Business Transformation: Product And Market Innovation

Evidence and data. Interviewees told Forrester that Microsoft’s AI solutions enabled their organizations to transform their businesses, facilitating product and market innovation. They explained that AI allowed or would allow them to create new products, content, and services and serve new markets or audiences that they otherwise could or would not due to cost or scale. They were empowering and accelerating the creative process. As a result, they expected incremental net-new revenue.

• First, some interviewees discussed being able to create new products, content, services, or other offerings due to AI.

  • The head of responsible AI at an advertising organization explained how their team had rapidly prototyped and built a new product. They said: “The tools we built integrate generative AI capabilities into them, so from a capability perspective, no generative AI, no tool. Also, in terms of expediting that timeline, it would not have happened because they would not have been able to get the business case together and the funding to secure professional developers.”
  • The vice president at a sports and live experiences organization talked about the revenue potential of data with AI. They said: “There is a lot we could do in the context of the game and broadcasting scenarios with ball tracking and player tracking and how we apply computer vision. Those stats really excite fans, and we also work with legalized sports betting partners to share that data. There is potential there.”

• Second, interviewees discussed being able to reach new audiences with AI.

  • The managing director of strategic supplier relationships and AI transformation at an advertising organization described how they are using agents to unlock the value of historical information and serve customers that they otherwise would not, saying: “We have 40 years of interviews. We can now use that history to target small- and medium-size enterprises. Agentic AI enables us to create a lighter version of what we do with our large customers. This requires a different approach that is only possible because of AI.” They estimated that in a few years, revenues from this new offering would be worth 4% of current revenues. They added: “That’s new margin and new customers that we’re pushing into. … We can do it only because of AI and because of the deal we struck with Microsoft.”
  • The director of digital media and audience development at a sports and live experiences organization also discussed how they planned to reach and better serve underserved audiences by using Microsoft’s AI solutions. They explained the value of being able to localize and personalize substantial content for their global audiences, which would be impossible at that scale without AI. They explained: “It is all English now. We plan to introduce seven languages as a pilot.” They continued: “It is significant. We think it is the number-one lever for growth and it goes back to the global nature of our business. We are available to watch in over 200 territories.” They shared a goal to double their total addressable audience through this AI-driven personalization, localization, and scaling.

• Survey respondents reported a median 2% increase in top-line revenues via new revenue streams and new markets (realized or expected) with Microsoft’s AI solutions. All media and entertainment subindustries reported expected or realized increases.

• Sixty-three percent of survey respondents said that revenue growth would come from creation, 56% said experience and engagement, and 53% said personalization and monetization.

Modeling and assumptions. Based on the interviews and corroborated by the survey, Forrester assumes the following about the composite organization:

• It has base revenue of $2.5 billion.

• The composite innovates with Microsoft’s AI solutions by creating new products, content, services, and experiences; enhancing existing offerings; and expanding to new audiences or markets.

• It takes time to innovate, so there is no Year 1 revenue impact. The composite organization realizes up to 1.5% revenue growth in Year 2 and up to 3% revenue growth in Year 3.

• The average media and entertainment operating margin is 9.76%.

Results. This yields a three-year projected PV ranging from $2.8 million (baseline) to $8.5 million (upside potential high).

Go-To-Market Transformation: Improved Marketing, Sales, And Customer Service

Evidence and data. Interviewees told Forrester that there were opportunities to transform how their organizations go to market with Microsoft’s AI solutions through improved marketing, sales, and customer service functions. Microsoft 365 Copilot, the broader Microsoft ecosystem, and AI agents transformed how they bring their products, content, experiences, and services to market.

• First, interviewees and survey respondents reported transforming their marketing and business development functions with AI.

  • The managing director of strategic supplier relationships and AI transformation at an advertising organization described using agents to aid with assessing and responding to RFPs. For more than 80% of the RFPs, they reduced the time to respond from weeks to one day and improved the quality.
  • The chief AI officer at an advertising organization also spoke about using agents to improve ads. Different agents work together on storyboarding and creating different creative elements. Other agents then analyze the ad concept and suggest improvements. The goal is for agentic AI to get the effort to the 80% mark and for humans to do the rest.
  • Survey respondents in marketing roles reported that their organizations have realized or expect to realize:
    • A 33% faster time to proposal.
    • A 46% increase in campaign response rates.
    • A 32% higher content engagement rate.
    • A 20% improved brand sentiment/affinity.
  • Survey respondents in sales and customer success roles reported that their organizations have realized or expect to realize:
    • A 35% improved conversion rate.
    • A 30% increase in opportunities.
    • A 10% increase in opportunities pursued.

• Second, interviewees and survey respondents reported transforming their sales functions with AI.

  • In addition to being able to respond to RFPs faster, interviewees also explained that they were able to make better pitches. The head of responsible AI at an advertising organization said: “We are looking at deploying an AI assistant to help with the repetitive tasks we have to do for every request for information and RFP. That can allow the team to do [more and larger pitches].”
  • The AI leader at an advertising organization explained that they were converting at a higher rate due to improved product quality with AI.
  • Survey respondents in sales and customer success roles reported that their organizations have realized or expect to realize:
    • A 26% improved win rate.
    • A 15% faster sales cycle.
    • A 16% larger average deal size.
    • A 14% larger average revenue per customer.
    • A 40% better upsell/cross-sell rate.

• Lastly, interviewees and survey respondents also reported transforming their retention and customer service functions with AI.

  • The head of colleague productivity and technology at an advertising organization described using agents to provide client services teams with comprehensive views of their clients and improve interactions. They said, “We are reducing the admin overload so people can spend more time with clients.”
  • The managing director of strategic supplier relationships and AI transformation at the same advertising organization said that agentic AI “will have a big impact on customer retention” and estimates that the churn rate should decrease by one-third.
  • The chief AI officer at the same organization explained that agentic AI democratizes data analysis and insights for more users working with customers. This improves the value delivered to customers, increasing revenue and customer retention. In one example that brings together multiple agents, they elaborated: “A user may ask an orchestrator bot a question to understand what is happening in a [consumer market]. The orchestration agent will work with specialized agents to look at different cuts of the data and come up with a go-to-market plan.” Their in-house team is using these tools initially, but the longer-term goal is to make them available for customer self-service.
  • Survey respondents in marketing roles reported that their organizations have realized or expect to realize:
    • A 30% improved customer experience score.
  • Survey respondents in sales and customer success roles reported that their organizations have realized or expect to realize:
    • A 20% improved customer retention rate.

Modeling and assumptions. Based on the interviews and corroborated by the survey, Forrester assumes the following about the composite organization:

• It uses Microsoft’s AI solutions for marketing, sales, and customer service functions driving go-to-market value. The value it derives increases year over year as adoption, proficiency, and AI development increase.

• By transforming its marketing and business development functions, the composite organization generates or pursues up to 1% more opportunities in Year 1, up to 2% more opportunities in Year 2, and up to 4% more opportunities in Year 3.

• By transforming its sales functions, the composite organization wins up to 1.5% more opportunities in Year 1, up to 3% more opportunities in Year 2, and up to 6% more opportunities in Year 3.

• With better engagement and customer service, the composite organization retains up to 0.75% more customers in Year 1, up to 1.5% in Year 2, and up to 3% in Year 3.

Results. This yields a three-year projected PV ranging from $8.9 million (baseline) to $15.1 million (upside potential high).

Operations Transformation: Labor Efficiencies

Evidence and data. Interviewees told Forrester that their employees saved time on repetitive, low-value tasks with Microsoft’s AI solutions and were able to refocus the time savings on higher-value work. This work included more creative tasks that the employees enjoyed most and drove the most value for their organizations. Agents also enabled the interviewees’ organizations to do what previously was impossible, further amplifying the capabilities of their employees throughout the creative process.

• Interviewees’ organizations realized clear productivity gains with Microsoft 365 Copilot. They conducted internal surveys and used Viva Insights to measure the value.

  • With Microsoft 365 Copilot, the head of responsible AI at an advertising organization explained: “We saw 15 to 30 minutes [of time savings] per day on average with people reporting that they were using that time on higher-level, more strategic tasks. … We were seeing an increase in focus hours and uninterrupted time through the Viva Insights, so an improvement in working habits.”
  • The head of colleague productivity and technology at an advertising organization estimated, “I get in an extra half day a week of work that I would not be able to do otherwise.”
  • The vice president at an advertising organization said, “Copilot has been an absolute game changer for us in terms of productivity.”

• Interviewees shared specific examples of how agents, including those built by Microsoft and their organizations, drove labor efficiency.

  • The vice president at a sports and live experiences organization described a complex back-office document processing use case with multiple handoffs that consumed 700 hours. They said: “We landed on agentic AI as the best path forward for solving this because of the potential of building smaller agents for divvying up tasks that we have in the business process. They can do the work for that business process and have the flexibility to have a human in the loop to review and approve the agent’s work.” They estimated: “We are being super conservative in our KPIs with this. The goal is to save 30% of the manual work.”
  • The head of colleague productivity and technology at an advertising organization also described early success with Facilitator Agent: “We have 130 people testing Facilitator Agent, and they all think it is very useful. Everyone previously liked that they were able to get a meeting summary, but Facilitator tracking action follow-ups is really powerful; nobody has to log actions, which saves time. It also helps people stick to agendas. I think we can reduce every meeting by 10 minutes, which saves a lot of time and frees up rooms.”
  • The chief AI officer at an advertising organization shared an example of AI for data analytics, saying: “In the past, someone needed to ask the data science team to do the analysis, even for something as simple as a SQL query. What could take three days of elapsed time can now be done in minutes.”
  • The same chief AI officer also shared how teams can test new product ideas faster, saying: “If there are 50 ideas to test for a client, it can take weeks or months. Using avatars for testing, our teams will be able to complete the work in a single day.”

• Survey respondents reported that their organizations have realized or expect to realize the following time savings per functional area:

Modeling and assumptions. Based on the interviews and corroborated by the survey, Forrester assumes the following about the composite organization:

• An increasing percentage of employees benefit from productivity gains as the composite organization grows Microsoft 365 Copilot adoption and develops agents.

• To be conservative, Forrester excludes employees in the marketing, sales, and customer services functions that drove value in the prior benefit.

• With Microsoft’s AI solutions, the average employee in the composite organization realizes up to 10 hours of time saved per month in Year 1, up to 11 hours in Year 2, and up to 12 hours in Year 3.

• The composite organization’s employees recapture up to 50% of this time for productive work on higher-value tasks.

Results. This yields a three-year projected PV ranging from $16.9 million (baseline) to $26.2 million (upside potential high).

Operations Transformation: External Spend Optimization

Evidence and data. In addition to labor efficiencies, interviewees also explained that their organizations optimized and saved on external spend for software and services. This spend could then be saved or reallocated to higher-value services.

• The director of AI and automation for an advertising organization noted the potential for software cost savings, saying, “We are looking at consolidating our tech stack.” They added: “Over time, when these agents can integrate more, there will be cost savings from removing elements of our stack. There is repetition already.”

• The chief AI officer at an advertising organization said that they often needed to pay third parties to aid with data collection and using agents would reduce this cost.

• The director of digital media and audience development at a sports and live experiences organization explained how they could now realize more value from a multimillion-dollar services contract by having it deliver creative value instead of manual work. They said: “If 50% of the output was run-of-the-mill elements that can be automated and AI-generated and the other 50% was concentrated on genuine storytelling, then those [run-of-the-mill] elements would be replaced and reduced.”

• Survey respondents in finance/accounting and operations roles reported that their organizations have realized or expect to realize the following cost savings per functional area:

Modeling and assumptions. Based on the interviews and corroborated by the survey, Forrester assumes the following about the composite organization:

• Based on Forrester research on IT and software spending, the composite organization spends approximately 0.6% of its baseline revenue on third-party software and systems.⁶

• The composite organization also spends approximately 8% of its baseline revenue on outsourced services.

• By adopting Microsoft’s AI solutions and transforming its operations, the composite organization reduces its third-party software spend by up to 3% in Year 2 and up to 7% in Year 3. It also reduces its outsourcing spend by up to 3.5% in Year 2 and up to 9% in Year 3. This value increases year over year as it realizes more value from Microsoft’s AI solutions and can later replace and reduce other systems, solutions, and services.

• The composite organization does not recognize any savings in Year 1 as it takes time to find and capitalize on potential savings opportunities.

Results. This yields a three-year projected PV ranging from $15.5 million (baseline) to $20.5 million (upside potential high).

People And Culture Transformation: Reduced Employee Attrition And Accelerated Onboarding

Evidence and data. In addition to go-to-market and operations transformations, interviewees’ organizations also underwent people and culture transformations. This included enabling their employees with the best AI solutions and improving the employee experience. This resulted in reducing employee attrition and accelerating onboarding for new employees and internal movers.

• Retention-wise, interviewees noted that Microsoft’s AI solutions enabled employees to focus on the more creative and higher-value work that they enjoyed. Employees expected AI solutions and employers could present them as an investment in empowering their people. Additionally, most survey respondents in human resources roles agreed or strongly agreed that Microsoft’s AI solutions would reduce employee attrition and enhance the employee experience. Put simply, AI tools would allow people to do the job they were hired to do, not all the accompanying (and until now, necessary) busywork. Survey respondents reported that their organizations had realized or expected to realize a 24% reduction in employee attrition rates due to AI tool use.

• The managing director of strategic supplier relationships and AI transformation at an advertising organization described a range of agentic AI use cases to support joiners, leavers, and transfers. For example, they provided new hires with agentic data mining tools, “which will reduce the time to be fully productive from six months down to two or three months.” For transfers, it will reduce the time to productivity from two months to one month.

• Most survey respondents in human resources roles also agreed or strongly agreed that Microsoft’s AI solutions would accelerate onboarding for new employees. They reported that their organizations had realized or expected to realize 32% faster new employee onboarding.

Modeling and assumptions. Based on the interviews and corroborated by the survey, Forrester assumes the following about the composite organization:

• In terms of a retention impact, all employees can potentially benefit from Microsoft’s AI solutions. For example, HR employees may develop agents for organizationwide use or otherwise use AI to augment and extend the value they deliver.

• Before adopting Microsoft’s AI solutions, the employee attrition rate is 20%. Postadoption, this declines by up to 6% in Year 2 and 12% in Year 3, resulting in fewer leavers. It takes the composite organization time to improve the employee experience, so there is no impact in Year 1.

• The average cost to hire a new employee is 30% of their fully burdened annual salary.

• The time to onboard a new employee was previously 40 days. This falls by up to 20% in Year 1, up to 30% in Year 2, and up to 50% in Year 3.

• Similarly, the time to transfer to a significantly different role internally previously took 20 days. The composite can reduce the time this takes by up to 30% in Year 1, up to 40% in Year 2, and up to 50% in Year 3.

• The composite organization realizes year-over-year improvements to these metrics as it better manages knowledge, creates employee experience agents, and as more employees benefit from using the AI solutions.

• The productivity of new hires and internal transfers is lower than the average employee. Additionally, Forrester assumes those employees will recapture 50% of the time saved for productive work.

Results. This yields a three-year projected PV ranging from $6.8 million (baseline) to $11.7 million (upside potential high).

Unquantified Benefits

Interviewees and survey respondents mentioned the following additional benefits that their organizations experienced but could not quantify:

• Strengthened security and compliance. Interviewees and survey respondents explained that using Microsoft’s enterprise-caliber AI solutions had a positive security impact. This included protecting their customers’ data in their AI agents and products and preventing data leaks from their employees using unauthorized AI solutions. The head of responsible AI at an advertising organization detailed how there was a data protection benefit, saying: “It is a baseline expectation from our employees that we are going to have AI capabilities and tools to make their lives easier. If we do not put enterprise tools in their hands, they are going to use other tools regardless.”

• Improved data analysis and insight. The interviewees explained the importance of data and how their organizations’ investments in Microsoft’s AI solutions helped them better capitalize on it. This included everything from sports statistics to research to older content and more structured and unstructured information. Sixty-one percent of survey respondents agreed that Microsoft’s AI solutions would help their organizations by improving data analysis and insights. The chief AI officer at an advertising organization shared that the first pillar of their AI strategy is about data: “We have a lot of proprietary datasets that we can use. Bringing together datasets with clever AI will create a lot of new opportunities for us.”

Flexibility

The value of flexibility is unique to each customer. There are multiple scenarios in which a customer might implement Microsoft’s AI solutions and later realize additional uses and business opportunities, including:

• New, unexpected use cases and opportunities. Interviewees and survey respondents were excited about the new AI use cases and opportunities their organizations were uncovering. In fact, 67% of survey respondents strongly agreed or agreed that Microsoft’s AI solutions would help their organizations by reducing barriers or unlocking new opportunities/initiatives. For example, the vice president at a sports and live experiences organization said, “Our partnership with Microsoft has opened the doors to evaluating several different avenues, whether it is minimizing manual work or making the game experience more enticing.”

• Speed and agility at the forefront of AI advancement. The interviewees said that their organizations were ambitiously pursuing AI transformation with speed, agility, and scale. This was enabled thanks to Microsoft’s AI solutions’ integration with the broader Microsoft ecosystem. Overall, 81% of survey respondents strongly agreed or agreed that Microsoft’s AI solutions would help their organizations by making them faster, more agile, or scalable. The vice president at a sports and live experiences organization said, “We are positioning ourselves at the forefront of working with technology and making technology work our specific needs instead of having to run after technology and catch up with it.”

Flexibility would also be quantified when evaluated as part of a specific project (described in more detail in Total Economic Impact Approach).

Survey Insights

Media And Entertainment AI Use Cases

Interviewees shared that their organizations had genAI and agentic AI use cases across media and entertainment functions as well as in business support functions. Survey respondents reported that the top functional areas they have transformed or expect to transform their organization’s business with Microsoft’s AI solutions are creation (75%), experience/engagement (68%), and content management (62%). They also shared the most critical use cases for each functional area, including:

Creation

The survey respondents reported that image generation (20%), video generation (16%), and captioning/subtitling (13%) are the most critical creation use cases for their organizations.

Experience/Engagement

The survey respondents reported that recommendations (58%), feedback (23%), and experience (20%) are the most critical experience/engagement use cases for their organization.

Content Management

The survey respondents reported that media asset management (46%), copywriting (22%), and metadata management (19%) are the most critical content management use cases for their organizations.

Business Support

The survey respondents reported data analysis and insights (25%), automation (18%), and knowledge and discovery (12%) are the most critical business support use cases for their organization.

Personalization/Monetization

The survey respondents reported that monetization (41%), marketing personalization (23%), and advertising placement and timing (13%) are the most critical personalization/monetization use cases for their organizations.

Content Distribution

The survey respondents reported that distribution and delivery (42%), localization (23%), and rights management (15%) are the most critical content distribution use cases for their organization.