Your guide to understanding AI in Microsoft Dynamics

Posted October 02, 2025

If you are new to Artificial Intelligence (AI) in business as many of us are, learning the basic vocabulary behind AI technology can help you gain a better understanding of how Microsoft Dynamic’s AI tools can take your organization to the next level.

Recent advances in AI are already having a profound impact on nearly every aspect of our lives and work.

However, the AI community uses a lot of jargon and buzzwords that can make it hard to follow and understand. Joesoftware is here to break down some of the terminology so you can better understand AI in a Microsoft Dynamics environment, ultimately leading to a better understanding of how AI could help your business.

Artificial Intelligence (AI)

Artificial intelligence is a technology that allows machines to perform tasks that typically require human intelligence.

AI can analyze if something is positive or negative, translate between languages, make decisions, recognize patterns, answer complex questions, and learn from its experience. What makes it “artificial” is that its intellect was created by humans using technology. AI is not a physical machine or robot; it is a program that runs on computers.

It works by looking at a lot of information and following a set of instructions called algorithms to create models that can automate tasks that typically require human time and intelligence.  

AI is like having a smart assistant that can help with various tasks by using its ability to learn, understand, recognize, and decide. Sometimes you directly engage with an AI system, like with Bing Chat or ChatGPT, but more often AI is in the background doing things like suggesting words as we type in Microsoft Word or recommending the next song in your playlist.

Generative AI

Generative AI leverages its power to make new things, not just regurgitate or provide information about existing things. Generative AI enables the creation of content that is similar but new. It can create art, write stories, design products, and perform administrative tasks. However, Generative AI can also be used by bad actors to create fake news or photos that look real but are actually fake.

Responsible AI

Responsible AI is about creating AI systems that are safe and fair. AI systems are often tasked with making important decisions about society – in healthcare, social services, education, commerce and more. Since these systems are created by humans and trained on data drawn from a less than perfect world, it is important to find ways to mitigate any AI shortcomings or inherent biases.

Copilots

A copilot is an AI-powered productivity tool that helps users with everyday tasks in their Microsoft apps, documents, and conversations.

A copilot is an AI-powered digital assistant that helps with tasks like writing, coding, summarizing, and searching. Copilots can comprehend human language and provide answers, content, or take action. Just like a copilot on an airplane, it’s a tool that can help you be more productive and efficient, but you as the main pilot are always in charge.

Agents, and how they work with copilots

Agents are specialized AI tools build to handle specific processes or solve business challenges. Agents can be used with a copilot to perform tasks, respond to and resolve inquiries, and take independent action based on predefined goals.

Agents are like apps on an AI-powered interface. A copilot is the interface that allows you to interact with these agents.

An AI Agent is a software system that perceives its environment, reasons about it, and takes actions to achieve a goal, often with a degree of autonomy and self-improvement. AI agents can learn from their experiences to enhance performance over time. These agents use AI techniques like natural language processing and machine learning to process data (text, voice, code), make decisions, and utilize tools to complete complex workflows.

Agents are autonomous or semi-autonomous. Microsoft 365 Copilot features a number of pre-built autonomous agents, including Microsoft 365 Copilot for Sales, Microsoft 365 Copilot for Service, and Microsoft Copilot for Finance.

Building custom agents

Copilot Studio is a low-code platform that allows users to create and run AI-powered agents. As you interact with Copilot Studio, you consume “messages”.  Messages are a measure of the time and effort required for an agent to retrieve information and respond to prompts and any actions or custom skills the agent uses. The number of messages depends on the complexity of the task.

In the coming weeks and months, Joesoftware will share the information and insights you need as a business leader to make informed decisions about AI in your Microsoft Dynamics environment.  

Sources: 10 AI terms everyone should know: https://news.microsoft.com/10-ai-terms/