Building Agentic Solutions with Microsoft Foundry

Chapter 4. Building Knowledge Bases

Enterprise AI systems may sometimes feel subpar, not because of model quality, but because of context. Without reliable access to organizational knowledge, consistent memory across interactions, and visibility into how decisions are made, even the most capable large language models may deliver lackluster responses or untrustworthy answers.

Foundry IQ addresses this problem directly. As the knowledge and intelligence layer of Microsoft Foundry, Foundry IQ enables AI agents to reason over enterprise and web data, retain context across interactions, and produce responses that are grounded, observable, and auditable. Rather than treating retrieval, memory, and evaluation as bolt-on components, Foundry IQ integrates them into the core lifecycle of AI application development.

This chapter explores Foundry IQ’s role within Microsoft Foundry, its architectural principles, and how it enables production-grade, knowledge-aware AI systems.

What Is Foundry IQ?

Foundry IQ is a managed knowledge layer for AI agents built on Microsoft Foundry. It enables agents to:

• Ground responses with enterprise and public content

• Produce citation-backed answers

• Support multi-turn, multi-agent reasoning

• Integrate seamlessly with evaluation and observability pipelines

Rather than requiring developers to assemble vector databases, retrieval pipelines, and citation logic themselves, Foundry IQ provides these capabilities by directly integrating agents with Azure AI ...