AI is rapidly transforming how we work, operate, and decide, and teams will increasingly depend on it in their daily processes. But across waves of enterprise AI, from BI dashboards and data lakes to predictive models, and now generative AI and agents, the playbook has largely been the same: collect more data, add more tools, and hope models can reconstruct business context from inconsistent semantics scattered across systems.
This leads to brittle integrations, conflicting definitions, complex context engineering, and model responses that are inconsistent, expensive to correct, and hard to trust for decisions. While platforms like Microsoft Fabric and OneLake unifies where data lives, the meaning of that data is still fragmented.
At Microsoft Ignite, we introduced Fabric IQ, a new semantic foundation within Microsoft Fabric. Fabric IQ is not a replacement for your data estate; it’s a force multiplier for every investment you’ve already made. It brings together data, meaning, and actions into a single semantic layer, enabling AI agents and business users to reason, automate, and act with confidence.
At the core of Fabric IQ, is the new Ontology item that we are releasing in public preview.
What is Ontology in Fabric IQ?
Ontology introduces the semantic foundation that connects people, processes, systems, actions, rules and data into a unified ontology. By binding real-world data to these ontologies, raw tables and events are elevated into rich business entities and relationships, giving people and AI a higher-level, structured view of the business to think, reason, and act with confidence.
With shared definitions, lineage, and policy attached to these entities and relationships, the organization operates on a consistent semantic layer that eliminates semantic drift and conflicting definitions, so every application and AI agent can operate from the same source of meaning, reason and act in real time, power business-aligned dashboards, and drive decisions you can trust.
Key Benefits
Semantic foundation: Enable the next frontier of shared understanding, where business users, engineers, and AI agents can model & understand the things that matter, how they relate, the rules that govern them, and the actions they drive.
Reuse your semantic investments: New analytics or AI experiences don’t need to start from scratch or rediscover business meaning, users can reuse existing Power BI semantic models, so core concepts are defined once and applied everywhere.
Enterprise-grade AI grounding: Ontology gives AI a precise semantic backbone, so responses are consistent, explainable, and aligned with your business reality.
Decision-ready AI actions: Because business rules and constraints live in the ontology, agents can move beyond answers to safe, auditable actions.
Governance and trust: Clear semantics reduce duplication and semantic drift, while constraints improve data quality.
Cross domain reasoning: Graph links and rules let you traverse relationships (like Order > Shipment > Temperature Sensor > Cold Chain Breach) to explain outcomes.
“ENMAX Power is excited to leverage Ontology in Fabric IQ to unify transmission and distribution grid data, overcoming the limitations of traditional relational databases that silo information and complicate real-time analysis. By structuring relationships between assets, events, and operational domains such as weather, outage management, GIS, and SCADA we are empowered to build a foundation for advanced forecasting, risk evaluation, and transparent decision-making. This approach streamlines grid optimization and outage mitigation, while democratizing data for partners and field teams, enabling scalable, efficient, and resilient grid operations.”
— Josh Watmough, Director of System Operations at ENMAX Power
Key Capabilities
Automated Ontology Generation: Automatically generate and enrich ontologies from existing semantic models and schemas, so what you’ve already built for BI seamlessly extends into a live operational ontology graph.
Ontology Modeling and Management: Give business and technical users a low-code way to define and manage ontologies, turning real business processes & concepts into entities, properties, and relationships that mirror how your operations work.
Connect Live Enterprise data: Bind analytical, operational, time-series, and geospatial data to a single semantic foundation, so people and AI can interact with all your data through one consistent business lens.
Business logic and actions: Capture business rules & constraints directly in the ontology and trigger actions, alerts, workflows, and updates, when conditions are met, turning tacit knowledge into automated operations.
Managed ontology graph: Run on a managed, queryable graph with automatic schema and data updates, so you can instantly explore dependencies, impact paths, and patterns that matter to the business.
AI-ready semantic layer: Provides AI agents such as Data Agents and Operational agents in Fabric with a shared semantic layer, grounding their insights and autonomous actions in your business language, rules, and relationships. It also gives agents build in Microsoft Foundry IQ with the real-time business context needed to understand organizations operations.
Powering AI Agents with the real-time business context
Ontology gives AI agents a shared, reliable understanding of your business. Instead of looking at raw tables and columns, agents see business entities, the relationships between them, and the rules and constraints that apply. A single entity can represent multiple tables and columns across different data sources, while hiding that complexity behind a clean business concept. With this grounding, agents can get better answers, stay within business guardrails, and take actions that are consistent, explainable, and aligned with how your operations actually run.
“At Kyndryl, trust that Agentic AI will consistently make sound decisions is essential. Fabric IQ lets us define an ontology that equips our agents to make decisions grounded in business understanding and live operational context, while also making it faster to develop and tune them. We apply Microsoft’s security, trust, governance, and compliance capabilities to manage and secure the ontology that powers agents in production.”
— Tony DeBos, Senior Vice President at Kyndryl
Data Agent in Fabric allows you to build your own conversational Q&A systems using generative AI. It uses Ontology as its map of the enterprise, querying business entities and their relationships instead of raw schemas. Ontology bindings abstract the complexity of diverse data sources, so users don’t need to specify which source to query for a given scenario or question. Ontology seamlessly joins data across semantic models, lakehouse, and eventhouse, to query the right facts together without manual stitching. The result is faster, more accurate answers that stay consistent as data sources evolve.
Operations Agent in Fabric continuously monitor your business in real time, reason over live conditions, evaluate trade-offs, and automatically take actions to advance desired business outcomes. It uses ontology definitions, rules, and actions to build its playbook for how to respond to operational situations. It can monitor real-time data streams already bound in the ontology, detect when business constraints are violated, and trigger the right workflows or alerts. Over time, the ontology becomes the living handbook that guides the agent’s decisions across routes, assets, inventory, and more.
With Foundry IQ, developers can build custom AI agents that use Ontology to bridge unstructured and structured data. Agents can reason over documents in SharePoint, OneDrive, and OneLake files, then enrich those insights with structured facts from semantic models, lakehouses, and eventhouses which are resolved and organized through the ontology. This creates agents that answer in natural language but are grounded in your enterprise’s trusted semantics and data.
Ontology in Fabric IQ and Unified Semantics
Ontology is not just a semantic layer; it’s a way to turn your data and AI investments into better business outcomes. It gives you: • Faster, more confident decisions because data and AI speak the same business language. • Lower operational and compliance risk because rules and constraints are enforced centrally, not re-implemented in every system. • Higher ROI on existing data and AI because agents can reuse the same semantics everywhere instead of rebuilding logic each time.
Under the hood, Ontology brings your data, semantics, and AI agents together in a single, governed semantic layer. By combining low-code modeling, automated generation from existing semantic models, and live connections to analytical, operational, time-series, and geospatial data, it creates one trusted view of how your business runs. Data Agents, Operations Agents, and AI Foundry agents all draw from this shared foundation to deliver answers and actions that are consistent, explainable, and aligned with your operating model.
Get Started with Ontology
Ready to transform your enterprise with semantic powered AI? Explore the capabilities, build your first Ontology, and connect AI agents to your enterprise context.
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