IDC Study: Frontier Firms Lead AI Transformation, Achieving 3x Higher Returns

A recent global study conducted by the International Data Corporation (IDC), commissioned by Microsoft, has shed light on the transformative power of AI in business. The study, which surveyed over 4,000 business leaders responsible for AI decisions, reveals that while 68% of companies are currently using AI, the real differentiator lies in *how* they are using it. 'Frontier firms,' identified as leaders in AI transformation, are reportedly achieving returns three times higher than their slower-adopting counterparts. These firms demonstrate success that transcends mere efficiency and productivity gains, driving growth, expansion, and industry leadership within the evolving AI-powered economy. Microsoft has distilled five key lessons from the IDC study to help organizations successfully transform their business with AI: 1. Expanding AI Impact Across Every Business Function Frontier firms utilize AI across an average of seven business functions, with over 70% integrating it into customer service, marketing, IT, product development, and cybersecurity. The broad adoption of AI is translating into significant business impact, with Frontier firms reporting outcomes at a rate 4x greater than slow adopters across key metrics, like brand differentiation, cost efficiency, top-line growth, and customer experience. BlackRock, for example, uses Microsoft AI to transform its investment lifecycle, improve insights, and enhance client service. 2. Unlocking Industry-Specific Value Leading organizations are deploying AI for strategic, industry-specific applications, with 67% monetizing these use cases to boost revenue. Industries such as financial services, healthcare, and manufacturing are at the forefront of this transformation. Mercedes-Benz, for instance, scales AI across its production network to advance automotive innovation and meet sustainability demands. 3. Building Custom AI Solutions for Competitive Advantage Custom AI solutions, which allow businesses to embed proprietary knowledge and compliance standards, are being used by 58% of Frontier firms. Within the next two years, 77% plan to leverage custom AI solutions, reflecting a trend toward deeper strategic AI integrations. Ralph Lauren, for example, developed the 'Ask Ralph' conversational tool powered by Azure OpenAI, to provide personalized styling tips. 4. Agentic AI: The New Differentiator Agentic AI, systems that can reason, plan, and act with human guidance, is rapidly becoming a defining capability. IDC estimates that the number of companies using agentic AI will triple in the next two years. Dow, for example, utilizes agents in Copilot Studio to automate shipping invoice analysis, streamlining its supply chain. 5. AI Budgets are Growing 71% of respondents plan to increase their AI budgets, sourcing funds from IT and non-IT areas. This signals a shift in perception, with AI increasingly viewed as a core enabler of enterprise-wide transformation. The IDC emphasizes the need for both strong measurement capabilities and a robust business case to estimate the return on AI investments, modelling both cost implications and the potential for responsible value creation. To get started with your company's AI transformation, visit Microsoft's AI solutions website for more information.