Token Economics: The New FinOps for Agentic AI
In AI applications, tokens are now cost — and token economics deserves architectural attention For a long time, AI application design started with model capability: Can the model write code? Can it reason? Can it use tools? Can it handle long context? Those questions still matter, but in the age of agentic applications, they are no longer sufficient. The more important production question is this: How many tokens does the architecture burn to complete one useful task? A classic chat application often maps one user turn to one model call. An agentic system is different. One user goal can trigger planning, retrieval, tool selection, tool execution, result interpretation, reflection, repair, and summarization. The user sees one instruction; the system may execute dozens of model calls behind the scenes. Tokens are no longer just a measure of text length. They become a measure of system design, runtime behavior, developer workflow, and business cost. GitHub Copilot’s 2026 move to usage-based billing through GitHub AI Credits captures the industry shift clearly. Usage is now aligned with token consumption, including input, output, and cached tokens. That matters because Copilot has evolved from an in-editor assistant into an agentic platform that can handle long, multi-step coding sessions across repositories. In that world, a tiny prompt and a multi-hour autonomous coding workflow should not be treated as the same economic unit. Token economics is therefore not about telling developers to “write shorter prompts.” It is about designing systems where: useful context is preserved, while noise is removed; repeated context is cached or deduplicated; simple tasks do not pay for frontier models; short-term state is managed structurally instead of copied repeatedly; every model call is metered, comparable, and governed. In short: token economics is the practice of making agentic AI economically sustainable. Scenario thinking: GitHub Copilot billing, Copilot SDK, GPT-5.5, Anthropic, and MAI-Code Model The new GitHub Copilot billing model provides a useful framing for developers. Copilot is no longer only autocomplete. It is becoming a programmable agentic platform. It can use models, call tools, work across files, stream responses, and participate in long-running coding workflows. With the GitHub Copilot SDK, developers can embed that agentic runtime into their own applications, services, and developer tools. That is powerful, but it also changes the cost model. Once an agent loop becomes programmable, token cost also needs to become programmable. If a system can plan, call tools, edit files, retry, repair, and summarize, it also needs to meter, route, cache, compress, and evaluate. EvalAgentic gives this idea a concrete playground. The project groups models into cost and capability tiers: Tier Example models Example price / 1K tokens Typical use LARGE claude-opus-4.8, gpt-5.5 $0.030 Agents, code generation, multi-step reasoning MID gpt-5.4-mini $0.012 Dialogue, summarization, extraction TINY gpt-5-mini $0.001 Classification, keyword matching, rule-like tasks This tiering lets us reason about real scenarios: GPT-5.5-class models are valuable for hard reasoning and engineering workflows, but they should not be the default for every step. Using a frontier model for simple classification is like hiring a principal architect to label folders. Anthropic high-capability models can be excellent for complex reasoning and coding, but they benefit from routing discipline. Requirements analysis, test interpretation, deployment explanation, and code generation may not need the same model tier. MAI-Code Model-style coding models should be treated as specialized capability layers. Their value is not just “better code generation”; it is deciding when code-specialized intelligence should be invoked in a larger agent pipeline. The real question is not “Which model is the best?” It is: Which model is the most economical and reliable for this step of this workflow? Four engineering techniques for saving tokens Context Compression: turn long text into executable structure Implementation principle Context Compression converts long natural-language context into the structured information an agent actually needs. Business documents are often verbose: resumes, contracts, product manuals, requirements, and support logs contain narrative text, boilerplate, repeated explanations, and low-value context. The next agent step may only need a few fields. EvalAgentic demonstrates this with a long resume-like input that is compressed into a compact JSON object. Instead of injecting the full original text into every prompt, the system extracts key fields and dynamically injects only the data required by the current task. A practical compression pipeline includes: Redundancy detection — identify long-tail text, repeated descriptions, stale history, and low-value context. Structured extraction — use Copilot or a mid-tier model to transform prose into JSON, tables, or typed schemas. Dynamic injection — inject only the fields needed for the next step. Recoverable references — preserve source pointers so compressed context remains auditable. How to evaluate Prompt token reduction before and after compression. Answer quality and task success rate. Schema fidelity and missing-field rate. Latency improvement. Cost per successful task. Compression is not summarization. Summaries are designed for humans. Structured compression is designed for agents. Prompt Deduplication / Cache: stop paying twice for the same context Implementation principle Many agent systems waste tokens because they repeatedly send the same context. The same resume, contract, repository README, user profile, API documentation, or business rule can be copied across turns and agents. Prompt Deduplication / Cache applies a simple principle: if context has already been processed, do not pay to process it again unless it has changed. A concrete design includes: compute a hash or semantic key for source context; reuse extracted structured results when content is identical or equivalent; apply a TTL for repeated entities, such as the 24-hour cache pattern shown in EvalAgentic; organize stable prompt prefixes to benefit from provider-level prompt caching where available; store shared context in an artifact store or memory layer so multiple agents do not copy the same blob. How to evaluate Cache hit rate. Cached token ratio. Duplicate prompt rate. Cost delta before and after caching. Correctness under cache, especially stale-cache failures. Caching is not “save everything forever.” Good caching knows when to reuse and when to invalidate. On-Demand Model Routing: let task complexity decide model tier Implementation principle On-Demand Model Routing routes each request to the cheapest model that can complete the task reliably. The entry point can use a rule tree, a lightweight classifier, or a hybrid complexity score. EvalAgentic’s routing tree is intentionally easy to explain: INCOMING REQUEST └─ Prompt < 500 tokens? ── YES ─→ TINY: classify / extract └─ NO ──→ multi-step reasoning? ├─ NO ─→ MID: dialogue / summary └─ YES ─→ LARGE: agent / code The engineering logic is straightforward: simple classification and keyword matching go to TINY; summarization and structured conversion go to MID; multi-step reasoning, coding, cross-file changes, and orchestration go to LARGE; code-specialized models such as MAI-Code Model can be placed in the coding phase rather than used across the whole pipeline. How to evaluate Routing accuracy. Cost per route. Quality regression by tier. Escalation rate from small models to larger models. End-to-end success rate. Routing does not mean “always use the smallest model.” It means frontier intelligence is reserved for the steps where it actually changes the outcome. Short-term Memory: preserve state instead of replaying history Implementation principle Short-term Memory controls context growth across multi-turn and multi-agent workflows. Without it, agents often replay the full conversation history, full tool outputs, and full intermediate reasoning on every turn. The context grows; quality may not improve; the bill definitely does. A better design stores state structurally: user goal; current plan; tool outputs and references; failure reasons; next actions; handoff artifacts between agents. In a multi-agent coding pipeline, the Requirements Agent should hand off a structured spec. The Coding Agent should read that spec, not the entire prior conversation. The Testing Agent should consume testable artifacts, not every word produced by the Coding Agent. How to evaluate Context growth curve across turns. Memory retrieval precision. Rework rate caused by missing state. Recovery quality after failed steps. Average input tokens per turn. Short-term memory is not about remembering everything. It is about remembering the next useful thing. EvalAgentic as a concrete evaluation example EvalAgentic is effective as an evangelism project because it turns token economics into an observable before/after system. The architecture has five layers: Frontend — frontend/index.html provides Tabs A / B / C, live SSE logs, and before/after charts. API — backend/server.py exposes FastAPI routes and Server-Sent Events streaming. Orchestration — eval.py handles A/B evaluation; coding_agents.py handles the multi-agent coding scenario. Core — compressor.py, router.py, gh_models.py, and token_meter.py implement compression, routing, Copilot SDK calls, and token metering. Providers — GitHub Copilot SDK and Microsoft Agent Framework provide model access and agent orchestration. Tab A: Compression comparison Tab A compares long-form context before and after structured compression. The key message is that token saving does not come from writing a clever sentence. It comes from converting verbose context into a structured artifact that downstream agents can consume efficiently. Tab B: On-demand model routing Tab B demonstrates that cost is not only about raw token count. If a system routes simple tasks to cheaper tiers and reserves expensive models for complex reasoning, total cost can fall even if some token counts increase. This is a subtle but important point: token economics is not token starvation; it is model portfolio optimization. Tab C: Coding scenario — multi-agent with Agent Framework Tab C is the most persuasive demo. The same deliverable — a Taobao-like goods-list site with HTML + JavaScript frontend, Flask backend, and Docker deployment — is produced twice by a four-agent pipeline: Requirements Agent; Coding Agent; Testing Agent; Deployment Agent. The before pipeline uses no compression and sends every agent to GPT-5.5 / LARGE. The after pipeline injects a compressed JSON spec and uses on-demand routing: requirements can use MID, coding can use LARGE, testing can use MID, and deployment can use TINY. This mirrors real enterprise development. Architecture and complex code generation may deserve frontier models. Test interpretation, deployment packaging, and simple validation often do not. Summary and refinement based on the project diagrams The EvalAgentic README describes three important visuals: the architecture flow, the routing tree, and the token-meter design. Together, they form a governance loop: User Scenario ↓ Context Compression ↓ Prompt Deduplication / Cache ↓ On-Demand Model Routing ↓ Short-term Memory ↓ Token Metering & Budget Actions ↓ Before / After Evaluation Optimize the path, not only the prompt Many teams start token optimization by editing prompt wording. That helps, but the largest waste usually lives in the execution path: how many calls are made, how much context is repeated, how often tools retry, and whether every step uses the same expensive model. EvalAgentic makes the path visible through A/B comparisons. Token Meter is the control plane of cost governance EvalAgentic’s token_meter.py uses a non-invasive interceptor pattern: INTERCEPTOR (@token_meter) ↓ COUNTER CORE: accounting / budget threshold / trigger ↓ ACTION HUB: throttle (>80% budget) / rollback (>budget) This is the right architectural instinct. Production systems need thresholds, throttling, rollback, and traceability. Without those controls, one retry loop can quietly turn a small user request into a budget incident. Cost metrics must be evaluated with quality metrics A system that cuts cost by 80% but drops success rate by 50% is not optimized. It is broken more cheaply. The evaluation matrix should combine cost, quality, latency, and reliability: Dimension Metric Why it matters Cost Cost per successful task Measures the real unit economics Token Input / output / cached tokens Identifies compression and cache opportunities Quality Pass rate / regression rate Ensures cheaper tiers do not break outcomes Efficiency Latency / retry count Prevents cheap models from causing expensive retries Governance Budget breach / rollback count Validates runtime control Narrative A simple three-line narrative works well for demos: Token is no longer a technical detail. It is the bill of your architecture. EvalAgentic shows the same scenario before and after cost-aware design. The goal is not to make models cheaper; the goal is to make agent systems economically governable. For a developer audience, the sharper version is: A good agent does not use the biggest model everywhere. It uses the right intelligence at the right step, with the right context, under the right budget. Practical recommendations for real projects Establish a token baseline first. Measure input, output, retries, tool calls, and cost per scenario before optimizing. Make compression a component, not a prompt habit. Define schemas, cache policies, and fallback behavior. Introduce a model routing matrix. Route by task type, complexity, risk, latency, and cost. Define handoff contracts between agents. Pass structured artifacts, not endless conversation history. Evaluate every optimization with A/B tests. Compare cost, quality, latency, and stability. Add budget actions. Throttle at a threshold, rollback on breach, and add circuit breakers for failed retries. Closing: token economics is the second curve of agent engineering The first phase of AI application development was about calling models. The second phase was about putting models into products. The next phase of agentic AI is about running those systems reliably, affordably, and governably. EvalAgentic matters because it turns Context Compression, Prompt Deduplication / Cache, On-Demand Model Routing, and Short-term Memory into something developers can run, compare, and explain. It moves token economics from opinion to instrumentation. Future AI applications will not only ask: How smart is this agent? They will ask: How many tokens does it spend per completed task? Which model did it use? Did it hit cache? Did retries run away? Did the system reserve frontier intelligence for the steps that deserved it? References kinfey/EvalAgentic GitHub Copilot is moving to usage-based billing Updates to GitHub Copilot billing and plans Copilot SDK - GitHub DocsCopilot, Microsoft 365 & Power Platform product updates call
💡Copilot, Microsoft 365 & Power Platform product updates call concentrates on the different use cases and features within the Microsoft 365 and in Power Platform. Call includes topics like Microsoft 365 Copilot, Copilot Studio, Microsoft Teams, Power Platform, Microsoft Graph, Microsoft Viva, Microsoft Search, Microsoft Lists, SharePoint, Power Automate, Power Apps and more. 👏 Weekly Tuesday call is for all community members to see Microsoft PMs, engineering and Cloud Advocates showcasing the art of possible with Microsoft 365 and Power Platform. 📅 On the 7th of July we'll have following agenda: News and updates from Microsoft Together mode group photo Aimery Thomas (Avanade) – Creating custom Copilot integrated search results UX for enterprise search Michael Greth - My SharePoint Hackathon Agent, Rebuilt with Microsoft Cowork Paolo Pialorsi – Understanding Work IQ MCP and Work IQ CLI 📞 & 📺 Join the Microsoft Teams meeting live at https://aka.ms/community/ms-speakers-call-join 🗓️ Download recurrent invite for this weekly call from https://aka.ms/community/ms-speakers-call-invite 👋 See you in the call! 💡 Building something cool for Microsoft 365 or Power Platform (Copilot, SharePoint, Power Apps, etc)? We are always looking for presenters - Volunteer for a community call demo at https://aka.ms/community/request/demo 📖 Resources: Previous community call recordings and demos from the Microsoft Community Learning YouTube channel at https://aka.ms/community/youtube Microsoft 365 & Power Platform samples from Microsoft and community - https://aka.ms/community/samples Microsoft 365 & Power Platform community details - https://aka.ms/community/home 🧡 Sharing is caring!Copilot, Microsoft 365 & Power Platform Community call
💡 Copilot, Microsoft 365 & Power Platform weekly community call focuses on different use cases and features within the Microsoft 365 and Power Platform - across Microsoft 365 Copilot, Copilot Studio, SharePoint, Power Apps and more. Demos in this call are presented by the community members. 👏 Looking to catch up on the latest news and updates, including cool community demos, this call is for you! 📅 On 9th of June we'll have following agenda: Latest on SharePoint Framework (SPFx) Latest on Copilot prompt of the week PnPjs CLI for Microsoft 365 Dev Proxy Reusable Controls for SPFx SPFx Toolkit VS Code extension PnP Search Solution Demos this time Sandeep PS (EY) – Awesome SharePoint — A Curated Open-Source Resource Hub for the SharePoint Community Charlie Vaughn (County of Calaveras) – Breaking Free from Proprietary Systems: Power Platform in Government David Warner (Quisitive) & Hugo Bernier (Takeda) – Streamline presentation demos with the new Slicinator community tool 📅 Download recurrent invite from https://aka.ms/community/m365-powerplat-dev-call-invite 📞 & 📺 Join the Microsoft Teams meeting live at https://aka.ms/community/m365-powerplat-dev-call-join 💡 Building something cool for Microsoft 365 or Power Platform (Copilot, SharePoint, Power Apps, etc)? We are always looking for presenters - Volunteer for a community call demo at https://aka.ms/community/request/demo 👋 See you in the call! 📖 Resources: Previous community call recordings and demos from the Microsoft Community Learning YouTube channel at https://aka.ms/community/youtube Microsoft 365 & Power Platform samples from Microsoft and community - https://aka.ms/community/samples Microsoft 365 & Power Platform community details - https://aka.ms/community/home 🧡 Sharing is caring!
My Journey with Azure SRE Agent
Introduction A customer came to me with a problem that many organisations have. They control their infrastructure through Infrastructure as Code, but there are often scenarios where an admin needs to go in and make a change - even though they would ideally not want this to happen. The use an Entra feature Privileged Identity Management (PIM). Users statically don't have contributor access to Azure resources, but PIM allows them to elevate their access for a period of time. As part of PIM, the admin needs to give a reason for the elevation. Wouldn't it be good if an agent of some sort could look at this reason, then look at what the user actually did and make an assessment on whether what they did aligned with the reason given? Then alert if not. I initially built Python agents to handle this, but as with many "build vs. buy" decisions, I eventually discovered that Azure SRE Agent (in preview at the time of writing) could do what I needed – and more. This blog chronicles my journey from initial scepticism to building a fully autonomous PIM elevation audit agent. Along the way, I learned valuable lessons about what SRE Agent is designed for, how to work with its tooling model, and the difference between interactive exploration and production automation. The Starting Point: Python Agents and the Buy vs. Build Decision Before discovering SRE Agent, I had functional Python scripts that queried Azure Audit Logs and Activity Logs to correlate PIM activations with actual Azure operations. They worked, but they required maintenance, error handling, scheduling infrastructure, and ongoing attention. When I heard about Azure SRE Agent's capabilities as an autonomous monitoring platform, I decided to investigate. The decision: If there's a choice between buy versus build, buy should win – especially when the "buy" option is a managed Azure service with built-in security, monitoring, and integration capabilities. First Impressions: The Interactive Front End One of the first features that caught my attention was SRE Agent's chat interface. Unlike my static Python scripts, I could have conversational interactions with the agent, refining queries and exploring my Azure environment in natural language. This was powerful for discovery and prototyping. Initial Success (and Failure) When I first asked SRE Agent to analyse PIM elevation patterns, the results were... disappointing. The agent couldn't initially answer my PIM elevation questions effectively. However, this is where the interactive experience shone: through. With coaching in an interactive session, I could: - Explain what PIM activation events look like in Azure Audit Logs - Show the agent how to correlate `CorrelationId` between activation requests and justifications - Demonstrate how to build time windows from activation start to deactivation/expiration - Guide it through matching Azure Activity operations against justification keywords After several rounds of refinement, the agent eventually got excellent results. The interactive session wasn't just a chatbot – it was a learning tool that helped me shape the agent's behaviour. The Subagent Puzzle: Interactive vs. Headless What I really needed was an autonomous agent that could run on a schedule. As I got better results from the interactive sessions, Subagents is the tool in SRE Agent for this. I naturally wanted to convert the interactive session into a subagent that could run autonomously. This is where I hit my first conceptual stumbling block. The Aha Moment: Understanding SRE Agent's Purpose I was initially confused about how to structure a subagent. Should it replicate the interactive conversation flow? How do I capture all that back-and-forth in a static configuration? After discussions with the engineering, I learned a critical lesson: The interactive experience is fantastic for exploration, prototyping, and troubleshooting – but it's not what you should be aiming for in production automation. This reframed my entire approach. Instead of trying to replicate the conversational flow, I needed to distil my learnings from those sessions into the instructions for a subagent. Struggling with Subagent Format Even with this clarity, I struggled with the format of a subagent definition. The YAML structure, the `system_prompt` verbosity, the tool declarations – it felt overwhelming to translate my interactive sessions into a configuration file. The Game-Changer: Let the Agent Write Itself Then came the game-changing advice from engineering: This was brilliant in its simplicity. I had already what I wanted the agent to do in the interactive chat session. It was a simple as "generate a subagent from this conversation". I must admit, I did have to ask it to generate an email with the report, but the bulk of the effort in generating the YAML subagent file was done by the agent. What would have taken me hours of trial and error was done in minutes. Tool Configuration: The Missing Pieces With a subagent definition in hand, I deployed it and... nothing worked. This began the most educational part of my journey: understanding how tools work in Azure SRE Agent. Challenge #1: Accessing Log Analytics My subagent kept failing to query Log Analytics. I initially thought this was a role assignment issue – did the agent's managed identity have Log Analytics Reader permissions? I spent time checking RBAC, verifying workspace access, and reviewing Entra ID permissions. The real issue? I needed to add `QueryLogAnalyticsByWorkspaceId` as a tool in my subagent configuration! tools: - QueryLogAnalyticsByWorkspaceId The Azure SRE Agent UI supports selecting this tool during configuration, but I had missed it. More importantly, I needed to mention the Log Analytics workspace ID in my subagent's `system_prompt` so the agent knew which workspace to target: system_prompt: > ... Query the workspace: XXXXXX-d119-4550-86c0-YYYYYYYYYYY... Lesson learned: Tools aren't automatically available – you must explicitly declare them. The agent uses this to understand what capabilities it has and to configure the appropriate authentication and access patterns. Challenge #2: Sending Email Notifications The next hurdle was sending email reports. My PIM audit was working beautifully, but the results were only visible in logs. I needed email notifications. Initially, there didn't seem to be a built-in email tool I could choose from the portal. I attempted to write a custom Python tool that sent emails via Microsoft Graph API. This seemed logical – I'd done this in my previous Python agents. Problem: Corporate email policies blocked my application from sending emails via Graph. This was a security feature, not a bug, but it meant my custom tool approach was dead in the water. Discovering the Outlook Connector Then I noticed the Outlook connector in the SRE Agent configuration portal. This was a managed connector specifically for sending emails with pre-configured authentication. I set it up, configured it (noting the connector ID: `connector-abf2`), and waited for emails. Still nothing. The Manual YAML Edit Trawling through other sample subagent configurations, I discovered a tool called SendOutlookEmail. This tool wasn't available in the portal's dropdown menu, but it existed in the platform. I needed to **manually add this to my subagent YAML file**: tools: - QueryLogAnalyticsByWorkspaceId - SendOutlookEmail After this change and redeploying the subagent, emails started flowing perfectly. Lesson learned: The portal UI is evolving (remember, this is preview), and not all tools are exposed visually yet. Don't be afraid to hand-edit the YAML when you know a capability exists. The documentation and sample repositories are your friends. Making It Fully Autonomous: Scheduled Triggers With a working subagent that could query logs, analyse alignment, and send emails, I had one final step: scheduling it. I created a scheduled task trigger in Azure SRE Agent configured to run every 24 hours (UTC). This trigger invokes my PIM elevation subagent, which executes its entire workflow autonomously and emails stakeholders with any findings. The subagent configuration includes this execution schedule guidance: system_prompt: > Execution schedule: Run every 24h (UTC). Now, every morning, our security team receives a PIM elevation alignment report without any manual intervention. The Result: A Production PIM Elevation Agent My final solution is an **autonomous agent** that: Runs on a 24-hour schedule Queries Azure Audit Logs for PIM activations Extracts user justifications from the log Builds precise activation time windows Queries Azure Activity logs during that time window Classifies alignment: Aligned, Partial, or NotAligned Generates JSON and plaintext reports Emails stakeholders with flagged non-aligned activity No Python scripts. No custom authentication handling. No infrastructure to maintain. You can see the full subagent configuration in my GitHub repository: PIM Elevation Agent Reflections: SRE Agent's Power and Rough Edges Azure SRE Agent is powerful. The ability to define complex audit workflows in declarative YAML, leverage natural language prompts for behaviour specification, and integrate with Azure services through managed tools is genuinely impressive. It also integrates with incident response services - both being able to generate incidents and to trigger flows from incidents. All as a first-class Azure Platform as a Service (PaaS). However, it's important to remember that this is a preview service (as of February 2026). There are rough edges: - Tool discoverability: Not all tools are visible in the portal UI - Documentation gaps: Some capabilities require digging through samples - Learning curve: Understanding the interactive-vs-headless paradigm takes time - Debugging: Error messages aren't always clear about what's misconfigured These are typical preview-stage challenges, and I expect they'll improve as the service matures. The core platform is solid, and the engineering team is responsive to feedback. Key Takeaways If you're considering Azure SRE Agent, here are my lessons learned: Use interactive sessions for discovery – They're excellent for prototyping and learning Think headless/autonomous for production – Autonomous agents should be declarative, not conversational Let the agent write itself – Ask the interactive session to generate subagent configs Explicitly declare tools – They're not automatic; you must add them to your config Include context in prompts – Workspace IDs, connector IDs, schedules – be specific Don't fear manual YAML edits – The portal is evolving, hand-editing is ok Check samples and docs*– Other configurations show patterns and tools not yet in UI, so check the YAML of these Embrace "buy over build" – Managed services reduce long-term maintenance burden Resources: - SRE Agent Documentation - my PIM Elevation subagent sample - Kusto (KQL) Query Reference *This blog post represents my personal experience and opinions. Azure SRE Agent capabilities and UI may have changed since the time of writing.*
Automation for a real estate brokerage
I manage a real estate brokerage and am looking for help in how to utilize Microsoft teams better. I would like to have it automate processes for my associates. Example, they are looking to list a property, it will guide them to a tutorial and provide all of the documents that i uploaded. Another example, they want to request a lockbox or signs, it will ask them the relevant information and then put it in my queue. Any help would be appreciated!What’s New in Microsoft 365 Copilot | May 2026
Welcome to the May 2026 edition of What's New in Microsoft 365 Copilot! Every month, we highlight new features and enhancements to keep Microsoft 365 admins up to date with Copilot features that help your users be more productive and efficient in the apps they use every day.
