setups, where the same hostname resolves to a different answer depending on whether the query comes from inside or outside the network. Coordinating those deployments across headquarters, branch offices, and multiple clouds means ongoing manual synchronization work for network teams. 

Private DNS itself is not a new concept. It is already available from hyperscalers and established enterprise DNS vendors, but it typically runs apart from public DNS, with its own console, control plane and policy engine.

Cloudflare’s answer is a product it calls Internal DNS.

“Many organizations already use Cloudflare for their public DNS,” Enrique Somoza, product, performance and infrastructure at Cloudflare, told Network World. “Internal DNS extends that same platform to private DNS, so public and private are managed from the same global network and control plane.” 

How it works

Query handling starts at the resolver, not at the zone. That consolidation extends to daily operations as well.

“Instead of operating two separate DNS systems, customers use one API, one audit trail, one dashboard, and one policy engine for every DNS query—whether it is for a public website or an internal application,” Somoza said.

Policy first. The resolver sits ahead of every lookup, not behind it. “Architecturally, Cloudflare Gateway becomes the resolver that customers connect to, and can use WARP, DNS over HTTPS, DNS over TLS, or traditional DNS,” Somoza said. “Gateway evaluates zero -trust policies first, then routes the query to the appropriate DNS view based on context, such as source IP, device posture, or network location.”

No public path in. Internal zones sit outside the public DNS hierarchy entirely. “Internal zones are never assigned public nameservers—they are only reachable through Gateway, so every query is evaluated before it is resolved,” Somoza said.

One hostname, multiple answers. Branch offices, data centers and cloud environments no longer each need their own resolver stack. “Operationally, this simplifies environments that span branch offices, data centers, and multiple clouds,” Somoza said. “The same internal hostname can return different answers depending on where the request originated without maintaining separate resolver infrastructure, conditional forwarders, or duplicate zone files.”

Somoza described the underlying objective in direct terms: “The goal is to make internal DNS behave like a single service instead of a collection of independent deployments,” he said.

View selection. The same hostname can resolve to different IP addresses depending on where the request comes from. Gateway makes that call using several client signals. 

“View selection is policy driven,” Somoza said. “Gateway resolver policies evaluate the context of each DNS query, including attributes like source IP, device identity, or network location and determine which DNS view should answer the request.”

A view is a container, not a separate infrastructure stack. Somoza explained that a view is simply a logical grouping of internal zones. For example, a company could have separate views for Europe and North America, or for corporate users and operational technology networks.

Latency and resilience. Internal DNS inherits its performance characteristics from Cloudflare’s existing public network. “Internal DNS runs on Cloudflare’s global network, so queries are answered by the nearest available Gateway location, helping keep latency low for connected users,” Somoza said. “Because Internal DNS runs on the same global infrastructure as Cloudflare’s public DNS, it benefits from the same anycast architecture, geographic distribution, and resilient network design.”

How this differs from split-horizon DNS

Internal DNS replaces the duplicate-zone model traditional split-horizon setups depend on.

“Before migrating, many organizations maintain multiple versions of the same internal DNS zones across headquarters, branch offices, and cloud environments,” Somoza explained. “Conditional forwarders determine which resolver answers each query, and keeping those environments synchronized becomes an ongoing operational task.”

Internal DNS collapses those duplicate zones into a single authoritative copy split across views instead. “With Internal DNS, that configuration becomes much simpler,” Somoza said. “A customer might create a single corp.internal zone in Cloudflare and define multiple DNS views.”

For example, users in headquarters could receive one internal IP address for wiki.corp.internal, while branch offices receive a different address. Somoza emphasized that the zone itself only exists once. “Instead of maintaining multiple copies of the same configuration, administrators manage a single source of truth,” he said.

Early use cases and migration challenges

Not surprisingly, Somoza noted that the first use case Cloudflare sees for Internal DNS is for split-horizon DNS consolidation. There is also interest from organizations that operate across multiple cloud providers that want one consistent internal DNS service instead of managing separate DNS platforms in each environment.

Another common use case is extending zero-trust policies to internal name resolution. “Customers already use Gateway to control access to internet traffic, and Internal DNS lets them apply similar policy decisions before internal names are resolved,” Somoza said.

When it comes to migration, the friction customers report during migration is procedural rather than architectural.

“Customers need to think through API permissions, connectivity, and how existing local DNS forwarding rules interact with Gateway,” Somoza said. “Those are all well understood migration steps and customers often run both environments in parallel before completing the transition.”

Model Context Protocol (MCP), the emerging standard for connecting AI models to external tools and enterprise data, is undergoing its biggest architectural overhaul yet.

The latest release candidate, scheduled for release on July 28, removes protocol-level sessions in favor of a stateless architecture, a change which industry experts say is intended to make MCP easier to deploy across standard cloud infrastructure as enterprises move AI pilots into production.

“The session-based model made sense when MCP servers were local processes on a developer’s laptop. In production, it became an operational tax,” said Muskan Bandta, cloud associate at ZopDev.

“When your infrastructure team asks whether MCP services can scale like other cloud applications, the answer used to be ‘not quite.’ With the move to a stateless architecture, the answer is now yes,” Bandta added.

Earlier versions of the protocol maintained information about every client connection, meaning servers had to keep track of each session throughout an interaction. While that approach worked well for local development, it complicated deployments across multiple servers because requests often had to be routed back to the same machine, limiting scalability and making MCP a less natural fit for modern cloud architectures.

“Under the new stateless design, every request contains the information needed for any available server to process it independently. Applications that need to maintain context across multiple requests can still do so, but developers must now manage that state explicitly rather than relying on the protocol itself,” she said.

This transition to a stateless design goes beyond simplifying infrastructure by fundamentally changing how AI applications manage and share context across tools, according to Amit Jena, AI development manager at IT consulting firm Kanerika.

Instead of keeping application state hidden inside protocol sessions, the new design makes it explicit, allowing AI models to access, reason over, and pass that information between tools, giving developers greater control over how context is preserved and shared across tools, Jena said.

It should also make AI workflows more portable, resilient, and easier to orchestrate across distributed environments, he said.

MCP’s new features

Other changes to MCP include the addition of a Multi Round-Trip Requests (MRTR) mechanism that changes how AI agents request additional information they need to complete a task.

Instead of relying on a persistent connection between the client and server throughout the interaction, the new mechanism lets the server request additional input through a standard request-response exchange before continuing the task, Jena said.

Routable transport headers, another addition, enable API gateways and other networking infrastructure to identify and route MCP requests without inspecting their contents.

They reduce processing overhead, lower latency, and let enterprise teams enforce routing, rate-limiting and security policies more efficiently using existing API management infrastructure, Jena said.

MCP is also getting an updated authorization framework built around OAuth 2.1 and OpenID Connect; interactive MCP Apps; and deterministic caching of tool and resource listings to improve LLM prompt-cache hit rates, potentially saving on token costs.

Rebuilding the trust boundary

The MCP release steering committee also decided to deprecate some legacy features, including Roots, Sampling, Logging, the older HTTP+SSE transport and Dynamic Client Registration, although these will continue to work in this version and any other released over the next year.

The deprecation of Sampling is likely to have the biggest impact because it changes who is responsible for interacting with foundation models, said Jena.

“Sampling let MCP servers invoke the LLM through the client, which meant the server had a callback path into the model without owning that connection. Deprecating it means rebuilding that trust boundary,” Jena said. “Your server now calls the model provider directly. That changes your network architecture, your auth model, and depending on how you’ve built cost attribution, your billing flow.”

The year-long transition period will be enough for teams to audit their sampling dependencies now, said Jena: “The risk is that teams who haven’t implemented sampling themselves won’t know if a third-party MCP server they’re depending on uses it.”

Updated MCP SDKs

To accompany the protocol update, there are updated MCP SDKs for Python, Typescript, Go, and C#. These support both the old and new protocol versions, so new clients can continue communicating with older servers, while updated servers will also support older clients, reducing the risk of immediate disruptions.

That backward compatibility should make the transition largely incremental, except for enterprises that built custom infrastructure around MCP’s earlier session-based architecture, Bandta said.

Identifying and auditing those session dependencies may not be easy, Jena warned.

“Session management complexity tends to be hidden across multiple layers — the gateway config, the deployment scripts, the monitoring dashboards. The code change is small; finding everywhere the assumption lives is what takes time,” he said.

Model Context Protocol (MCP), the emerging standard for connecting AI models to external tools and enterprise data, is undergoing its biggest architectural overhaul yet.

The latest release candidate, scheduled for release on July 28, removes protocol-level sessions in favor of a stateless architecture, a change which industry experts say is intended to make MCP easier to deploy across standard cloud infrastructure as enterprises move AI pilots into production.

“The session-based model made sense when MCP servers were local processes on a developer’s laptop. In production, it became an operational tax,” said Muskan Bandta, cloud associate at ZopDev.

“When your infrastructure team asks whether MCP services can scale like other cloud applications, the answer used to be ‘not quite.’ With the move to a stateless architecture, the answer is now yes,” Bandta added.

Earlier versions of the protocol maintained information about every client connection, meaning servers had to keep track of each session throughout an interaction. While that approach worked well for local development, it complicated deployments across multiple servers because requests often had to be routed back to the same machine, limiting scalability and making MCP a less natural fit for modern cloud architectures.

“Under the new stateless design, every request contains the information needed for any available server to process it independently. Applications that need to maintain context across multiple requests can still do so, but developers must now manage that state explicitly rather than relying on the protocol itself,” she said.

This transition to a stateless design goes beyond simplifying infrastructure by fundamentally changing how AI applications manage and share context across tools, according to Amit Jena, AI development manager at IT consulting firm Kanerika.

Instead of keeping application state hidden inside protocol sessions, the new design makes it explicit, allowing AI models to access, reason over, and pass that information between tools, giving developers greater control over how context is preserved and shared across tools, Jena said.

It should also make AI workflows more portable, resilient, and easier to orchestrate across distributed environments, he said.

MCP’s new features

Other changes to MCP include the addition of a Multi Round-Trip Requests (MRTR) mechanism that changes how AI agents request additional information they need to complete a task.

Instead of relying on a persistent connection between the client and server throughout the interaction, the new mechanism lets the server request additional input through a standard request-response exchange before continuing the task, Jena said.

Routable transport headers, another addition, enable API gateways and other networking infrastructure to identify and route MCP requests without inspecting their contents.

They reduce processing overhead, lower latency, and let enterprise teams enforce routing, rate-limiting and security policies more efficiently using existing API management infrastructure, Jena said.

MCP is also getting an updated authorization framework built around OAuth 2.1 and OpenID Connect; interactive MCP Apps; and deterministic caching of tool and resource listings to improve LLM prompt-cache hit rates, potentially saving on token costs.

Rebuilding the trust boundary

The MCP release steering committee also decided to deprecate some legacy features, including Roots, Sampling, Logging, the older HTTP+SSE transport and Dynamic Client Registration, although these will continue to work in this version and any other released over the next year.

The deprecation of Sampling is likely to have the biggest impact because it changes who is responsible for interacting with foundation models, said Jena.

“Sampling let MCP servers invoke the LLM through the client, which meant the server had a callback path into the model without owning that connection. Deprecating it means rebuilding that trust boundary,” Jena said. “Your server now calls the model provider directly. That changes your network architecture, your auth model, and depending on how you’ve built cost attribution, your billing flow.”

The year-long transition period will be enough for teams to audit their sampling dependencies now, said Jena: “The risk is that teams who haven’t implemented sampling themselves won’t know if a third-party MCP server they’re depending on uses it.”

Updated MCP SDKs

To accompany the protocol update, there are updated MCP SDKs for Python, Typescript, Go, and C#. These support both the old and new protocol versions, so new clients can continue communicating with older servers, while updated servers will also support older clients, reducing the risk of immediate disruptions.

That backward compatibility should make the transition largely incremental, except for enterprises that built custom infrastructure around MCP’s earlier session-based architecture, Bandta said.

Identifying and auditing those session dependencies may not be easy, Jena warned.

“Session management complexity tends to be hidden across multiple layers — the gateway config, the deployment scripts, the monitoring dashboards. The code change is small; finding everywhere the assumption lives is what takes time,” he said.

This article first appeared on InfoWorld.

Microsoft has released Visual Studio Code 1.130, an update to the code editor that brings several improvements to the Agents window, along with enhancements to the agent host and the terminal.

VS Code 1.130 was released on July 22, one week after VS Code 1.129. Developers can access the release for Windows, Linux, or Mac from code.visualstudio.com.

With the new release, the Agents window gets updates that make it easier to review changes and manage chats. File-level diff statistics help users assess the size of each file’s changes when scanning a multi-file diff. The window also gets a more compact multi-file diff that makes it easier to review changes, Microsoft said. The Agents window is a dedicated window in VS Code that lets users run and track multiple agent sessions in parallel across their projects, without opening each workspace in a separate window.

Also with VS Code 1.130, assisted permissions for agent tool calls are available in the agent host. With assisted permissions, the LLM evaluates the risk of each tool call and decides whether the tool can run or should require the user’s approval. The setting to enable assisted permissions is chat.assistedPermissions.enabled. In another agent host improvement, quick chats running on the agent host now use compact, single-line rows in the sessions list. Regular sessions retain a second line with change statistics, status, and timestamps.

VS Code users now can open file links from Git diff output in the terminal when Git’s diff.mnemonicPrefix option is enabled. VS Code recognizes prefixes such as i/ for the index and w/ for the working tree, and removes the prefix from the link target so the correct file opens. When mnemonic prefixes are enabled, VS Code also recognizes the numeric prefixes produced by git diff --no-index.

Timestamps for chat requests and responses now are displayed when users hover over the message toolbar. You can disable this through the chat.verbose setting.

I have worked alongside enterprise technology for more than 30 years and watched AI evolve from a lab experiment into the modern boardroom’s core focus. However, the last few years of implementing AI alongside our customers have delivered our most profound reality checks.

The initial hype has faded, leaving CIOs to drive real enterprise value. Based on my experience implementing Google, OpenAI and Anthropic technologies, here are the fundamental, technology-agnostic lessons every leader must anchor their strategy around.

AI as a leadership multiplier

The most common tactical error we see is treating AI as an isolated technology project. What I have observed among our customers is that true success does not come from organizations that define a standalone “AI strategy,” but rather from those leaders that integrate AI into their business strategy.

When our customers isolate AI and define an AI strategy, it inevitably treats it like a “technological toy” to experiment with. This approach yields fragmented, orphaned initiatives that fail to scale because they are fundamentally disconnected from their core corporate objectives. What I learned is that AI is not the ultimate destination; it is a powerful catalyst. We have replaced “What can AI do for our customers?” with a more strategic question, “How does AI accelerate their existing business goals?”

Think of AI like electricity. No modern corporation designs a standalone “electricity strategy.” Instead, all companies route it invisibly across the entire organization to illuminate offices, power production lines and drive communication. AI must be woven into the enterprise fabric in the exact same way, acting as an underlying utility that supercharges your existing operational model.

Integrating AI into the broader business strategy also dictates how we measure success. It forces a shift away from short-term tech vanity metrics and anchors the technology into a long-term roadmap.

When AI remains trapped within the IT department of our customers, we notice that it is relegated to a mere “software experiment.” To become a true competitive advantage, we observed that AI requires intense cross-functional orchestration. This perspective does not diminish the merit of the technical team; their expertise is fundamental for establishing the architecture, data governance and tools your enterprise requires. However, while IT builds the foundational infrastructure, it lacks the organizational authority to decide what should be built on top of it. Only the CEO or the owner of the company can step in to ensure AI leaves the “toy project” phase and integrates into the DNA of the organization.

The requirement for top-down, executive ownership stems from three critical realities observed in the field:

• Silo-smashing and data collaboration: True enterprise AI is data-hungry and that data lives across disparate business lines, finance, operations, marketing and customer service. Only the CEO possesses the cross-functional authority to demand that data silos be dismantled.
• Cultural transformation and fear mitigation: AI triggers widespread anxiety over job displacement across all industries and hierarchies. When relegated to an “IT project,” resistance spikes as teams view it as a threat to their livelihoods. When I saw the CEO lead this cultural shift directly is when I noticed the best results.
• C-Suite education and strategic alignment: The mandate for AI capability cannot just be delegated downward; the transformation must begin at the very top. I have conducted more than 70 presentations for the Board of Directors and C-Level teams. These people need to be actively educated not on technical code, but on specific business use cases, return on investment (ROI) frameworks and how AI resolves core organizational bottlenecks.

PwC’s data found that only 12% of enterprises have achieved both cost and revenue benefits from AI. Those elite 12% succeeded precisely because their CEOs embedded AI extensively across strategic decision-making and cross-functional workflows. AI is simply too disruptive and too critical to be left exclusively in the hands of technical experts. If AI is not on the CEO’s weekly agenda, it is fundamentally missing from the company’s true strategy.

AI as a new operational framework

Traditional IT systems have operated on strict algorithmic certainty: if you input a specific set of data, the system executes an immutable line of code and guarantees the same, predictable output every single time.

AI completely breaks this paradigm. Because modern AI is built on probabilistic models, it does not execute static formulas; instead, it predicts the most likely correct response based on mathematical probabilities. This means that AI solutions carry an inherent, small percentage of uncertainty and variability. A prompt entered today might yield a slightly different, though contextually valid, output tomorrow.

Executive leadership and organizational cultures must be actively educated to accept and navigate this fundamental shift. Traditional quality assurance frameworks for software are designed for a 100% success rate. Applying this rigid standard to AI will paralyze your initiatives, keeping 80% of your projects trapped eternally in the pilot phase. This happened to us in a food and beverage company in Latin America a couple of years ago. After this experience, we started to include conditions in our contracts that tolerate statistical margins of error and still define the project as a success.

In terms of cost calculation, we had to teach CIOs and business managers to forget the monthly subscription model for AI and learn to manage the primary unit of exchange in modern AI: the token.

To understand AI costs, executives must understand how large language models process data. AI models do not read full words; instead, they break text, images or code down into “pieces” called tokens. As a baseline, every 100 words process as approximately 130 to 140 tokens. Because the major AI providers use the token as their currency, your business is billed dynamically based on the exact volume of tokens consumed by every query submitted (input) and every response generated (output).

Many leaders believe AI costs are fixed due to flat-rate enterprise tiers ($25–$30/user). This is a temporary illusion. These venture-capital-subsidized rates mask true operational costs and come with dynamic usage limits. Modeling long-term ROI on them guarantees a severe budget shock when true consumption pricing takes over.

The solution is not to halt AI adoption; doing so means losing your competitive edge. Instead, the cost per token must cease to be treated as a technical footnote relegated to the IT department. It must be elevated to a core business variable.

Risks in the AI adoption model

Since the beginning of the AI boom, I have seen all our customers making a critical tactical error that could cost them heavily in the medium term: they are focusing only on operational efficiency (reducing costs with AI).

I have observed that an alarmingly high percentage of companies remain trapped in pilot phases focused exclusively on short-term cost reduction. Bain & Company’s global Automation and AI Pathfinder Survey found that the largest share of companies measuring their AI initiatives (exactly 40%) realized cost reductions of 10% or less, heavily missing their internal targets. Our customers are putting too many resources and effort into marginal financial gains and in doing so, they are jeopardizing their most valuable assets: service quality, resilience and customer trust.

Utilizing AI solely to slash headcount or cut operational corners is a dangerous trap that introduces severe field liabilities. A financial service organization in Latin America announced that they saved $1 million in customer support by replacing humans with AI chatbots. However, the mid-term reality revealed a different story: a damaged brand reputation due to AI errors and an influx of frustrated clients fleeing because the automated system cannot handle special cases.

Putting a company on an extreme AI diet might make it look leaner on next quarter’s financial statement, but over-indexing on cost-cutting will ultimately leave the business too weak to compete when market dynamics shift. We are now inviting our customers to change the question from “How much money will AI save us?” to “How will we leverage AI to exponentially increase the long-term value of our enterprise?”

Deploying enterprise AI is a marathon, not a sprint, and the terrain changes with every mile. The organizations that thrive in this next era will be those that transition from fascination to discipline, treating AI not as a magic bullet for immediate savings, but as a core capability that demands rigorous governance, architectural foresight and cultural maturity. Navigating this shift requires moving past the theoretical hype and anchoring decisions in raw, field-tested reality.

As we continue to deploy these technologies across industries, the blueprint for success is being rewritten in real time. Let’s keep this conversation going as we map out the future of business intelligence together.

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ISC2 has begun developing a vendor-neutral AI security certification aimed at cybersecurity professionals working to secure AI systems and manage emerging AI risks.

The nonprofit organization, best known for the CISSP certification, says it is seeking volunteers worldwide to help define the knowledge and skills that will shape the new credential. While ISC2 has not finalized the certification domains, the certification is expected to address both technical AI security and governance topics, with a pilot exam planned before the end of 2026.

According to Casey Marks, ISC2 chief operating officer, feedback from cybersecurity practitioners led ISC2 to conclude that AI security had grown beyond expanding AI content within existing certifications.

“AI has reached a tipping point,” Marks says. “AI no longer is just another tool; instead, it has fundamentally changed the cybersecurity practice itself.”

ISC2 already includes AI-related content in certifications including CISSP and CCSP, but Marks says practitioners have identified new responsibilities and risks that extend beyond those programs. “Enterprise security teams are currently grappling with significant knowledge gaps, particularly around securing model architectures against new vulnerabilities like prompt injection, data poisoning, and model inversion,” Marks adds.

Organizations are working to understand emerging governance frameworks, including the NIST AI Risk Management Framework and ISO/IEC 42001, while adapting traditional application security and security operations workflows to AI systems, he says.

ISC2 has not finalized the certification domains, but Marks says the organization expects the credential to address both technical controls and governance practices for securing AI systems and managing AI risk. The certification will use ISC2’s established certification development process, which relies on cybersecurity practitioners to define job roles, develop exam content, and validate competencies.

Marks says ISC2 will continue to update the certification through ongoing input from cybersecurity professionals, in addition to its regular certification review process.

The organization is also determining which professionals the certification will target. Marks says AI security responsibilities are emerging across security architecture, risk management, security operations, software development security, governance and compliance, communication and network security, and security assessment and testing. ISC2 says the certification will reflect how those roles are evolving.

For organizations that are building AI security programs now, Marks recommends using existing AI training resources, adopting established governance frameworks, creating cross-functional AI security working groups, and participating in the certification development process.

Marks says ISC2 expects AI knowledge to become part of most cybersecurity roles while a more specialized AI security discipline continues to develop. He says organizations will increasingly need professionals with foundational AI security knowledge, as well as specialists in areas such as adversarial machine learning, model architectures, and AI data pipelines.

Looking ahead, Marks says he expects AI security expertise to evolve into both a foundational skill for cybersecurity professionals and a specialized discipline of its own.

“At this time, we are seeing a hybrid evolution occurring in real time: AI security is simultaneously becoming a baseline expectation for all security roles, while also carving out a dedicated, highly specialized discipline,” Marks says.

Over the past year, I had the same conversation with almost every team starting an AI initiative. Should we build on Semantic Kernel, AutoGen or Foundry?

At first it felt like the most important architectural decision we’d make. Each framework had its own philosophy, each promised to be the foundation for enterprise AI, and picking the wrong one felt like an expensive mistake. I spent a lot of time helping teams weigh the trade-offs.

Looking back, I think we were asking the wrong question. I certainly was.

I watched teams spend months debating SDKs while the decisions that actually decided whether their applications survived production went unexamined. Some built elaborate orchestration layers for workflows that a few deterministic functions would have handled. Others avoided agent frameworks entirely and later found they’d designed themselves into a corner.

Then Microsoft settled it for us. It introduced the unified Agent Framework, quietly moved Semantic Kernel and AutoGen into maintenance mode, and the debate I’d spent months refereeing was suddenly over. Turns out the answer to “which of the three” was “none of the three, here’s a fourth.” The framework hit version 1.0 and general availability in April 2026, stable across .NET and Python.

What surprised me wasn’t the decision. It was how fast a debate that had eaten so much of our attention stopped mattering. Microsoft changed the menu.

It didn’t change the meal.

The framework was never the hard part

Framework selection dominated almost every early conversation I had about enterprise agents. Which SDK do we standardize on? Which orchestration model gives us the most flexibility? Which one is Microsoft actually betting on?

Fair questions. But after a year of watching these projects play out, I’ve slowly come around to a different view. Those weren’t the questions that decided anything.

The first question I ask now is much smaller. Does this thing actually need an agent?

It sounds obvious, and I still get it wrong sometimes. But it’s the mistake I see most. On one project, a team spent weeks designing a multi-agent workflow for a process that ran the same four steps every time: read a document, validate it, call an API, send a notification. The diagrams looked great. The system in production didn’t. A few well-tested functions would have been easier to build, easier to maintain and a lot easier to trust.

Part of this is just that “agent” has become the word everyone reaches for. Sometimes it’s the right call. Sometimes it’s a workflow we already knew how to build, wearing a newer label. An agent earns its complexity when it genuinely has to decide things you can’t predetermine, choosing between tools, adapting to what it finds, working out its own next step. If you already know every step, you have a workflow, and a workflow is usually the better engineering choice. The consolidation didn’t change that. It just made it easier to see.

What building production agents actually taught me

Once I stopped fixating on frameworks, the same three problems kept showing up. None of them had anything to do with the SDK.

Context beats model choice

Early on I spent a lot of time comparing models, the way you’d agonize over a restaurant menu and then order what you always order. Now I spend most of it thinking about context, which is far less fun and far more useful.

I’ve watched good models fail because they were handed too much, not too little. One team I worked with gave the model access to nearly every internal document they had on the theory that more information meant better answers. It went the other way. Responses got slower, less consistent and sometimes skipped right past the thing that actually mattered. When we cut the context down to only what the task needed, the quality jumped almost immediately. I didn’t predict that. It taught me to be suspicious of “just give it everything.”

The best agent systems I’ve worked on weren’t the ones with the biggest context windows. They were the ones careful about what reached the model, and when. That’s not something the framework hands you.

Failure is where the real work is

Most agent demos look great because they’re built around the happy path. Production doesn’t extend that courtesy.

I remember a project where everything held up in testing. Then a downstream API timed out after the agent had already completed several earlier steps. We couldn’t just restart, because part of the business process had already gone through. We ended up spending far more time on recovery logic than we ever spent on prompts. That project changed how I think about this work. The hard part was never getting the model to make a decision. It was making sure the system didn’t fall apart when reality refused to follow the script.

Tool calls fail partway through. APIs return inconsistent data. Models call the same tool over and over because the last answer wasn’t what they wanted. That’s not the exception; that’s a normal Tuesday. Whether you retry, roll back, pause for a human or push on with partial results is a judgment call, and no framework is going to make it for you.

Identity is the real security boundary

This one surprised me most. The moment an agent stops being a chatbot and starts touching real business systems, identity matters more than orchestration.

Every project gets to the same question eventually. Who is this agent actually acting as? The developer’s credentials? A service account? The user who asked? Get it wrong and you’ve built something autonomous running with more access than any single person should have, which is exactly the kind of thing that looks fine until an audit. The Agent Framework, like most modern tooling, makes it easier to wire agents to tools through standards like the Model Context Protocol. That helps. But where human approval belongs, what needs extra authorization, how much rope to give the thing, those are still yours to decide.

The surprises weren’t technical

Here’s what I didn’t see coming. The hardest part of last year wasn’t technical at all. It was organizational. The moment a team heard “agent,” expectations shifted under everyone’s feet. Business stakeholders started expecting full autonomy. Developers assumed the thing could reason its way through anything. People started designing for flexibility before we’d even agreed on what problem we were solving. The word did damage before any code did. I found myself spending as much time resetting expectations as I did discussing architecture.

Build for change, not for today’s winner

I don’t think the teams that struggled last year picked the wrong framework. Semantic Kernel was reasonable. AutoGen was reasonable. Foundry made sense for plenty of cases. I’d have signed off on any of them.

The ones that got hurt put all their eggs in one framework, treating it as the foundation of the whole system instead of as one more dependency. Microsoft provided a migration path. But teams that had tightly coupled their applications to framework-specific abstractions discovered that migrating and rewriting are not the same thing. That wasn’t Microsoft’s doing. It was their own architecture’s. The teams that moved easily had kept their business logic, prompts and orchestration loose enough to evolve independently of any one SDK. For them, the change was a manageable project, not a teardown.

For what it’s worth, nobody I work with is treating this as an emergency. Most are moving the smaller workloads first, watching how they behave and leaving the production-critical systems alone until they actually understand the new abstractions. That’s the right instinct. And I doubt this is the last consolidation we’ll see, the ecosystem is still young, frameworks will keep absorbing each other and over time the differences between them will be operational more than architectural.

I don’t regret the framework debates, honestly. They were reasonable at the time. What changed wasn’t Microsoft’s roadmap.

It was mine. Watching these systems run in production taught me that the framework is the easiest piece to swap out. Recovery logic, context management, security boundaries, the business workflow itself, those stay with you long after today’s SDK gets replaced by tomorrow’s.

So, Microsoft made one decision easier by turning three frameworks into one. Good. Five years from now we’ll be on different tools, and we’ll still be asking the same handful of questions.

Does this actually need an agent? Does it have the right context? Can it recover when something breaks, because something will? Is it acting as the right person?

Those questions outlast every rewrite. That’s where I’ve learned to put my effort.

Frameworks come and go. Good architecture has to survive all of them.

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Late in a large enterprise SAP transformation, the strategic governance conversations began to drift. Instead of executive decisions, we found ourselves debating whether the program needed dedicated testing, whether cutover required a full weekend, whether twenty Agile teams really needed coordination support and whether offshore resources were adding value at all.

The questions were not coming from the delivery teams. They were coming from the executive sponsor.

The sponsor had recently been elevated into a senior leadership role and had never sponsored a technology transformation at this scale. The challenge was not authority. The sponsor had every right to ask any question they wanted. The challenge was that strategic governance had quietly turned into a debate about delivery practices, because the sponsor did not yet have the transformation context to focus the conversation anywhere else.

This is not a story about a bad sponsor. The executive in this case was a capable senior leader with strong judgment and authentic intent. They had been placed into a role they had not yet been prepared for, and the pattern that followed was structural, not personal. It is one of the more common patterns I have observed across enterprise transformation programs, and one of the most consistently misdiagnosed.

Most program failures are not execution failures. They are sponsor mismatches.

When governance becomes a debate about delivery practices

When the sponsor does not understand what an enterprise transformation actually requires, governance forums stop functioning as decision bodies and start functioning as practice debates.

You see it in the questions that get asked. Why do we need a dedicated testing phase? Can the Build timeline be compressed? Why does cutover need a full weekend? Why do we need more Scrum Masters across 20 product teams? Can the US team simply work longer hours instead of using offshore resources? On one program, the sponsor suggested shifting the entire project’s working hours to India time, despite roughly 85 percent of the delivery organization being based in the United States.

None of these questions are unreasonable in isolation. Each one targets a real cost or timeline pressure. The problem is what is missing underneath them: an understanding of the operational risks the original choices were designed to mitigate.

When sponsors ask delivery-practice questions without that context, the program leadership team ends up defending the work instead of advancing it. Decision velocity drops. Trust between the program and its sponsor erodes. Senior delivery talent disengages from governance forums where the conversation never reaches the decisions they need made. What looks from the outside like an active sponsor producing engagement is, from inside the program, an active drain on the cycles needed to deliver.

The compounding cost is not unique to any single program. PMI’s research on executive sponsorship consistently identifies sponsor engagement quality, rather than sponsor presence alone, as one of the strongest predictors of project success. The visible symptom is debate. The actual cost is unmade decisions.

Authority is rarely the issue. Literacy is

When transformations stall under a mismatched sponsor, the diagnostic instinct is to question the sponsor’s authority. Are they senior enough? Do they have the cross-functional reach? Can they unblock?

In most of the programs I have led or advised, authority was not the limiting factor. The sponsor in the SAP program above had ample authority. They could unblock any decision the program needed. What had not been developed was the transformation literacy to know which decisions mattered, which were technical noise and which were execution risks that should not be optimized away.

This is what I have come to think of as the literacy problem. Sponsors elevated into transformation roles often have deep functional expertise (finance, operations, business unit leadership) but limited exposure to the distinct functions of PMO, organizational change management, agile delivery, testing and cutover, and how each one reduces a specific category of implementation risk. They are not expected to be SAP configuration experts. But they need enough transformation literacy to recognize which questions actually belong in a steering committee.

Harvard Business Review’s research on effective executive sponsorship has emphasized that sponsorship effectiveness depends as much on judgment as on authority. Judgment is where literacy becomes operational. A sponsor with authority but limited transformation literacy will optimize for speed and cost in ways that consistently underestimate risk. A sponsor with both will make the tradeoffs the program actually needs.

Prosci’s longstanding benchmark studies on change management have ranked active and visible executive sponsorship as the single greatest contributor to change success for two decades. The word that matters in that finding is active. Active sponsorship without transformation literacy can introduce real cost. Not because the sponsor is acting against the program, but because the optimization choices they make are based on incomplete information about what the program is built to protect against.

Shift the conversation from delivery practices to business risk

When the sponsor relationship is already in place and cannot be changed, the program leadership team has one move that consistently works: shift the conversation.

On the SAP program above, we stopped explaining why the testing phase existed. We started explaining the business risk of reducing it. We stopped debating the number of Scrum Masters. We started connecting delivery capacity to coordination across more than twenty Agile teams and the business cost of losing that coordination. We reframed offshore support as a way to maintain delivery momentum around the clock rather than asking the U.S. team to sustain fifteen-hour days.

The shift is from defending delivery practice to explaining business risk. The sponsor does not need to understand why testing takes the time it does. They need to understand what the program is exposed to if testing is compressed. They do not need to know how many Scrum Masters are statistically optimal for twenty Agile teams. They need to know what coordination breaks when the number is wrong.

This reframing accomplishes two things. First, it brings the conversation back to the level at which sponsors actually make decisions: tradeoffs between business outcomes and business risks. Second, it builds transformation literacy in the sponsor over time, almost as a byproduct. By the third or fourth iteration of business-risk-framed conversations, the sponsor begins to ask the right questions on their own.

In practice, this happens through small but deliberate moves. When the sponsor asks why a phase needs the time it takes, the program lead names two or three things that could go wrong if the time is cut and what each would cost the business. When the sponsor asks why a role is needed, the program lead names the work that would not get done without it. Every delivery-practice question gets converted into a business-risk answer.

The program leadership team’s job is not to make the sponsor an expert in SAP delivery. It is to provide enough transformation context so that executive decisions reflect both business priorities and implementation realities.

There are a few phrases I have used with executive sponsors over the years that capture the underlying issue. The sharpest one:

If the decision has to go above the sponsor, they are not the sponsor.

Sponsorship is defined by what the sponsor can decide without asking someone else. That is the test. Anything else is the appearance of sponsorship, not the substance.

For CIOs supporting enterprise transformation, the implication is direct. Sponsor selection, or sponsor preparation when selection is not an option, is not a hierarchy question. It is a transformation capability question. The same execution discipline that goes into defining decision rights, structuring governance and protecting delivery momentum should apply, with equal rigor, to assessing sponsor fit and building sponsor literacy before the program begins.

A sponsor does not need to be the technical expert. They do need to know when to trust the people who are.

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Earlier this month, Nokia provided an AI-RAN platform update that brings an AI-native and programmable compute which is projected to double spectral efficiency by 2028. This increases speed, but more importantly, it can allow mobile operators to create some actual monetization beyond connectivity.

With this release, Nokia is introducing what it calls the industry’s first commercial AI-RAN platform, built on its AI‑native anyRAN software and Nvidia’s Aerial AI-RAN stack running on merchant GPU-based accelerated computing. The company is already seeing more than 20% gains in spectral efficiency from AI-driven radio algorithms, with a roadmap to reach 50% by 2027 and more than 100% by 2028, effectively doubling capacity on existing spectrum in dense cells.

Legacy RAN infrastructure enables connectivity but not much beyond that. The AI-RAN makes the network intelligent and extends AI into the physical world, enabling telcos to get more from their infrastructure investments, including providing a path to 6G. The partnership with Nvidia brings CUDA and AI into mobile environments.

For Network World readers, the headline isn’t just that Nokia got to market first with AI‑RAN—it’s that the company is using AI and GPUs to break the historical coupling between radio performance and custom silicon refresh cycles, and to turn the RAN into an application platform.

What AI-RAN actually is

At a technical level, Nokia’s AI‑RAN is a software‑defined baseband architecture that runs Layer 1/Layer 2 RAN functions and AI models on accelerated compute, primarily GPUs, instead of being locked into fixed‑function ASICs. Udayan Mukherjee, Nokia’s CTO for RAN and core, summarized the vision in the analyst briefing: “AI‑RAN is essentially a platform that turns the radio network into a true AI‑native programmable platform… one software detached from the hardware, defining flexible hardware deployment configurations, including part of the AI grid.”

Several pillars stand out:

• AI‑native design: Algorithms move from traditional linear models to increasingly nonlinear techniques (e.g., advanced channel estimation, deep receivers/transmitters, RKHS-based methods), which demand tensor-heavy compute best delivered by GPUs.
• Software-defined RAN: The same anyRAN software stack runs across different hardware configurations—plug‑in cards, standalone AI‑RAN nodes, and COTS/cloud RAN—so innovation comes via software releases rather than baseband card swaps.
• Programmable “D‑apps” layer: Nokia is pushing a new real‑time E3 interface from Layer 1/2 into an application layer for distributed apps (D‑apps) that can tap IQ samples, channel estimation and scheduling data for use cases such as sensing and location services.
• Crucially, this isn’t meant to replace all custom silicon overnight. Mukherjee was explicit: “We are not dropping the purpose‑built product… but we want to also get to merchant silicon, because that’s the future as we want to develop bigger models and AI elements and value‑added services on top of it.” The result is a hybrid era where AI‑accelerated platforms coexist with existing basebands but begin to shoulder the most compute‑intensive workloads.

Why AI-RAN matters for operators

Nokia and its early operator partners are trying to solve three perennial problems: finite spectrum, changing traffic patterns, and the drag of hardware refresh cycles.

First, spectrum constraints. Aji Ed, Nokia’s head of AI‑RAN and cloud RAN, called spectrum “the first constraint everybody has,” noting that operators have paid “huge amount of money” for bands and now need to “get up to the 2x spectrum” in terms of usable capacity. By running more complex AI models for multi‑user MIMO pairing, channel estimation, carrier aggregation and deep receiver/transmitter functions on GPUs, Nokia believes it can unlock those gains where traditional platforms simply run out of compute headroom.

Second, traffic is shifting. Generative AI and distributed inference workloads are driving more uplink-heavy, latency‑sensitive patterns that current RANs weren’t designed for. AI‑RAN’s ability to adapt scheduling, beamforming and resource allocation dynamically via AI models deployed at the baseband is meant to keep up with this shift.

Third, innovation cadence. In Ed’s words, “hardware upgrades can’t keep up with the innovation… we can’t really have a silicon refresh cycle linked with every three‑year cycle.” Nokia’s subscription‑based software model is designed to deliver new AI algorithms, spectral‑efficiency improvements and network optimization features continuously, without requiring “forklift” hardware replacements.

For operators, the message is attractive: comparable TCO and power to existing basebands, “no hardware premium” for GPU adoption, but higher capacity and a path to new services. Nokia told analysts it has reached performance, price and energy efficiency parity between its custom GridShark silicon and GPU-based systems, while moving the baseband roadmap to merchant silicon.

Nokia’s differentiation strategy

Every major RAN vendor is talking about AI‑enhanced radio, but Nokia is drawing a line between incremental gains and what it claims is a platform shift. When asked why its 2x spectral efficiency ambition is so much higher than the ~20% numbers competitors discuss, Ed pointed to the underlying architecture: “We are able to bring much more complex algorithms into this compute infrastructure… all of these require much higher compute, which is exactly what is coming from the accelerated computing.”

Several differentiators emerge:

• Aggressive spectral roadmap: Nokia is targeting 1.5x by 2027 and 2x by 2028, across TDD massive MIMO and FDD scenarios, with a feature roadmap built jointly with Nvidia and other partners.
• Single code base, three deployment paths: The same anyRAN software stack runs on (1) a GPU‑powered AirScale capacity plug‑in card, (2) a high‑capacity standalone AI‑RAN node, and (3) GPU‑based COTS/cloud RAN servers. This lets operators modernize “at their own pace” and mix brownfield evolution with greenfield AI-native deployments.
• Open ecosystem with D‑apps: Nokia is leaning into ORAN compliance (front‑haul, O1/O2) and actively championing the E3 interface and D‑apps concept within ORAN and AI‑RAN alliances, with Bell Labs and at least two external partners already building sensing and location applications on the platform.
• Software subscription tied to value: The commercial model builds on existing software subscriptions but ties pricing more explicitly to delivered value, such as spectral efficiency improvements and new AI services, rather than pure license metrics.

Mukherjee emphasized the openness angle in the briefing: “We see a lot of third‑party applications, whether it’s improving spectral efficiency or location service or sensing, can be developed on this platform… any AI‑powered services from us in Nokia or from ecosystems can be actually developed on top of it.” For operators burned by closed optimization stacks, that’s a notable pivot.

How AI-RAN unlocks new revenue

Most operators will sign off on AI‑RAN if the capacity and TCO story holds, but the more strategic question is monetization beyond connectivity. Nokia’s spokespeople spent considerable time on this in the analyst call, pointing to several classes of services that are difficult or impossible to deliver without AI running in the RAN itself.

Examples include:

• Integrated sensing: Turning the RAN into a distributed sensor grid that can support applications such as 3D mapping, gesture recognition and environmental monitoring, using the same RF infrastructure. Mukherjee noted, “We have at least two to three partners developing sensing applications on top of it… as well as two other companies developing location services.”
• Physical AI and location services: For factories, logistics hubs and smart cities, AI‑RAN can provide high‑precision positioning and real‑time telemetry for robots, drones and autonomous systems by fusing radio data and AI models at the edge.
• Distributed AI infrastructure: Operators exploring “AI‑native cities” can use AI‑RAN nodes and COTS GPU servers as a distributed inference fabric for applications that need tight latency to endpoints—think AR/VR offload, real‑time video analytics or interactive generative AI experiences.
• Premium connectivity tiers: With fine‑grained, AI‑driven control over uplink/downlink scheduling and QoS, operators can create differentiated SLAs for enterprise slices, mission‑critical IoT and AI workloads, charging for guaranteed performance rather than best‑effort connectivity.

Ed framed the opportunity as a continuum: Superior connectivity from 2x spectral efficiency creates “space for new AI workloads and other use cases,” while the D‑apps ecosystem and subscription model provide a mechanism to package and sell those capabilities. In practice, that could look like:

• Industrial sensing-as-a-service, where Nokia and partners supply D‑apps for integrated sensing and positioning, and operators monetize them per site or per device.
• Network‑exposed APIs for inference, location and RF sensing, integrated into operators’ broader network API portfolios as they pursue “network-as-a-platform” strategies.
• Sector‑specific AI‑native services, such as stadium analytics, transportation corridor monitoring, or drone traffic management, built by ISVs on top of Nokia’s exposed E3 data.

For operators that already use Nokia’s MantaRay and SMO stacks for cross‑network optimization, AI‑RAN essentially becomes the local real‑time execution environment, while R‑apps/X‑apps continue to orchestrate macro-level behaviors. Mukherjee described this layered architecture as “DU and CU on the platform running D‑apps using E3, interfacing to X‑apps and R‑apps through E2SM and connecting to the overall management system/SMO for lifecycle management.”

Adoption path and reality check

Nokia is not promising instant transformation. AI‑RAN pilots are slated for late 2026, with commercial availability on card‑based systems in 2027 and AirScale-based systems around 2028, all driven from a single software stack that supports 4G, 5G and is upgradable to 6G. The company already has trials and collaborations underway with T‑Mobile US, SoftBank, Indosat Ooredoo Hutchison, BT, Elisa, Vodafone, Orange, NTT Docomo, Deutsche Telekom and others.

There are still open questions around 3GPP vs ORAN standardization of E3, the maturity of the D‑apps ecosystem, and how operators will digest yet another subscription layer tied to radio software. But Nokia’s move puts a stake in the ground: in the AI era, the RAN is not just a throughput engine; it’s a programmable AI computer that can be monetized.

For Network World readers evaluating vendor roadmaps, this launch suggests a clear directional change. If Nokia hits its targets, AI‑RAN could mark the point where baseband becomes less about hardware SKUs and more about an AI platform strategy—one where spectral efficiency and new services are rolled out at “software speed,” as Ed described it, rather than at the pace of the next card generation.

Microsoft has released Visual Studio Code 1.130, an update to the code editor that brings several improvements to the Agents window, along with enhancements to the agent host and the terminal.

VS Code 1.130 was released on July 22, one week after VS Code 1.129. Developers can access the release for Windows, Linux, or Mac from code.visualstudio.com.

With the new release, the Agents window gets updates that make it easier to review changes and manage chats. File-level diff statistics help users assess the size of each file’s changes when scanning a multi-file diff. The window also gets a more compact multi-file diff that makes it easier to review changes, Microsoft said. The Agents window is a dedicated window in VS Code that lets users run and track multiple agent sessions in parallel across their projects, without opening each workspace in a separate window.

Also with VS Code 1.130, assisted permissions for agent tool calls are available in the agent host. With assisted permissions, the LLM evaluates the risk of each tool call and decides whether the tool can run or should require the user’s approval. The setting to enable assisted permissions is chat.assistedPermissions.enabled. In another agent host improvement, quick chats running on the agent host now use compact, single-line rows in the sessions list. Regular sessions retain a second line with change statistics, status, and timestamps.

VS Code users now can open file links from Git diff output in the terminal when Git’s diff.mnemonicPrefix option is enabled. VS Code recognizes prefixes such as i/ for the index and w/ for the working tree, and removes the prefix from the link target so the correct file opens. When mnemonic prefixes are enabled, VS Code also recognizes the numeric prefixes produced by git diff --no-index.

Timestamps for chat requests and responses now are displayed when users hover over the message toolbar. You can disable this through the chat.verbose setting.

A new attack method found by Zenity Labs reveals that AI agents are becoming persistent insiders that attackers can recruit, rather than malware they have to install.

Its researchers have discovered AgentForger, a phishing-based attack that silently creates and launches a fully autonomous AI agent within OpenAI workspaces.

Once running, the agent has full access to apps like Outlook, Slack, SharePoint, and Google Drive. It is configured to operate indefinitely without further user interaction, can approve its own access by toggling “never ask” settings, and can continue to act on new assignments sent via email by the attackers that control it. Broad, unfettered access to systems allows it to perform reconnaissance, harvest sensitive data and credentials, impersonate victims, and launch phishing campaigns.

While OpenAI resolved the vulnerability four days after disclosure, on a larger scale, AgentForger sheds light on what can happen when AI agents go rogue.

“We’re moving into a world where software doesn’t just help people work. It works alongside them,” said Michael Bargury, co-founder and CTO of agentic AI security platform Zenity. “As AI agents become more capable, attackers will naturally look for ways to influence them, just as they’ve always looked for ways to influence people.”

A ‘persistent operator’ that acts without approval

OpenAI’s Workspace Agents can connect and work autonomously across Outlook, Gmail, Slack, Google Drive, SharePoint, and Teams. Users open the agent builder, describe what the agent can do in natural language, connect to tools, set approvals, review and test, schedule actions, then publish. For instance, an agent can autonomously handle incoming emails, review and take actions with approval, gather information from various sources to send out daily briefings, or automatically respond to questions in ChatGPT or Slack channels.

Normally, this is “useful automation,” Zenity AI red team researcher Mike Takahashi wrote in a blog post. But in this attack, “the same scheduler becomes the persistence mechanism.”

The creation workflow kicks off the moment a user clicks on a phishing link containing instructions from the threat actor. For the attack to work, a victim must be logged into ChatGPT and Workspace Agents, and have at least one integration with another app, such as Outlook, Gmail, Slack, Google Drive, SharePoint, or Teams.

Because those connections already exist, OAuth consent screens are not triggered. Furthermore, the victim does not need to click on another link, keep a Builder tab open, or even visit ChatGPT again.

The forged agent is a “persistent operator;” it is installed on the original click and given a schedule, and at those predetermined times, the agent invokes itself, scans for emails from attacker addresses with the subject line “task”, carries those orders out, then returns results to the same attacker-controlled email address.

It goes undetected because the attacker prompt instructs the Builder to toggle Outlook to never ask for approval of its actions. Typically, the default is “always ask,” to keep agents from taking unauthorized action; that switch gives agents the ability to act without asking for human approval.

“AgentForger showed that an attacker could deploy an autonomous insider agent inside your ChatGPT workspace with a single click,” said Bargury. From there, it can continue to access information, harvest credentials from various sources, impersonate employees, and carry out phishing attacks and fraud while “leveraging the trusted victim’s identity.”

A ‘planted accomplice’ that does all the work

Once activated, AgentForger can perform reconnaissance to create an internal map of a company. For instance, agents can scan Outlook, Slack, Teams, Google Drive, SharePoint, or calendar data to identify people, roles, active projects, internal discussions, or all-hands recurring meetings. This can help attackers identify where in the enterprise to target next, based on active teams and channels, projects in the works, or prominent users.

“This is the kind of internal context an attacker normally has to build slowly,” Takahashi noted. But in this scenario, action is based on a single emailed assignment. The attacker’s “planted accomplice” does all the work.

In another scenario, the agent can steal data by searching for and identifying financial documents, business agreements, or invoices. Or, it can steal credentials by scanning for messages containing passwords, one-time codes, access tokens, password recovery links, or API keys. Further, it can impersonate victims to carry out phishing scams, for instance, by sending legitimate-looking Teams messages instructing users to confirm their credentials on a fake Microsoft login page.

In all cases, collected information is organized, analyzed, and sent back to the attacker.

“AgentForger points to something much bigger than a single vulnerability,” said Bargury. “It’s less about one bug and more about understanding how the security model changes as AI becomes part of everyday business operations.”

FOMO exposing security gaps

This isn’t necessarily about trust, but more about the need to move fast and adapt, Bargury emphasized. AI agents are helping employees automate work, make decisions faster, and get more done. But enterprises fear they’ll fall behind if they don’t move quickly enough.

“The challenge is that we’re introducing a fundamentally new kind of technology into the enterprise,” said Bargury. “The pressure to integrate the next AI feature is outpacing the security controls needed to safely deploy it.”

However, the answer isn’t to slow down adoption, he emphasized; the business value is too significant. Rather, the first step is understanding where AI agents exist, who created them, what they’re connected to, and what they’re allowed to do. And when it comes to autonomous agents, enterprises need to pay attention to the processes that trigger them: A schedule, an incoming email, or another automated event.

“Those triggers should be governed just as carefully as the agent itself,” said Bargury.

High-impact actions should require approval where appropriate, and security teams should be able to quickly disable an agent or its triggers if something doesn’t look right, he said.

More broadly, AI agents are introducing the need for a new security model, he pointed out. The question is no longer just “Does this agent have permission?” It’s also, “Is this the behavior we intended?”

“The organizations that answer both questions will be in the strongest position to adopt AI safely,” Bargury said.

Check Point has confirmed that a critical security hole in its SmartConsole management tool, one that allows unauthenticated attackers to assume full admin privileges, is now being exploited in the wild. The vulnerability, CVE-2026-16232, was given a CVSS score of 9.3.

In its security alert, Check Point described the bug as one allowing an unauthenticated attacker to “obtain an application login token and use it to login via SmartConsole with full admin privileges and apply changes to the security policy and security configuration.”

The company has released a patch for the bug and also recommends that users “limit Trusted Clients, GUI clients, to trusted IP addresses/subnets.” That approach has always been a best practice, but practical networking realities today make it challenging to maintain. Check Point said that the exploit has impacted ten of its customers, all of whom it had notified directly.

Far worse than most

Frank Dickson, group VP for security at IDC, said this security hole is far worse than most.

“This hits harder than your average CVE because of where it lives,” he said. “The CVE targets the SmartConsole login on Check Point’s Security Management Server, the console that pushes policy to every gateway underneath it. Popping a gateway gets you one lock picked. Popping the management server is more like finding the One Ring: one stolen token to rule every gateway it manages, no need to fight each one individually. The attacker can rewrite policy, open new VPN paths and kill the logging.”

In an interview with CSO Online, Lotem Finkelstein, vice president of research at Check Point, said that the company learned of the vulnerability on Sunday, emailed customers the same day, and released the patch within 72 hours.

But when his team re-reviewed earlier logs, knowing what to look for, they spotted this hole being attacked as early as April, Finkelstein said.

The fact that, over the course of three months, the team only found ten organizations under attack, indicated that it has been very difficult for the attacker to find vulnerable systems, he noted; customers were, in the main, using secure settings to protect themselves.

Nonetheless, Finkelstein said, Check Point considers this hole to be “a severe vulnerability.”

Challenges of IP address restrictions

While it can be technically challenging to keep the IP address allowlists that Check Point recommends current, given DHCP’s ability to easily change those addresses, Assaf Morag, a cybersecurity researcher at Flare, noted that specifically limiting access to a management console is far more critical than limiting overall external access.

“Implementing Trusted Clients as a per-IP allowlist is impractical,” he said, but that is not the case with restricting management access. “The more scalable solution is to restrict access based on trusted administrative network segments such as VPN pools, management VLANs, or jump hosts rather than maintaining lists of individual DHCP-assigned client addresses,” he explained. “That gives you the security benefit without creating a full-time administrative task. Maintaining allowlists for individual hosts is much more practical when those hosts have stable, predictable IP addresses, rather than dynamically assigned DHCP addresses.”

Pieter Arntz, malware intelligence researcher at Malwarebytes, also noted that the constantly changing nature of global IP addresses can prove annoying to IT teams. Stressing that he is not familiar with Check Point’s specific settings, he noted, “Certain settings are a nuisance when applied strictly, and at some point the IT staff gets tired of constantly tweaking and they abandon the most secure path.”

Ideal platform for long-term attacks

Mike Wilkes, enterprise CISO at Aikido Security,  agreed that the severity and exposure of this hole is alarming.

“This is exactly the kind of vulnerability that keeps CISOs awake at night because it strikes at the one system that is supposed to stand between the attacker and everything else. An authentication bypass that grants administrative control of a perimeter firewall isn’t just another CVE to patch. It’s an invitation for an adversary to rewrite the rules of the network itself,” he said. “The uncomfortable reality is that nobody runs a CrowdStrike agent on their firewall. Once an attacker owns an edge device, they gain a uniquely privileged position that often falls outside the visibility of traditional endpoint security, making it an ideal platform for persistence, credential theft, traffic manipulation, and long-term espionage.”

IDC’s Dickson strongly encouraged CISOs to deploy the patch, not to just change settings to mitigate the issue. 

“Apply the actual hotfix,” he said. “Don’t just restrict Trusted Client IPs and call it done. That’s a stopgap, not a fix. Any internet-facing management console, Check Point or otherwise, is a five-alarm architecture problem independent of this CVE.”

And, he added, “since attackers here can disable logging, audit admin activity going back before the bug surfaced. Quiet logs aren’t proof nothing happened. This is the recurring theme with ‘single pane of glass’ security tools: the console built to make everything easier to run is also the one thing you really don’t want someone else driving.”

The cybersecurity landscape has evolved beyond human scale. Today’s adversaries have replaced predictable, manual playbooks with machine-generated attack chains that can breach traditional controls in seconds. To bridge the gap, organizations must move past legacy, reactive controls and embrace a fundamentally different, AI-driven architecture: Agentic Endpoint Security (AES). 

AES represents a paradigm shift, moving security from a passive monitor to an active participant in the defense lifecycle. It provides the visibility and automated guardrails necessary to govern autonomous AI agents and agentic tools, ensuring that as your workforce scales with AI, your security posture remains unbreakable. 

With autonomous AI agents now capable of planning and executing multi-stage attacks at machine speed, the pressure on traditional security operations (SOC) has reached a breaking point. To survive this shift, the strategy is clear: we must fight AI with AI. 

Here is how AI-driven defense, pioneered by Cortex XDR and the era of Agentic Endpoint Security, is fundamentally rewriting the cybersecurity playbook.

1. From reactive patching to proactive prevention 

For decades, the industry lived in a “wait-and-see” mode waiting for a vulnerability to surface, waiting for a signature, and then rushing to patch the hole. But reactive methods just don’t hold up against modern “frontier” AI attacks that are constantly morphing. 

AI-driven defense changes the game by shifting to a prevention-first architecture. Rather than relying on historical signatures, modern platforms deploy localized, ML-driven analysis to evaluate the intent and behavior of an active process, stopping threats pre-execution. Cortex XDR leads with a strict prevention-first approach by using AI-driven local analysis and behavioral threat protection; the XDR agent stops sophisticated threats pre-impact and pre-execution. This proactive stance reduces the overall risk profile by blocking malicious chains of events in real time across network, process, file, and registry activity. 

2. Eliminating the “agentic blind spot” 

As we all rush to adopt generative AI and automated workflows, a new gap has appeared: the “agentic blind spot.” Adversaries are now targeting AI assistants and automated scripts to bypass defenses. Since these digital agents often have deep access to enterprise data, a compromise here lets attackers move completely under the radar. 

The new playbook requires securing this entire ecosystem. By combining the distinct capabilities of Cortex XDR and Koi Security, organizations can effectively close this gap. Koi Agentic Endpoint Security tracks everything from shell commands to prompts in real time, while Cortex XDR adds a layer of defense that identifies and neutralizes behavioral anomalies unique to these automated threats. 

3. Machine-speed detection and “attack storylines” 

When an attacker can move through your network in seconds, human-led teams can’t keep up. To make matters worse, most systems just flood analysts with low-quality, isolated alerts, leading to major burnout. 

AI-driven defense fixes the investigation process by automatically stitching separate data points into a single, high-fidelity “attack storyline.” Cortex XDR uses thousands of machine learning detectors across endpoint, network, and cloud sources to group related signals into one cohesive case. This reveals the full story of an attack, letting your analysts focus on fast remediation instead of digging through piles of data, reducing alert noise by up to 98%. 

4. Surgical and autonomous response 

The final piece of the puzzle is moving from manual remediation to autonomous action. AI-driven response lets your SOC handle threats in minutes, not hours. The platform can automatically revoke compromised tokens or isolate endpoints at machine speed. 

Cortex XDR delivers built-in enterprise-grade automation at no additional cost, providing over 120 out-of-the-box playbooks and 18 quick actions to handle up to 99% of incidents without manual intervention. Crucially, this level of automation requires an unbreakable foundation of agent resilience. To ensure the defense cannot be disabled by an adversary, Cortex XDR is certified in both the AVC EDR Detection and Anti-Tampering tests, successfully blocking all attempts to disable or modify the agent. 

Summary

The threat landscape is changing faster than ever, driven by AI-powered attackers who exploit even the smallest gaps. But you don’t have to stay on the defensive. By shifting to a proactive, AI-driven architecture like the one built into Cortex XDR, you can stop threats before they happen, secure your agentic workflows, and automate away the noise that leads to analyst burnout. 

The journey to a more resilient, AI-powered SOC doesn’t have to be daunting. With the right foundation in place, you’re not just keeping pace with the new threat landscape; you’re staying one step ahead. It’s time to move beyond the old manual playbook and embrace the future of security operations. 

To learn more about Palto Alto Networks, visit https://www.paloaltonetworks.com.

A new version of Python’s native package management tool, pip, will remove a limitation that has frustrated Python developers for years. If you wanted to install the dependencies for a given package, but not install the package itself, you were stuck. Either you had to extract the dependency list from the package and install it by hand, or you had to build the whole package anyway.

Why was this a problem? Sometimes, you want only the dependencies for a package—for instance, as a way to create a separate environment for testing or another project. If you’re making source distributions via CI, some requirements might be needed to make the source distribution but aren’t actually included in it (e.g., Cython). You would need to install these requirements somewhere—apart from the project itself—to perform the build step.

A dependencies-only install mode for packages is a long-requested feature. Developer James O’Claire found many examples of such requests, along with various workarounds. Most of those involved third-party solutions of some sort.

Now, a new feature set to land in pip version 26.2 will fix this problem from the inside. The command pip install --only-deps will install only the dependencies for a given package. Note that it will not install build dependencies for the package, but only runtime dependencies.

Note that you can accomplish this with existing third-party tools. For instance, uv sync --no-install-project has the same behavior. But having this functionality right inside pip means you don’t have to turn to external tooling—or ugly hacks—to solve the problem. This may be an example of how third-party projects like uv (a superfast Python package installer) are inspiring native Python features where they make sense.

pip 26.2 is scheduled to be released by the end of July 2026.

AMD executives took to the stage at its Advancing AI 2026 event in San Francisco today to detail the company’s next generation of AI infrastructure solutions, from Instinct MI455X AI accelerator GPUs and 6th Gen EPYC “Venice” CPUs, to Pensando networking, ROCm.AI software and its Helios rack-scale platform that ties it all together.

AMD has been working towards rack-scale AI system solutions for years. Its ZT Systems acquisition last year added valuable engineering talent and intellectual property that is now finally bearing the real fruits. Its Helios AI platform is a major platform evolution for AMD, with shipments scheduled to begin in the second half of this year (which is here and now).

The announcements at Advancing AI show how the company has engineered its AI platform solutions for large reasoning models, sustained inference and agentic workflows. These workloads pressure memory capacity, data movement, networking and CPU orchestration. AMD’s approach is to keep as much data close to the compute engines as possible and move it more efficiently throughout the system, but there’s deeper nuance here that’s obvious versus AMD’s chief rival, NVIDIA.  

AMD’s MI455X targets the AI memory wall

The Instinct MI455X GPU is the compute engine that fuels the Helios rack, and the first GPU based on AMD’s new CDNA 5 architecture. Built with a modular mix of 2nm and 3nm chiplets, it carries 432GB of HBM4 and 23.3TB/s of peak memory bandwidth.

Compared to AMD’s current MI355X, the MI455X offers 1.5 times the memory capacity, up to 2.9 times the peak memory bandwidth and up to four times the peak matrix performance with MXFP4 and MXFP8 data types, which are lower-precision numerical formats designed to accelerate AI processing while reducing memory demands. With MXFP6 (6-bit floating point), performance is rated at up to twice that of MI355X.

AMD also shared some actual, measured internal results using production silicon. The company claims MI455X delivers 3.8 times higher FP8 decode performance, 3.5 times more measured FP4 compute performance and between 2.5 and 3.5 times more networking bandwidth than MI355X, depending on the transfer path tested. Those figures provide more context than just numerical specifications, though they remain AMD-provided comparisons that will need independent validation.

AMD

The architectural choices behind the numbers are important. Reasoning models and long context windows require sizeable KV caches for maintaining AI attention states, while mixture-of-experts models frequently move large amounts of data across accelerators. MI455X should let more model data, activation states and cache remain local. New dedicated IP in hardware can transfer data while the GPU continues processing, and expanded cache and multicast capabilities are designed to reduce redundant data movement to further improve efficiency.

The aforementioned lower-precision formats can also raise throughput and reduce memory use, but model developers still have to determine where they can be applied without unacceptable accuracy loss.

AMD’s Helios rack takes aim at Vera Rubin

Dave Altavilla

Helios is AMD’s primary rack-scale competitor to NVIDIA’s Vera Rubin platform. Each liquid-cooled rack combines 72 MI455X GPUs, 18 single-socket Venice host CPUs and Pensando networking technologies.

In its most complete, premium configuration, AMD rates Helios for 2.9 exaflops of low-precision AI compute, with 31TB of aggregate HBM4 capacity, 1.7PB/s of memory bandwidth, 260TB/s of bidirectional scale-up bandwidth and 43TB/s of scale-out bandwidth.

These are formidable figures, but they are technical specifications rather than actual application benchmarks. The more consequential development is AMD’s move from collections of eight-GPU servers to a 72-GPU shared-memory domain. Models too large for one node can operate across the rack without treating every exchange as a scale-out networking transaction, which benefits large-model inference as well as training.

AMD uses UALink over Ethernet, or UALoE, for an open standard scale-up fabric. Each MI455X provides 3.6TB/s of bidirectional scale-up bandwidth, while the complete rack delivers all-to-all connectivity through a single switch layer. AMD also claims six times more scale-out bandwidth per GPU than MI355X when MI455X is configured with three Pensando Vulcano 800 AI NICs.

While open standards give cloud providers more control over suppliers and system design, AMD and its partners now have to prove those components can deliver the predictable performance, reliability and deployment experience customers expect from a tightly controlled, more vertically integrated platform.

Finally, AMD designed Helios with automatic rerouting around failed links, virtual rack partitions, tray-level serviceability and rack-wide power, cooling and health monitoring. Major hyperscalers and potentially large-scale enterprise customers will likely key in on these capabilities, which can affect the availability, total cost and consistency of the AI services they consume.

Kind of like cowbell, AMD Venice gives agentic AI more CPU

AMD

AMD’s agentic CPU messaging regarding its upcoming Venice-based EPYC processors is mostly marketing speak, but the underlying requirement is very real. An AI agent can invoke retrieval, databases, security checks, code execution and other tools before a GPU generates a response. Running many agents concurrently increases the amount of conventional compute requirements surrounding the accelerators.

Venice scales to 256 Zen 6 cores with support for 512 threads, 16 memory channels, up to 1GB of L3 cache per socket, along with PCIe 6.0 and CXL 3.1 connectivity. AMD is also offering several Venice configurations for other applications, including general-purpose servers, high-frequency workloads, GPU hosts and high-density CPU sandbox systems used to execute agent tools.

Treating the CPU solely as a GPU host understates its role. Gateways, tokenization, vector search, databases and short-lived code execution stress different mixes of per-core performance, thread count, memory bandwidth and I/O. Specifically, AMD’s internal testing shows Venice significantly outperforming its current EPYC 9965 Turin CPU across five parts of the agentic AI pipeline, including gateway processing, context assembly, vector search, enterprise applications and short-lived tool execution. Individual gains vary by workload, but AMD details the overall generational improvement at up to a 1.7 times lift. As with the MI455X figures though, these comparisons come from AMD and will require independent validation.

Pensando networking and ROCm software advance

Keeping GPUs fed with data and coordinating traffic across racks directly affects utilization and operating costs. In fact, GPU utilization is a pretty sad state of affairs currently for some of the major frontier model providers.

As such, Pensando networking has become central to AMD’s roadmap. Helios can connect each MI455X to as many as three 800Gbps Vulcano AI NICs, while Salina DPUs handle front-end networking and infrastructure services.

On the software side, which is an equally critical component, AMD also introduced ROCm.AI, an AI-assisted development layer due to arrive in August. It includes reusable skills for coding agents, simplified management and Hyperloom, which can profile workloads, tune serving configurations, modify kernels and validate results.

These tools address two persistent AMD challenges: developer efficiency and ease of use, and software tuning. Automated optimization still has to produce repeatable gains without creating hard-to-maintain code, however. And while ROCm has progressed significantly over the last few years, NVIDIA’s CUDA retains an advantage in maturity, tooling and developer familiarity.

Customer commitments underscore rack-scale confidence

AMD now has commitments that give its MI450 generation and Helios considerably more weight. Meta and OpenAI have announced multi-generation agreements composed of up to 6GW of AMD compute capacity, with initial 1GW deployments planned for the second half of 2026.

Oracle plans a 50,000-GPU public cloud cluster beginning in the third quarter, while Microsoft will deploy Helios for Azure AI inference. Finally, just before the AMD event, Anthropic announced a strategic partnership for up to 2 Gigawatts of AMD-fueled AI compute, with its first gigawatt expected online in the first half of 2027.

Commitments of this scale reflect confidence in more than just MI455X performance. These customers are evaluating the complete architecture, including Venice CPUs, Pensando networking, ROCm software, rack integration, serviceability and AMD’s ability to deliver and execute across multiple product generations.

There is some financial alignment behind the agreements as well. AMD issued OpenAI performance-based warrants and committed to investing up to $5 billion in Anthropic. That context matters when evaluating these deals as market validation, but these planned deployments are substantial nonetheless and put Helios on a much stronger foundation as it begins shipping.

AMD expands its robotics and embedded foundation

AMD also expanded its physical AI portfolio, building on credible traction from its Xilinx-derived Kria adaptive system-on-modules and embedded technologies that are already powering robotics, machine vision and industrial automation applications.

The new Ryzen AI Embedded X100 combines up to 16 Zen 5 CPU cores, integrated Radeon graphics, a second-generation NPU and as much as 128GB of unified LPDDR5X memory shared across its compute engines. To me this looks a lot like a repackaging and optimization of the company’s Strix Halo platform, but with specific optimizations for the embedded space. Regardless, AMD is pairing X100 with the Kria AI Robotics Developer Platform, which includes a System Module or SOM, and a new Robotics Partner Network spanning hardware, software and platform providers.

Samples began shipping in June, with full production expected in the fourth quarter. This broader objective is to give developers a path across AMD x86 CPUs, GPUs, NPUs and FPGAs for real-time autonomous systems, rather than requiring them to assemble those hardware engines and software components independently.

Execution for AMD is now the test

AMD has assembled a credible platform for the burgeoning agentic AI market that’s blowing up currently with no signs of stopping. MI455X addresses memory and data movement, Venice handles dense agentic CPU workloads, Pensando networking connects global system resources, and ROCm.AI addresses software complexity. Finally, Helios assembles these components into a true competitive threat for NVIDIA’s latest Vera Rubin platform.

AMD’s open architecture may appeal to customers seeking supplier choice, but openness must also translate into reliable deployments, competitive total cost and software that does not require a significant rip-up. NVIDIA enters this cycle with a stronger ecosystem and far more rack-scale deployment experience. The true test will be how easily and reliably customers can integrate, operate and maintain these AMD solutions at scale.

As it stands, AMD now has major customers and a clearly defined architecture with systems engineering expertise behind it. Delivering Helios on schedule and showing that its performance claims translate into a real production workload throughput advantage and total cost of ownership gains will determine how much the competitive gap narrows. And of course, this is in a market that is clamoring for ever-more compute resources with a seemingly insatiable demand for AI services and capacity. That’s an environment for big iron success. Now AMD just has to deliver optimized, turnkey AI platforms. This is far easier said than done, but time will soon tell as deployments take shape this year.

This article is published as part of the Foundry Expert Contributor Network.
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Defense research agency DARPA made its largest quantum computing award ever this week, with a $125 million agreement announced on Wednesday. The same day, the White House announced an additional $5 billion for the Genesis Mission, which focuses on AI for science but also includes technology to accelerate quantum computing and quantum sensors.

“Taken together, these announcements signal that U.S. quantum strategy is shifting from supporting individual research projects to building the infrastructure needed for a quantum-enabled economy,” says Heather West, research manager in the infrastructure systems, platforms, and technology group at IDC.

None of the individual quantum announcements are surprising, she says. But the level of coordination is new. “Government investment is expanding beyond foundational research toward commercialization, manufacturing, and deployment,” she says.

“The US government has been signaling that quantum computing is a priority,” says David Mooter, an analyst at Forrester Research. Part of it is the desire for the US to be a leader in quantum, as it has been in other high-tech areas, he says. And part of it is because the government itself can take advantage of quantum computers.

“Spy agencies would love to use them to decrypt intercepted messages, including messages they intercepted years ago and saved,” he says. And other departments could use quantum computers or networks for energy-related research, for supply chain optimization, and for secure communications. 

Quantum computing is accelerating, he says. “I would not be surprised to see a general gate-based quantum computer that’s good enough to provide commercial value for limited use cases by 2030.”

DARPA’s Quantum Benchmarking Initiative

DARPA’s Quantum Benchmarking Initiatives was launched in 2024, and 18 companies were selected in April of 2025 for Stage A of the project, with awards of up to $1 million each. The companies were to use the money to provide details of their concepts and show how they could lead to a functional, fault-tolerant quantum computer in under a decade.

Then, in November of 2025, DARPA chose 11 companies for Stage B of the project, with awards of up to $15 million for developing their research plans.

To date, only two companies have been chosen for Stage C: PsiQuantum and Microsoft. PsiQuantum announced $32 million of DARPA funding for testing and evaluation in September of last year. This week’s $125 million award will expand the scope and pacing of the validation and verification work. Stage C awards can go up to $300 million, according to DARPA.

This past May, PsiQuantum also announced $100 million from the Department of Commerce, part of the CHIPS and Science Act, to accelerate domestic manufacturing of critical quantum computing components.

Microsoft and PsiQuantum are both in Stage C, bypassing the sequential path that other companies are expected to follow, because they were both part of DARPA’s predecessor to QBI, the Underexplored Systems for Utility-Scale Quantum Computing program.

Genesis Mission

Genesis Mission was launched in late 2025 with the goal of using AI to accelerate scientific breakthroughs, and it now includes more than 15 government agencies.

As part of the Genesis Mission, quantum computing and sensing company Infleqtion announced three projects for the Department of Energy on Wednesday. The three projects focus on quantum circuit design for nuclear applications, atomic quantum sensing, and nuclear fusion energy research.

This announcement did not include the total monetary value of the projects, but, in May, the company announced a separate agreement with the Department of Commerce for $100 million to accelerate Infleqtion’s neutral-atom technology roadmap.

Other quantum-related Genesis Mission projects announced this week include $1.5 million for a BlueQubit quantum error correction project with Microsoft and other partners, a Stanford effort to model the behavior of electrons at quantum scale, an MIT quantum sensing project, Argonne National Laboratory projects on quantum circuit design and quantum sensors, Brookhaven Lab quantum sensor projects, and quantum computing projects at Northwestern University.

IBM, one of three dozen private companies that are part of the Genesis Mission Consortium, announced that it will be leading a project to support more effective quantum applications, and will contribute up to $50 million of quantum compute access for the Genesis Mission.

Enterprise priorities

This week’s quantum announcements aren’t a sign that enterprises need to run out and buy quantum computers, says IDC’s West. But they do need to start preparing for the quantum era — such as by identifying business areas where quantum computing could become a competitive differentiator over the next decade.

But the most immediate threat is that of adversaries using quantum computers to break current encryption standards. Organizations should be inventorying cryptographic assets and developing a roadmap for the migration to quantum-proof algorithms, West says.

The point of no return is closer than ever, and many major players in the encryption and communication space, including Google and Cloudflare, have been accelerating their timelines. In fact, this Wednesday was the federal deadline for naming their post-quantum cryptography migration leads under a June executive order.

“The preparation that needs to be done to prepare is to implement post-quantum cryptography yesterday,” says Forrester’s Mooter.

However, according to a survey released by DigiCert this morning, while 87% of organizations are planning, testing or implementing PQC initiatives, only 7% of organizations have deployed quantum-safe or hybrid cryptography across most of their digital certificates.

Google’s AI offerings span its internal and cloud offerings. Its data centers are processing seven times more AI tokens compared to last year. To keep up, Google is upgrading its data-center hardware and software technologies at a faster clip. It plans to raise $80 billion to build new data centers. (See related story: Google transforms its data center architecture for agent era)

Network World spoke with Mark Lohmeyer, vice president and general manager of AI and computing at Google, about how the company’s infrastructure is keeping pace with AI demand.

Network World: What is the primary shift in infrastructure needs?

Mark Lohmeyer: We’ve seen the rise of agents and agentic use cases. Years ago, it was the chat phase: Ask a question, get an answer. Now we’re in the agentic era, where you express your intent, agents spin off multiple sub-agents, working in parallel, preserving state. This is a radical shift in what infrastructure needs to do; make them fast, cost effective, secure, reliable. We’re delivering infrastructure optimized for the age of agents.

NW: What’s the goal of the infrastructure buildout, and what should customers expect regarding costs?

ML: Ultimately, it’s about enabling customers with leading-edge capabilities and models at scale cost-effectively. With agents, inference transactions increase by 50x, 100x versus non-agentic workloads. We’re driving the cost per transaction down exponentially. In our latest platforms, we reduce the cost by almost 2x for the same work. Customers serve twice the number of users at the same cost, directly driving profitability.

NW: How are you addressing energy efficiency?

ML: Energy is a critical resource, and Google has optimized for years. We design data centers and compute [to drive] high PUE (power usage effectiveness). We introduced liquid cooling over five years ago, and these latest systems are all liquid cooled. For agentic workloads, CPUs come to the forefront… orchestrating agents, calling tools, doing evaluation loops in reinforcement learning. Our latest Axion-based CPU platform called N4A has energy efficiency and is significantly better than the prior generation and x86 comparables.

NW: How do you think about token efficiency as you build-out systems?

ML: Performance and efficiency gains are powered by co-design of the model and infrastructure. Gemini is trained on TPUs, primarily served on TPUs with high frontier model capability, in a token and cost-efficient way. This stems from co-design across the full stack.

NW: How do you project what infrastructure will be needed years in advance?

ML: Hardware cycles deliver a new next generation roughly every year, but design cycles are two years or more in advance. We work with DeepMind doing core research, to application teams taking models into production, to billions of users, to our team building infrastructure. We work upstream with DeepMind and application teams to understand what’s coming. Agents weren’t being broadly spoken of externally, but internally we had those insights around what they would need. That shows up in hardware design. We hit the timing right — these platforms are built for agents.

NW: What’s the eighth generation TPU platform?

ML: We deliver new platforms every year, and ones launched years ago are close to 100% utilized because demand for AI-optimized compute is high. The eighth-generation TPU platform is the first delivering two complete systems, from the chip all the way up to the network and storage and software, that are optimized.

TPU-8t is optimized for training, and TPU-8i is optimized for inference. For TPU-8i, we increased SRAM on the chip to 384MB — three times the prior generation — and increased the HBM by 50%.

NW: How are you approaching GPU and TPU compatibility?

ML: People in a single cluster do not commingle GPUs and TPUs. We offer both options based on specific workload needs. We’ve been investing on the TPU side in using software frameworks customers are comfortable with on GPUs and enabling those on TPUs. For example, PyTorch and vLLM. Customers could have a pool of GPUs and TPUs, running vLLM on top of that. Start with a workload on TPUs, but if the TPU pool is fully utilized, spill to GPUs or vice versa. This works because it’s all leveraging the same compatible software layer on top.

NW: How has the orchestration platform changed for agents?

ML: Kubernetes is becoming the orchestration platform of choice for AI. Google is transforming GKE [Google Kubernetes Engine] into an agent-native orchestration solution. When expressing intent to an agent and it spins up multiple sub-agents, compute needs to spin up rapidly — TPUs or GPUs — without long delays, then run and spin back down. We’re optimizing at every layer of the GKE stack: significantly improving node startup time and how rapidly we start and stop containers. Lovable demonstrates this with GKE, spinning up hundreds of sandboxes for live coding sessions on their platform in parallel, paying for infrastructure when needed.

NW: What is the role of the network and storage infrastructure?

ML: The network is critical for AI. This requires creating large-scale clusters of GPUs or TPUs and enabling them to talk to each other in a high-performance way. We created the Virgo network — a collapsed network architecture, non-blocking within a data center, where multiple pods or NVLink72 domains connect together.

In TPU8T, we can connect over a million TPUs together leveraging Virgo, creating large-scale, high-performance, reliable clusters that shrink innovation cycles. Storage is equally critical. In large-scale clusters, something is always failing. The ability to take snapshots and go back to a checkpoint is important.

We’ve introduced Managed Lustre 10T, with 10 terabytes per second of bandwidth, 18 petabytes of storage in single clusters. This is 10 times faster than last year and 20 times faster than competition. We have Rapid Bucket, low-latency storage backed by Google storage systems. Both are impactful in large-scale training environments.

NW: How does KV cache strategy differ between training and inference?

ML: For TPU-8i, we increased SRAM on the chip to 384 megabytes — three times the prior generation — and increased the HBM by 50%. Storing KV cache directly in chip memory allows responding to inference requests much more rapidly and cost-effectively than going to an external system. For inference workloads, storing as much KV cache as possible on-chip is critical.

We’re introducing a dedicated KV cache storage subsystem that works across GPUs and TPUs. As KV caches get larger, being able to fall back to this dedicated subsystem becomes critical. Loading model weights rapidly is important in dynamic inference environments where accelerators switch between models hour by hour.

Google’s data center team is racing to turn its infrastructure into a well-oiled machine for AI and the onslaught of agents. At this year’s Google I/O, CEO Sundar Pichai shared startling numbers: Google’s data centers processed about 3.2 quadrillion tokens a month, roughly seven times more than the 480 trillion processed in May 2025.

“Multiple agents work together, and now you’ve got millions, billions of users around the world potentially spinning off agents to help them do things,” said Mark Lohmeyer, vice president and general manager for AI and computing infrastructure at Google.

Google’s new data-center blueprint includes updated hardware, software, and orchestration layers to keep always-running agents operational.

In the LLM era, users sent prompts and received responses, and Google’s infrastructure was designed for latency and throughput. But agents could increase inference transactions by up to 100 times non-agentic workloads, Lohmeyer said. Google’s redesigned AI data-center stack has the elasticity for agents to be widely distributed, run for long periods, and make decisions independently.

“We’re delivering new platforms every year, each one optimized for what we think the world is going to need for the age of agents going forward,” Lohmeyer said.

Efficient data flow is key so agents can act, reason, and decide faster.

Google adjusted the Google Kubernetes Engine into an agent-native environment, where agents could be quickly spun up in sandboxes and containers. “From an infrastructure perspective, you need to spin up a bunch of TPUs or GPUs very rapidly. Then you need to be able to run them and spin them back down,” Lohmeyer said.

Google also made drastic improvements to its silicon to support its middleware changes. It recently introduced new AI chips, with the TPU-8t for training, and TPU-8i for inference. The 8t chip has three times more computing power than the previous-generation Ironwood chip. The 8i chip has 384 megabytes of SRAM and 288GB of HBM3e memory, which is 50% more than the previous-generation chip.

The platform is optimized for KV cache (key-value cache), which stores important contextual information needed by agents to make decisions, which reduces the round trips to other memory and storage systems. “Being able to store more of the KV cache directly on the chip allows you to respond much more rapidly and cost-effectively,” Lohmeyer said.

A new CPU called Axion N4A is more power efficient at agentic workloads such as orchestration and tool calling, Lohmeyer said.

Google also made many network and storage improvements to cut training and inference time. A new technology called TPUDirect can move data from storage directly into the memory of the TPU quickly by bypassing any orchestration overhead, Lohmeyer said.

A networking technology called Virgo can coordinate 1 million TPUs across a widely distributed network. It can also link up GPUs such as Nvidia’s latest CPU-GPU package called Vera Rubin. “In the case of Vera Rubin, we’ll be able to connect up to 960,000 GPUs leveraging Virgo,” Lohmeyer said.

A new technology called Pathways is a distributed training framework that efficiently scales machine learning across millions of TPUs and GPUs. Pathways solves bottleneck issues typically associated with JAX, and both help coordinate across wide networks.

“The software to orchestrate these large-scale distributed training jobs is also just as important as the hardware that it runs on top of,” Lohmeyer said.

Weighing Google’s AI data-center stack

Google is the only provider with its own data centers, software, hardware and models, said Jack Gold, principal analyst at J. Gold Associates. Google can optimize each on a regular cadence, which “many data centers can’t easily afford given the high cost of new chips,” Gold said.

Google’s stack may not be best for every data center need compared to Nvidia’s general-purpose GPUs, CPUs, and networking. AWS and Microsoft are also creating their chips.

“There is no real risk of Nvidia being replaced by Google in a big way. But with an ever-expanding market, there is plenty of room for all players,” Gold said.

But Logan Wolfe, partner at Kyndryl’s global AI strategy and sovereign transformation, advised enterprises to adopt a multi-cloud strategy to reduce risk from system failures, however superior an infrastructure may be. “I think that kind of hybrid and liquid infrastructure, we’re definitely getting there,” Wolfe said.

The cost per token varies depending on the provider of inference, whether that’s Microsoft, Google, OpenAI or Anthropic. That will matter as AI moves from experimentation to a powerful tool that drives business changes.

“Ultimately it really comes down to how much money are we spending on AI to move a certain business outcome,” Wolfe said.

The traditional methods of measuring success no longer tell the full story. Here’s what should replace them — and why.

In brief:

• AI is transforming software as a service (SaaS), and the old ways of keeping score no longer apply.
• Smart companies are evolving new metrics that provide deeper insight into how AI-native software is performing in a new marketplace.
• These changes impact everything from pricing to valuations.

The transformation of the software-as-a-service (SaaS) industry toward AI-native operating companies is rapidly changing the unit of value across the industry.

The traditional metric of seats — which measured access — is rapidly giving way to credits designed to measure work performed. This evolution is upending the industry in multiple ways, impacting everything from pricing to enterprise valuations.

While many companies still cling to seat-based metrics to measure growth, efficiency and durability, the future is likely to be one in which companies utilize a credit-centric metrics framework, with seats and outcomes as the bookends of a spectrum.

Why do software companies need new metrics?

Why the rethink, and why now? There are five major forces that are driving this shift:

1. The unit of value is changing. Seats measured who could access software, and credits measure what the software actually does. But in an AI-native world, agents don’t have seats; they have workloads. Over the past 18 months, every major SaaS platform has moved to some forms of credit or consumption unit.
2. The cost of goods sold (COGS) is exploding. AI inference adds real per-unit costs that scale with usage. In an AI-native world, software companies can’t scale to infinite users at near‑zero marginal cost as before.
3. Buying is moving up the org chart. AI-native applications shift purchasing to higher-level operators — such as line-of-business leaders or chief operating officers — which expands the market from software budgets to labor budgets. And because AI agents replace services as well as software, the total market opportunity is 3x to 10x larger than traditional SaaS.
4. Time to value (TTV) is collapsing. With AI-native tools, customers start seeing meaningful results in weeks rather than quarters. Onboarding and setup are fast, workflows are pre-built, and there’s no need for extensive customer success or professional services — dramatically reducing implementation time and costs.
5. Retention is bifurcating. AI forces clarity in a way that traditional SaaS couldn’t. Products that can provide value become even “stickier” and retain customers. Those that don’t churn faster. In an AI-native marketplace, the middle disappears.

How this shift is impacting pricing

Given how AI-native software is transforming the market, the shift to more variable pricing options is inevitable.

Seats won’t go away completely. Subscription pricing based on the number of users is stable and predictable and will continue to work for some customers. Tokens — the use of pass-through pricing for underlying compute — will fit those customers where the AI feature is commoditized or the buyer wants transparency into costs.

Credits will likely become the dominant architecture because they provide a simple metric for both customers and providers. The vendor sets the conversation ratio between credits and underlying compute, shielding the customer from inference cost details. Credits are easy to understand and can be packaged into annual contracts for multiple features and products.

Finally, the industry will likely see some move toward outcome-based pricing for results such as resolved tickets, recovered revenue or qualified leads. This strategy will mostly be limited to verticals where it is easy to prove AI impacted the result.

Where a software vendor sits on this spectrum is a signal of differentiation and pricing power. Credits are where most defensible AI-native businesses are landing because they balance customer predictability with vendor margin control.

How AI upends classic SaaS metrics

When SaaS was in its infancy, companies settled on key metrics designed to answer a small set of core questions. Are we growing? Are customers using the product? Are we retaining and expanding accounts?

But as AI upends software itself, it is also requiring companies to adopt new metrics to track success. These new metrics fall into three primary buckets, rebuilt around the pricing spectrum described earlier and the trend toward credits as the primary frame:

Revenue composition

• Committed credit annual recurring revenue (ARR) vs. burndown ARR: Measuring the credits sold on annual commitment vs. those consumed and replenished. This is the single most important split for valuation. Committed credits behave like subscription and burndown behaves like usage.
• Credit utilization rate: The percentage of purchased credits consumed per period. This is a leading indicator of renewal sizing.
• Credit burn velocity: How fast is a customer consuming their credits, and is that consumption increasing or decreasing quarter over quarter? This metric predicts expansion or contraction before it shows up in ARR.
• Effective price per credit: The real revenue per credit after discounts, overage and rollover, which can detect revenue leakage and help companies set smarter guide rails.

Margin reality

• Credit margin: The gross profit the company earns per credit after subtracting inference costs. This is the core economic unit for AI-native, usage-based businesses — the replacement for gross margin per seat used in SaaS.
• Inference-adjusted gross margin: By carving out AI inference costs separately in the P&L statement, you can see true AI margins, avoid hiding deterioration inside blended SaaS margins, and clearly distinguish AI economics from legacy SaaS economics.
• Compute leverage ratio: This metric measures how efficiently the business converts compute spend into revenue. It shows whether your AI margins are improving as you scale.
• AI-adjusted “Rule of 40”: This updated metric recalibrates the traditional growth and profitability benchmark to account for AI’s lower gross margins and variable inference costs, giving a more accurate picture of business health for AI-native companies.

Behavioral and value signals

• Time-to-first outcome: Replaces traditional onboarding metrics. Tracks how fast a customer reaches their first measurable result.
• Adoption: AI-native adoption is measured by workflow penetration and active agent density, not seat count. As AI replaces human-driven usage, the unit of adoption shifts from people to automated workflows and agents.
• Net credit retention (NCR): Credit-volume retention across the customer base, tracked separately from net recurring revenue to avoid price-change impact.

Along with these new metrics, the industry’s transformation is prompting companies to retire or recalibrate old SaaS measures, including per-seat ARR as a primary key performance indicator (KPI), traditional magic number calibrated to subscription dynamics, unadjusted Rule of 40, customer success metrics tied to human touchpoints, and blended gross margin without AI COGS carve-outs.

What does this mean for enterprise value calculations?

As the internal metrics of success change, so do the ways the investment community measures growth and long-term viability.

Increasingly, a company’s valuation multiple depends on whether its revenue behaves like committed subscription ARR or volatile usage ARR, and the commit‑to‑burndown ratio is the metric investors use to decide where the company fits.

For example, a business with 80% committed credit ARR could trade closer to subscription comps and one with 80% burndown could trade closer to usage comps even though both have the same types of customers. Being able to proactively explain the commit‑to‑burndown mix can help companies avoid undervaluation.

In addition, utilization is expected to replace net promoter scores and seat usage as the primary predictor of churn or expansion. Low utilization guarantees downsizing at renewal, so companies must track utilization cohorts the same way SaaS tracks logo retention cohorts today.

We’re also seeing an inversion of the operating model, with R&D and COGS moving up the P&L and sales and marketing (S&M) and customer success (CS) moving down or sideways. The net operating leverage profile is structurally different from classical SaaS, and the cost-to-scale curve looks different too.

Finally, credit margin engineering is a hidden value-creation lever. The gap between price per credit and cost per credit is set by the software vendor and can be optimized. Most operators have barely started managing this rigorously, and the ones who do will pull away on margin.

What this means for leaders, boards and investors

The shift from classic SaaS metrics to new AI‑native measures isn’t cosmetic. It represents the seismic change the industry is experiencing as AI matures and transforms products and organizations.

While these metrics — and perhaps others yet to be determined — may evolve over time, there is no doubt they are already changing how AI companies allocate capital, price products, incent sales teams, evaluate performance and communicate with investors.

It’s important to remember that SaaS metrics were practical tools for a specific era of software. As that era draws to a close, winning companies will choose new metrics that shape behavior and drive smart decision-making.

The views reflected in this article are the views of the author and do not necessarily reflect the views of Ernst & Young LLP or other members of the global EY organization.

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Over the past few years, I have learned that basic prompts produce inconsistent, hallucination-prone results that no executive would trust in production. What turned the tide was my move to advanced prompting techniques. These weren’t theoretical experiments; they became a practical foundation for reliable, measurable outcomes. I want to share the techniques that consistently delivered the biggest gains in my projects, complete with real before-and-after examples, copy-paste templates, lessons from failures and guidance on when to evolve beyond prompting to agentic systems.

Why advanced prompting still matters in enterprise settings

Sophisticated prompting remains essential for control, reliability and compliance. If you “ask nicely” and hope for the best, you need deterministic behavior, auditable reasoning and minimal risk of hallucination. Here’s what worked for me.

1. Chain-of-Thought (CoT) and its variants: Unlocking step-by-step reasoning

The problem: Models would jump to conclusions on complex analysis tasks, especially involving data interpretation or multi-step logic.

What I did: I started explicitly instructing the model to “think step by step” and show its reasoning.

Before (basic prompt): “Analyze last quarter’s sales data and recommend three actions.”

After (CoT prompt):

“You’re a senior business analyst. Analyze the following sales data step by step: [data]. First, identify the key trends. Second, calculate the rates and anomalies. Third, link findings to business context. Finally, recommend the three prioritized actions with expected impact. Explain your reasoning at each step.”  

Results: Accuracy and depth improved dramatically.

Variants that worked well: Self-consistency. I ran the same CoT prompt multiple times and took the majority consensus. This reduced variability significantly.

Template you can use:

You are [expert role]. Solve this problem by thinking step by step.

[Task or question]

For each step:

1. State your observation or calculation.

2. Explain the implication.

3. Proceed only when confident.

Final answer in this format: [structured output]

2. Tree-of-Thoughts (ToT): Exploring multiple reasoning paths

For truly complex decisions such as resource allocation or risk assessment, linear CoT isn’t enough. Tree-of-Thoughts lets the model generate and evaluate multiple branches.

Example: I was helping a client evaluate three potential vendor platforms for an AI deployment. A standard prompt gave a superficial comparison. With ToT

Prompt Snippet:

Explore three different reasoning paths for selecting the best vendor platform:

Path 1: Focus on cost and scalability.

Path 2: Focus on security, compliance and integration.

Path 3: Focus on innovation and long-term roadmap.

For each path, evaluate pros/cons against our requirements [list].

Then, compare the paths and recommend the strongest overall option with justification.

Outcome: The model surfaced nuanced trade-offs (e.g., one vendor had superior security, but higher integration cost).

When to use: Strategic planning, troubleshooting or scenarios with high uncertainty and multiple viable approaches.

3. ReAct (Reason+ Act) and prompt chaining: Moving toward agentic behavior

One of the biggest leaps I have noticed comes from combining reasoning with tool use and chaining prompts.

ReAct example: (used in data analytics workflow)

You are an AI analyst with access to tools. For the query below:

1. Reason about what information you need.

2. Choose the appropriate tool or action.

3. Observe the result.

4. Repeat until you can answer confidently.

Query: [user request]

In practice, I chained this with retrieval tools. One automated quarterly compliance reporting; the system reasoned about required data, pulled relevant records, validated them, and generated the reports.

4. Meta-prompting and self-reflection: Letting the model improve itself

Use the model to refine its own prompt. This is a huge time-saver.

You are an expert prompt engineer. Improve the following prompt for clarity, structure and effectiveness with [target model]. Make it more precise while preserving intent.

Original prompt: [paste]

Provide the improved version and explain your changes.

Self-reflection loops (asking the model to critique its own output and revise) are a game-changer for content generation and code-review tasks.

5. Multimodal and structured output techniques

With vision-enabled models, I started combining text with images (e.g., uploading architecture diagrams or dashboards).

Tip from experience: Be extremely specific in describing what the models should focus on.

Best practices I learned the hard way

• Start simple, then layer complexity: Over-engineered prompts from Day One usually backfire.
• Model specific tuning: Some models respond better to XML delimiters; others to explicit reasoning.
• Evaluation and versioning: Treat prompts like code if you track versions and run automated evals.
• Security guardrails: Always include instructions against prompt injections and respect data boundaries.
• When to stop prompting: For repetitive, high-stakes workflows, move to full agents or an orchestration framework.

Final takeaways for technical leaders

Advanced prompt engineering has now become a core competency for anyone responsible for enterprise AI outcomes. Start by picking one technique and apply it rigorously to a real business problem. Document before/ after and you will notice why it’s worth mastering.

The field continues evolving towards more automated and agentic systems, but the ability to precisely direct AI reasoning remains foundational.

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When it comes to building an effective AI stack, context is king and power isn’t everything it’s cracked up to be.

“Smaller, smarter, safer — this is a bet our company has taken in how we deploy AI internally,” said Ricky Thakrar, head of sales and account management at Zoho, provider of a suite of popular cloud-based software solutions for sales, marketing, and finance.

“I’m on the business side, and so decisions made by our CIO and IT folks affect me directly, and my teams’ workflows and processes,” he added.

Speaking to a room of tech leaders at the CIO 100 Leadership Live New York event last week, Thakrar explained that every company wants the speed of AI-generated work wedded to the quality of human work, even though these two are diametrically opposed. No amount of model upgrades or spend will close that gap, so the only way forward is to architect your way out. Thakrar encapsulated this idea in a simple formula:

• Smaller: Stop deploying maximum firepower on every task. Many tasks don’t need it.
• Smarter: The system around the model decides more than the model does.
• Safer: Verify at the point a mistake gets locked in, not just downstream of it.

He noted that organizations that win with AI won’t be those deploying the biggest, most powerful models or the most sophisticated architecture, but the ones that figure out that the model is the easy part and the right architecture is harder. That means understanding the hardest element, and the biggest differentiator, is building a human system that learns and compounds alongside agentic systems.

To get it right, organizations need to prioritize the context layer. The size of frontier models like the GPT series, Claude, and Gemini mostly exist to compensate for missing context, Thakrar explained. Without enough context, models need to be able to reason harder and infer more about what a user actually means because it doesn’t know the user’s account, process, or history. A rich context layer makes it possible for enterprises to run workloads on much smaller, lower-power models.

“The intelligence moves from the model into the architecture around it,” he said.

A steep learning curve

One of Zoho’s earliest AI agents was a churn management agent to help the account management team detect churn in customer subscriptions. So when a subscription became inactive, the agent would collect context from notes, meeting recordings, and Zoho’s data enrichment tool, then create a summary of reasons the account might have churned, and schedule a call.

“What happened was I got this churn agent a couple months later, already embedded in our CRM, and within a week my team no longer trusted that agent,” Thakrar said. “The reason is we forgot to collect one very key point.”

In Zoho’s CRM, when a customer buys a bundle of products, that bundle is represented as a single line item. That means the status of any products the customer may have previously purchased individually changes to inactive as they’re moved to the bundle. That’s not churn, but it was interpreted it that way. Zoho fixed it in the second version of the agent.

Then a new problem arose. Many potential customers first purchase Zoho products as pilots or sandboxes. As those customers move from pilot to live instance, they close down the pilot versions. And again, the CRM would record that as subscriptions going inactive.

“The trust deteriorates again because everyone got excited for version 2,” Thakrar said.

Sometimes, a certain product might not be the best fit for a customer and Thakrar’s team will suggest the customer move to another product. That’s deliberate churn, not a churn risk.

“You may have a similar story like this where the agent sounds so good, it’s going to do something quick and add value, but it’s missing context from the account managers, and there are so many more pieces we’re still building out,” Thakrar said. “It’s been almost a year and the problem I have is my team still doesn’t trust it. They’ll see [a message from the agent] and go out and do all the research anyway to make sure it gave the correct answer.”

The team is more on top of potential churn, though, but the promised productivity gains have yet to materialize because the agent has to earn back lost trust due to a lack of context.

“My goal for this year is having an AI-assisted customer journey from sales to account management where the handoff is clean, the context flows, and every piece of information we gather about a customer is weighed, identified, and coached so the sales team can close more deals,” he said.

Zoho’s early experience with agents has led to the idea that constrained, context-rich, deterministic architectures consistently outperform expensive models bolted onto fragmented systems. It all comes down to three pillars: routing, harness, and specialization.

Routing

Routing is about sending workloads to the proper model for the job, which entails providing enough context to a given task that a small, cheap model can handle it without the need for spare reasoning capacity to fill gaps.

Frontier models are expensive and companies can burn through a year’s budget worth of tokens in months. But most tasks can be handled by much smaller, more constrained models at a fraction of the cost.

“You don’t always have to pay the frontier guys for every task,” he said. “We’ve observed with some clients that we could save them 95% with a 3 billion parameter model.”

Harness

An AI agent harness is the software infrastructure scaffolding around an LLM that differentiates an agent from a chatbot. It’s what enables an agent to act on tasks rather than simply respond to prompts. A model reasons through a problem and decides what to do about it. The harness connects the model to the tools, systems, memory, guardrails, and execution environments required to perform the actions determined by the model. The term is frequently used more or less interchangeably with orchestration layer.

“It’s the process around the model, which matters way more than the model itself,” Thakrar said.

In benchmark tests, a superior harness on a less powerful model produces better results than an inferior harness on a much bigger model.

For the best results, Thakrar said, it’s essential to understand the deterministic and non-deterministic elements of a given workload, and build that into the architecture. Machines can read, organize, and validate, and they excel at deterministic tasks. Humans, on the other hand, are exceptional at non-deterministic tasks like judging, synthesizing, and deciding.

Those non-deterministic tasks in a process are the ideal point for AI agents to incorporate a human in the loop, what Thakrar calls human harness. He pointed to a stakeholder mapping agent Zoho built for sales as an example, which takes the context of an initial meeting and third-party enriched data like a LinkedIn profile, weighs probabilities, and makes an educated guess about the stakeholder map.

“The initial goal was just to eliminate that task completely from the human workflow,” he said. “The stakeholder map is done, it’s in the folder, and you can look at it.”

But the agent would struggle to capture nuance. The meanings of titles in organizations always vary, and the politics and dynamics of any given meeting can be difficult for an AI agent to discern. Rather than keep feeding the agent data to try to make it intelligent enough to make those determinations, it was simpler and more efficient for the agent to create a proposed stakeholder map and hand it over to a human who could make changes and explain why those changes were necessary.

Ultimately, Thakrar said the agent still saved human team members time because the stakeholder map was usually pretty close, and the corrections also helped the model grow smarter by adding richer context.

Specialization

Specialization is transitioning a process from testing on a frontier model to production on a much narrower, smaller model. Once you’ve proven that an agent can do a job well, you want to stop paying master-craftsman rates to keep doing that one job well.

Specialization is all about capturing your subject matter experts’ best judgement and pattern recognition to build an open-weight, open source, trained, and fine-tuned model that can be deployed in your own data center.

“The true enterprise bet is to keep that orchestration layer, which is your IP and knowledge, in house,” Thakrar said. “You don’t want to host that on someone else’s model. The goal of everyone in enterprise should be to run, train, and host their own models.”

Every CIO I speak with today is wrestling with some version of the same question: How do we move faster with AI and deliver on our commitments?

It’s an understandable concern. Boards and CEOs are asking about AI. Business leaders are experimenting with use cases. Employees are discovering tools daily, while technology vendors promise unprecedented gains in productivity, innovation, and competitive advantage.

After hundreds of conversations with technology executives over the past year, I’ve become convinced that speed isn’t the real issue. The organizations pulling away from the pack aren’t necessarily adopting AI faster than everyone else. They’re executing more effectively — a subtle distinction that represents one of the defining leadership challenges of the AI era.

Technology has never been the hardest part of transformation. People, priorities, culture, and operating models are the biggest challenges. The ability to translate bold boardroom aspirations into thousands of thoughtful decisions made every day by architects, engineers, product managers, analysts, and business leaders is where competitive advantage is created. AI may be accelerating the pace of change, but it hasn’t changed that fundamental truth.

I’ve met plenty of executives who are exceptional in the boardroom. They know how to frame a vision, influence a board, and build confidence among investors and business leaders. I’ve also met remarkable technologists who instinctively understand the architectural decisions, engineering tradeoffs, and implementation details that determine how great ideas become reality. Modern CIOs, however, must move comfortably between both worlds. Afshean Talasaz is one who stands out among this rare breed.

Long before becoming CIO of Colonial Pipeline, Talasaz built his career from the ground up as a business professional, data scientist, and technologist. He has designed enterprise platforms, built AI capabilities, led technology organizations, and partnered closely with executive leadership teams on business transformation. Today, as an executive in residence with our Practitioners for Practitioners (P4P) community, he helps CIOs and business leaders navigate one of the most significant technology shifts of our generation.

While Talasaz brings deep knowledge of data and AI to the table, his greatest strength is his ability to create strategy and connect it with execution. He can spend the morning discussing enterprise reinvention with the board and the afternoon debating architectural principles with the teams responsible for bringing that vision to life.

That versatility gives Talasaz a unique lens on how CIOs can deliver value with AI.

Software companies have a term for engineers who understand every layer of the technology stack: full-stack developers. Listen to Talasaz and it becomes evident that the AI era requires something similar from technology leaders: a full-stack CIO.

The full-stack CIO: Leading with clarity

A full-stack CIO understands how every layer of the enterprise influences the next. They recognize that every strategic priority becomes a portfolio investment, every investment shapes an operating model, every operating model influences architecture, every architecture choice informs product decisions, every product decision shapes engineering priorities.

The best CIOs understand both ends of that journey. The extraordinary ones understand everything in between.

And those who execute best lead with clarity, Talasaz says.

“Everyone, from executives to middle managers to the people writing code, should be able to explain what we’re trying to achieve,” he emphasizes. “Clarity isn’t that we’ve handed out the PowerPoint. It’s that people genuinely understand where we’re going and can articulate it in their own language.”

One of the unintended consequences of the AI boom is that organizations are beginning to confuse activity with alignment. They have AI councils, AI governance committees, AI innovation labs, AI centers of excellence, AI pilots, and AI roadmaps. Yet if you stop ten people in the hallway and ask a deceptively simple question, What business problem are we actually trying to solve? you’ll often hear ten different answers.

As a result, architects optimize for one objective while product teams optimize for another. Business units pursue opportunities that seem perfectly reasonable from their perspective. Engineers make thoughtful technical decisions based on the information available to them. Individually, none of those decisions are necessarily wrong. Collectively, however, they create organizational drift. AI doesn’t create that problem. It simply accelerates the consequences.

And while AI can be a force multiplier for the positive when every decision is guided by a shared understanding of where the organization is headed, it can also be a force multiplier for the negative, resulting in an organization simply moving faster in different directions.

“When we have the fundamentals right, the tech infrastructure, the operating models, the nuances of how our business actually runs, we get the impacts of AI in a positive way,” Talasaz says. “When we don’t have those in place, AI can amplify the gaps or mute the benefits.”

At a time when so much of the conversation surrounding AI is focused on algorithms, agents, and automation, it’s an important reminder that organizations don’t execute strategy; people do.

Reducing organizational friction

Most executives are familiar with the concept of VUCA that characterizes today’s business environment. But Talasaz stresses the importance of turning this concern inward: “If the world outside our organizations is becoming more volatile, uncertain, complex, and ambiguous, what are we, as leaders, doing to the inside of our organizations?”

Leaders spend enormous amounts of time helping their organizations respond to external disruption but comparatively little time asking whether they are inadvertently re-creating those same conditions internally in response to those external needs. Are we reducing uncertainty or introducing more of it? Are we simplifying work or adding unnecessary complexity? Are we helping people focus on what matters most, or asking them to navigate competing priorities and shifting expectations?

Talasaz refers to this phenomenon as double VUCA — something I’ve witnessed repeatedly while working with CIOs over the past decade. Organizations often assume they’re struggling because of technology limitations when the real constraint is organizational friction. Teams wait for decisions. Priorities shift faster than roadmaps. Governance grows heavier. New committees are formed to solve problems created by existing committees. Everyone is working harder, yet the organization somehow feels slower.

AI amplifies both outcomes. Organizations with clarity become dramatically more effective because AI accelerates good decisions. Organizations without clarity simply accelerate confusion.

Operating model as strategy enabler

AI governance is one way to achieve greater clarity, but as Talasaz says, governance shouldn’t primarily exist inside policy manuals that few people read.

Instead, AI governance should be embedded in the daily rhythms of the organization, shaping how teams collaborate, how decisions are made, how products move from ideas into production, and how innovation happens safely without requiring constant escalation. In other words, it’s all about your operating model.

“If you had to pick one thing that isn’t technology, your operating model is the most important element for executing data and AI at scale,” he says.

The best operating models create enough clarity that capable people can make thousands of decisions independently and confidently, without having to wait for permission. By embedding good governance into the way it works, the organization becomes faster.

This advice echoes something I’ve heard repeatedly from some of the world’s most respected CIOs: High-performing organizations aren’t built on tighter control; they’re built on greater trust, supported by clear principles, shared expectations, and operating models that enable responsible decision-making at every level of the enterprise.

Talasaz points out that technology leaders tend to speak in terms of transformation. He suggests CIOs consider a different word: reinvention.

As he explains, transformation implies replacing what exists today with something new. Reinvention starts with a more clear-eyed and practical premise: Some things absolutely must change; others represent years, sometimes decades, of accumulated expertise, customer trust, operational discipline, and competitive advantage.

Reinvention is about building on those strengths while also creating new ways to deliver value. The leaders making the greatest progress in their AI journeys seem to recognize that it’s less about abandoning the past than thoughtfully preparing the organization for the future.

Closing the gap between strategy and execution

Full-stack CIOs must be able to map out the various layers of execution and planning that need to be done at every level of the organization to be successful. To help with this, Talasaz has developed a data and AI framework that draws on his own experiences “from the keyboard to the boardroom.”

As Talasaz sees it, too many organizations have been doing good work in isolation. “They’re doing a lot of the right things,” he says. “They’re just not connected.”

Boards may be discussing growth while business leaders redesign customer experiences. Product teams may be prioritizing new capabilities while architects modernize platforms. Data teams may be improving quality while engineers focus on delivery. Every group makes meaningful progress within its own domain, yet somewhere between strategy and execution, the connective tissue begins to disappear. Talasaz’s framework brings those connecting points to the forefront.

Crucially, the framework doesn’t begin with technology or AI or even with data. It begins with the experiences the organization hopes to create for its customers, employees, or partners. Many AI initiatives start with the question, “What can this technology do?” And indeed, we need to be inspired by the possibilities and challenged to think differently by what the technology can do. But, Talasaz emphasizes, we also need to ask what experiences we need to deliver for our business and how the technology can make that a reality.

The framework challenges CIOs to answer that question first. Only after the experiences are clearly defined does the conversation move to the capabilities required to deliver it, the business activities that support those capabilities, the AI and data products that enable them, and finally the data foundation that makes everything possible.

This shift in perspective ensures that, rather than allowing technology investments to search for business value, the business experience defines the technology required to deliver it. For CIOs, that’s more than a planning exercise. It’s a fundamentally different way of leading.

Over the coming months, the P4P community will be convening a series of small CxO roundtables to explore these issues and work more deeply with Afshean Talasaz’s 6×6 Data and AI Framework. CIOs and other enterprise leaders interested in participating are welcome to reach out to me directly.

Leadership wants to scale AI. Budgets are tripling. Adoption is up.

Then the CFO asks the question every board now asks: which of these initiatives is actually profitable?

Most organizations cannot answer that question, not because they lack visibility into cost, but because the cost data they have was never designed to produce that answer.

Applying lessons learned from managing cloud spend won’t be a fix for the AI and ROI quandary. True, cloud taught a generation of CFOs that billing without business context is noise. So to get cloud ROI, they stitched two data sources together: cost data plus business data. AWS reveals which account, which region, which tag, which resource. Merge in customer and product mappings on top and the ROI of the cloud spend comes into focus.

But AI is harder. It requires three data sources: cost, business, and telemetry—the automatic collection of data from disparate sources that helps to clarify the whole picture of what happened and why. An executive or engineering lead can have AI invoices and customer revenue. But they have no way to connect them to business value. The token count on the OpenAI invoice does not specify which customer triggered which call, which feature it served, or whether the prompt produced a business outcome. That data does not exist in the provider’s billing.

AI providers won’t fix this problem

The situation is not likely to change anytime soon because AI providers are not in the business of attributing an enterprise’s costs to that enterprise’s customers. Instead, AI providers are in the business of selling tokens. The granularity they expose is the granularity their billing systems require, not the granularity a CFO requires.

Not convinced? Compare what AWS gives you to what an AI provider gives you.

AWS billing exposes resource IDs, account hierarchies, region, SKU, tag metadata, usage by the minute. Every dollar can be attributed to a workload, a team, a customer segment if it was tagged correctly. The data is rich enough that mature FinOps teams built unit economics on top of it years ago.

An AI provider invoice gives you tokens consumed by model, with optional grouping by API key. That is the resolution. No request-level attribution. No customer ID. No feature mapping. No prompt outcome. No retry identification. Multi-step agent workflows collapse into a token count. Imagine a large bank receives a multi-million dollar AI invoice each month. But it has no visibility into what parts of the business were responsible for what parts of the cost so cannot allocate them.

If an enterprise wants to know what AI cost drove which customer or feature, it has to capture that data itself, inside an application, before the call leaves it. 

Three required sources

Building AI ROI measurement requires three data sources, stitched together in a single model.

1. Cost data, normalized across providers. Every AI provider delivers cost differently. OpenAI invoices in one taxonomy, Anthropic in another, fine-tuning vendors and inference platforms each in their own. Cloud GPU costs sit in AWS or Azure billing. Vector database costs land in Pinecone or Snowflake invoices. None interoperate by default. Normalization is necessary but not sufficient. It will put all your AI costs in one schema. It does not tell you what they produced.
2. Application-layer telemetry. This is the source most organizations are missing, and the one that makes AI ROI structurally different from cloud ROI. It requires instrumenting AI calls inside your application across six categories: request-level tracing tied to a customer or session ID; feature attribution tied to the product surface that triggered the call; agent-step capture for multi-step workflows; retry and fallback identification so recovery costs don’t get attributed to primary calls; model selection logging that records which model was chosen and why; and outcome capture that ties each call to whether it produced business value. None of this data exists in the provider’s billing. All of it has to be captured at the moment the call is made and stored in a system that can be stitched to the cost data.
3. Business data. Revenue, customer segments, product hierarchies, and feature usage. The same business data already feeding your CRM and analytics stack, mapped to the customers and features the telemetry layer attributes calls to.

Stitched together, the three sources produce the unit economics every AI investment decision now requires: cost per customer interaction, margin per feature, profitability per agent workflow, ROI per model choice. None of these can be calculated from billing data alone. None can be calculated from telemetry alone. They require all three sources, modeled together in a way that maps cost to outcome.

Why agentic AI makes this urgent

Single-call inference is the easy case. One request, one cost, one customer, one outcome.

Agentic workflows are different. An agent decomposes a task into multiple steps. Each step calls a model. Some steps fall back to a different model when the first fails. Some steps retry on a poor result. Some steps invoke external tools that themselves cost money. A single user request can produce dozens of inference calls across multiple providers, with the cost compounding in ways the provider invoice cannot disaggregate.

If telemetry does not capture agent-step granularity, no one will know which steps are profitable. Aggregate costs will show up three weeks later in the invoice. By then, the workflow has been running at scale, customers are onboarded, and unprofitable paths have been retried thousands of times.

When agents make the calls, the volume of cost-generating events without business context attached grows by an order of magnitude. The window for instrumenting this before it becomes unmanageable is closing.

What changes when the three sources come together

Once the three sources are stitched together, the AI investment conversation changes.

Five different ways to build the same AI capability stop looking equivalent. They converge on adoption metrics and diverge by 10x on cost. The team picks the approach that delivers a similar business outcome at one-fifth the cost, because the team can finally see the difference. Product teams design features with margin awareness from the architecture phase, not from the post-launch budget review. Engineering teams choose model architectures with cost-per-outcome data alongside latency and quality. Leadership evaluates AI initiatives the way they evaluate any other capital allocation: on unit economics, not on the engagement chart. Aggregated invoices track the cost per customer interaction. Engagement metrics reveal margin per feature. Gut-instinct model selection is checked against real cost-per-outcome model selection results. 

Within seconds, everyone can see which AI features are profitable, which should scale, and which should be killed. This is the insight everyone is looking for and companies that achieve it will optimize the benefits of AI.

The build trap

AI costs are compounding now. The board is not waiting 18 months for an internal project to reach production.

The temptation to build it anyway has never been sharper. AI coding tools have changed what a small engineering team can ship in a quarter. The instrumentation layer looks tractable. The cost normalization looks like a weekend project. The semantic model feels like something a senior engineer could draft over a sprint.

It is a trap. Three reasons.

Volume is the first. A production AI footprint generates millions of telemetry events per hour, and that volume scales with agentic adoption. Real-time ingestion, correlation, and attribution at that scale is not the same problem as vibe coding a prototype in an afternoon. It is a permanent operational system that has to be right every minute of every day.

The vendor landscape is the second. Cost data arrives in delayed billing windows from providers with non-interoperable schemas. Schemas change without notice. New AI providers enter the landscape monthly, each with its own taxonomy and metering. The system is not built once. It is maintained against a moving target that moves faster than most internal release cycles.

The third is what the first two add up to: this is business-critical infrastructure. The CFO and the board are going to make capital allocation decisions on the data this system produces. When schema drift goes unnoticed for two weeks, when an agent telemetry stream stops correlating to a vendor that quietly changed its billing API, the cost of being wrong is not a sprint of cleanup. It is a quarter of misallocated capital.

The build-vs.-buy question for engineering leaders has changed. It’s not “can we build this?” The honest answer is yes. The real question is whether the marginal hour of your strongest engineers is best spent stitching cost data to telemetry to business outcomes, or building the AI products that produce the revenue the cost data is measuring.

The capability is reproducible in weeks. The choice is whether to spend the next 18 months building it, or the next 18 months acting on it.

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New Tech Forum provides a venue for technology leaders—including vendors and other outside contributors—to explore and discuss emerging enterprise technology in unprecedented depth and breadth. The selection is subjective, based on our pick of the technologies we believe to be important and of greatest interest to InfoWorld readers. InfoWorld does not accept marketing collateral for publication and reserves the right to edit all contributed content. Send all inquiries to doug_dineley@foundryco.com.