Governing AI apps and agents for Marketplace
Governing AI apps and agents Governance is what turns powerful AI functionality into a solution that enterprises can confidently adopt, operate, and scale. It establishes clear responsibility for actions taken by the system, defines explicit boundaries for acceptable behavior, and creates mechanisms to review, explain, and correct outcomes over time. Without this structure, AI systems can become difficult to manage as they grow more connected and autonomous. For publishers, governance is how trust is earned — and sustained — in enterprise environments. It signals that AI behavior is intentional, accountable, and aligned with customer expectations, not left to inference or assumption. As AI apps and agents operate across users, data, and systems, risk shifts away from what a model can generate and toward how its behavior is governed in real‑world conditions. Marketplace readiness reflects this shift. It is defined less by raw capability and more by control, accountability, and trust. This post is part of a series on building and publishing well-architected AI apps and agents on Microsoft Marketplace. What governance means for AI apps and agents Governance in AI systems is operational and continuous. It is not limited to documentation, checklists, or periodic reviews — it shapes how an AI app or agent behaves while it is running in real customer environments. For AI apps and agents, governance spans three closely connected dimensions: Policy What the system is allowed to do, what data it is allowed to access, what is restricted, and what is explicitly prohibited. Enforcement How those policies are applied consistently in production, even as context, inputs, and conditions change. Evidence How decisions and actions are traced, reviewed, and audited over time. Governance works when intent, behavior, and proof move together — turning expectations into outcomes that can be trusted and examined. These dimensions are interdependent. Policy without enforcement is aspiration. Enforcement without evidence is unverifiable. Governance in action Governance becomes real when responsibility is explicit. For AI apps and agents, this starts with clarity around who is responsible for what: Who the agent acts for — and how its use protects business value Ensuring the agent is used for its intended purpose, produces measurable value, and is not misused, over‑extended, or operating outside approved business contexts. Who owns data access and data quality decisions Governing how the agent consumes and produces data, whether access is appropriate, and whether the data used or generated is reliable, accurate, and aligned with business and integrity expectations. Who is accountable for outcomes when behavior deviates Defining responsibility when the agent’s behavior creates risk, degrades value, or produces unexpected outcomes — so corrective action is timely, intentional, and owned. When governance is left vague or undefined, accountability gaps surface and agent actions become difficult to justify and explain across the publisher, the customer, and the solution itself. In this model, responsibility is shared but distinct. The publisher is responsible for designing and implementing the governance capabilities within the solution — defining boundaries, enforcement points, and evidence mechanisms that protect business value by default. Marketplace customers expect to understand who is accountable before they adopt an AI solution, not after an incident forces the question. The customer is responsible for configuring, operating, and applying those capabilities within their own environment, aligning them to internal policies, risk tolerance, and day‑to‑day use. Governance works when both roles are clear: the publisher provides the structure, and the customer brings it to life in practice. Data governance for AI: beyond storage and access For Marketplace‑ready AI apps and agents, data governance must account for where data moves, not just where it resides. Understanding how data flows across systems, tools, and tenants is essential to maintaining trust as solutions scale. Data governance for AI apps and agents extends beyond where data is stored. These systems introduce new artifacts that influence behavior and outcomes, including prompts and responses, retrieval context and embeddings, and agent‑initiated actions and tool outputs. Each of these elements can carry sensitive information and shape downstream decisions. Effective data governance for AI apps and agents requires clear structure: Explicit data ownership — defining who owns the data and under what conditions it can be accessed or used Access boundaries and context‑aware authorization — ensuring access decisions reflect identity, intent, and environment, not just static permissions Retention, auditability, and deletion strategies — so data use remains traceable and aligned with customer expectations over time Relying on prompts or inferred intent to determine access is a governance gap, not a shortcut. Without explicit controls, data exposure becomes difficult to predict or explain. Runtime policy enforcement in production Policies are stress tested when the agent is responding to real prompts, touching real data, and taking actions that carry real consequences. For software companies building AI apps and agents for Microsoft Marketplace, runtime enforcement is also how you keep the system fit for purpose: aligned to its intended use, supported by evidence, and constrained when conditions change. At runtime, governance becomes enforceable through three clear lanes of behavior: Decisions that require human approval Use approval gates for higher‑impact steps (for example: executing a write operation, sending an external request, or performing an irreversible workflow). This protects the business value of the agent by preventing “helpful” behavior from turning into misuse. Actions that can proceed automatically — within defined limits Automation is earned through clarity: define the agent’s intended uses and keep tool access, data access, and action scope anchored to those uses. Fit‑for‑purpose isn’t a feeling — it’s something you support with defined performance metrics, known error types, and release criteria that you measure and re‑measure as the system runs. Behaviors that are never permitted — regardless of context or intent Block classes of behavior that violate policy (including jailbreak attempts that try to override instructions, expand tool scope, or access disallowed data). When an intended use is not supported by evidence — or new evidence shows it no longer holds — treat that as a governance trigger: remove or revise the intended use in customer‑facing materials, notify customers as appropriate, and close the gap or discontinue the capability. To keep runtime enforcement meaningful over time, pair it with ongoing evaluation: document how you’ll measure performance and error patterns, run those evaluations pre‑release and continuously, and decide how often re‑evaluation is needed as models, prompts, tools, and data shift. This is what keeps autonomy intentional. It allows AI apps and agents to operate usefully and confidently, while ensuring behavior remains aligned with defined expectations — and backed by evidence — as systems evolve and scale. Auditability, explainability, and evidence Guardrails are the points in the system where governance becomes observable: where decisions are evaluated, actions are constrained, and outcomes are recorded. As described in Designing AI guardrails for apps and agents in Marketplace, guardrails shape how AI systems reason, access data, and take action — consistently and by default. Guardrails may be embedded within the agent itself or implemented as a separate supervisory layer — another agent or policy service — that evaluates actions before they proceed. Guardrail responses exist on a spectrum. Some enforce in the moment — blocking an action or requiring approval before it proceeds — while others generate evidence for post‑hoc review. Marketplace‑ready AI apps and agents could implement both, with the response mode matched to the severity, reversibility, and business impact of the action in question. These expectations align with the governance and evidence requirements outlined in the Microsoft Responsible AI Standard v2 General Requirements. In practice, guardrails support auditability and explainability by: Constraining behavior at design time Establishing clear defaults around what the system can and cannot do, so intended use is enforced before the system ever reaches production. Evaluating actions at runtime Making decisions visible as they happen — which tools were invoked, which data was accessed, and why an action was allowed to proceed or blocked. When governance is unclear, even strong guardrails lose their effectiveness. Controls may exist, but without clear intent they become difficult to justify, unevenly applied across environments, or disconnected from customer expectations. Over time, teams lose confidence not because the system failed, but because they can’t clearly explain why it behaved the way it did. When governance and guardrails are aligned, the result is different. Behavior is intentional. Decisions are traceable. Outcomes can be explained without guesswork. Auditability stops being a reporting exercise and becomes a natural byproduct of how the system operates day to day. Aligning governance with Marketplace expectations Governance for AI apps and agents must operate continuously, across all in‑scope environments — in both the publisher’s and the customer’s tenants. Marketplace solutions don’t live in a single boundary, and governance cannot stop at deployment or certification. Runtime enforcement is what keeps governance active as systems run and evolve. In practice, this means: Blocking or constraining actions that violate policy — such as stopping jailbreak attempts that try to override system instructions, escalate tool access, or bypass safety constraints through crafted prompts Adapting controls based on identity, environment, and risk — applying stricter limits when an agent acts across tenants, accesses sensitive data, or operates with elevated permissions Aligning agent behavior with enterprise expectations in real time — ensuring actions taken on behalf of users remain within approved roles, scopes, and approval paths These controls matter because AI behavior is dynamic. The same agent may behave differently depending on context, inputs, and downstream integrations. Governance must be able to respond to those shifts as they happen. Runtime enforcement is distinct from monitoring. Enforcement determines what is allowed to continue. Monitoring explains what happened once it’s already done. Marketplace‑ready AI solutions need both, but governance depends on enforcement to keep behavior aligned while it matters most. Operational health through auditability and traceability Operational health is the combination of traceability (what happened) and intelligibility (how to use it responsibly). When both are present, governance becomes a quality signal customers can feel day to day — not because you promised it, but because the system consistently behaves in ways they can understand and trust. Healthy AI apps and agents are not only traceable — they are intelligible in the moments that matter. For Marketplace customers, operational trust comes from being able to understand what the system is intended to do, interpret its behavior well enough to make decisions, and avoid over‑relying on outputs simply because they are produced confidently. A practical way to ground this is to be explicit about who needs to understand the system: Decision makers — the people using agent outputs to choose an action or approve a step Impacted users — the people or teams affected by decisions informed by the system’s outputs Once those stakeholders are clear, governance shows up as three operational promises you can actually support: Clarity of intended use Customers can see what the agent is designed to do (and what it is not designed to do), so outputs are used in the right contexts. Interpretability of behavior When an agent produces an output or recommendation, stakeholders can interpret it effectively — not perfectly, but reasonably well — with the context they need to make informed decisions. Protection against automation bias Your UX, guidance, and operational cues help customers stay aware of the natural tendency to over‑trust AI output, especially in high‑tempo workflows. This is where auditability and traceability become more than logs. Well governed AI systems should still answer: Who initiated an action — a user, an agent acting on their behalf, or an automated workflow What data was accessed — under which identity, scope, and context What decision was made, and why — especially when downstream systems or people are affected The logs should show evidence that stakeholders can interpret those outputs in realistic conditions — and there is a method to evaluate this, with clear criteria for release and ongoing evaluation as the solution evolves. Explainability still needs balance. Customers deserve transparency into intended use, behavior boundaries, and how to interpret outcomes — without requiring you to expose proprietary prompts, internal logic, or implementation details. For more information on securing your AI apps and agents, visit Securing AI apps and agents on Microsoft Marketplace | Microsoft Community Hub. What's next in the journey Governance creates the conditions for AI apps and agents to operate with confidence over time. With clear policies, enforcement, and evidence in place, publishers are better prepared to focus on operational maturity — how solutions are observed, maintained, and evolved safely in production. The next post explores what it takes to keep AI apps and agents healthy as they run, change, and scale in real customer environments. Key resources See curated, step-by-step guidance to help you build, publish, or sell your app or agent (no matter where you start) in App Advisor Quick-Start Development Toolkit can connect you with code templates for AI solution patterns Microsoft AI Envisioning Day Events How to build and publish AI apps and agents for Microsoft Marketplace Get over $126K USD in benefits and technical consultations to help you replicate and publish your app with ISV SuccessDesigning AI guardrails for apps and agents in Marketplace
Why guardrails are essential for AI apps and agents AI apps and agents introduce capabilities that go beyond traditional software. They reason over natural language, interact with data across boundaries, and—in the case of agents—can take autonomous actions using tools and APIs. Without clearly defined guardrails, these capabilities can unintentionally compromise confidentiality, integrity, and availability, the foundational pillars of information security. From a confidentiality perspective, AI systems often process sensitive prompts, contextual data, and outputs that may span customer tenants, subscriptions, or external systems. Guardrails ensure that data access is explicit, scoped, and enforced—rather than inferred through prompts or emergent model behavior. From an availability perspective, AI apps and agents can fail in ways traditional software does not — such as runaway executions, uncontrolled chains of tool calls, or usage spikes that drive up cost and degrade service. Guardrails address this by setting limits on how the system executes, how often it calls tools, and how it behaves when something goes wrong. For Marketplace-ready AI apps and agents, guardrails are foundational design elements that balance innovation with security, reliability, and responsible AI practices. By making behavioral boundaries explicit and enforceable, guardrails enable AI systems to operate safely at scale—meeting enterprise customer expectations and Marketplace requirements from day one. This post is part of a series on building and publishing well-architected AI apps and agents on Microsoft Marketplace. Using Open Worldwide Application Security Project (OWASP) GenAI Top 10 as a guardrail design lens The OWASP GenAI Top 10 provides a practical framework for reasoning about AI‑specific risks that are not fully addressed by traditional application security models. It helps teams identify where assumptions about trust, input handling, autonomy, and data access are most likely to break down in AI‑driven systems. However, not all OWASP risks apply equally to every AI app or agent. Their relevance depends on factors such as: Agent autonomy, including whether the system can take actions without human approval Data access patterns, especially cross‑tenant, cross‑subscription, or external data retrieval Integration surface area, meaning the number and type of tools, APIs, and external systems the agent connects to Because of this variability, OWASP should not be treated as a checklist to implement wholesale. Doing so can lead teams to over‑engineer controls in low‑risk areas while leaving critical gaps in places where autonomy, data movement, or tool execution create real exposure. Instead, OWASP is most effective when used as a design lens — to inform where guardrails are needed and what behaviors require explicit boundaries. Understanding risks and enforcing boundaries are two different things. OWASP tells you where to look; guardrails are what you actually build. The goal is not to eliminate all risk, but to use OWASP insights to design selective, intentional guardrails that align with the system's architecture, autonomy, and operating context. Translating AI risks into architectural guardrails OWASP GenAI Top 10 helps identify where AI systems are vulnerable, but guardrails are what make those risks enforceable in practice. Guardrails are most effective when they are implemented as architectural constraints—designed into the system—rather than as runtime patches added after risky behavior appears. In AI apps and agents, many risks emerge not from a single component, but from how prompts, tools, data, and actions interact. Architectural guardrails establish clear boundaries around these interactions, ensuring that risky behavior is prevented by design rather than detected too late. Common guardrail categories map naturally to the types of risks highlighted in OWASP: Input and prompt constraints Address risks such as prompt injection, system prompt leakage, and unintended instruction override by controlling how inputs are structured, validated, and combined with system context. Action and tool‑use boundaries Mitigate risks related to excessive agency and unintended actions by explicitly defining which tools an AI app or agent can invoke, under what conditions, and with what scope. Data access restrictions Reduce exposure to sensitive information disclosure and cross‑boundary leakage by enforcing identity‑aware, context‑aware access to data sources rather than relying on prompts to imply intent. Output validation and moderation Help contain risks such as misinformation, improper output handling, or policy violations by treating AI output as untrusted and subject to validation before it is acted on or returned to users. What matters most is where these guardrails live in the architecture. Effective guardrails sit at trust boundaries—between users and models, models and tools, agents and data sources, and control planes and data planes. When guardrails are embedded at these boundaries, they can be applied consistently across environments, updates, and evolving AI capabilities. By translating identified risks into architectural guardrails, teams move from risk awareness to behavioral enforcement. This shift is foundational for building AI apps and agents that can operate safely, predictably, and at scale in Marketplace environments. Design‑time guardrails: shaping allowed behavior before deployment The OWASP GenAI Top 10 provides a practical framework for reasoning about AI specific risks that are not fully addressed by traditional application security models. It helps teams identify where assumptions about trust, input handling, autonomy, and data access are most likely to break down in AI driven systems. However, not all OWASP risks apply equally to every AI app or agent. Their relevance depends on factors such as: Agent autonomy, including whether the system can take actions without human approval Data access patterns, especially cross-tenant, cross subscription, or external data retrieval Integration surface area, meaning the number and type of tools, APIs, and external systems the agent connects to Because of this variability, OWASP should not be treated as a checklist to implement wholesale. Doing so can lead teams to over engineer controls in low risk areas while leaving critical gaps in places where autonomy, data movement, or tool execution create real exposure. Instead, OWASP is most effective when used as a design lens — to inform where guardrails are needed and what behaviors require explicit boundaries. Understanding risks and enforcing boundaries are two different things. OWASP tells you where to look; guardrails are what you actually build. The goal is not to eliminate all risk, but to use OWASP insights to design selective, intentional guardrails that align with the system's architecture, autonomy, and operating context. Runtime guardrails: enforcing boundaries as systems operate For Marketplace publishers, the key distinction between monitoring and runtime guardrails is simple: Monitoring tells you what happened after the fact. Runtime guardrails are inline controls that can block, pause, throttle, or require approval before an action completes. If you want prevention, the control has to sit in the execution path. At runtime, guardrails should constrain three areas: Agent decision paths (prevent runaway autonomy) Cap planning and execution. Limit the agent to a maximum number of steps per request, enforce a maximum wall‑clock time, and stop repeated loops. Apply circuit breakers. Terminate execution after a specified number of tool failures or when downstream services return repeated throttling errors. Require explicit escalation. When the agent’s plan shifts from “read” to “write,” pause and require approval before continuing. Tool invocation patterns (control what gets called, how, and with what inputs) Enforce allowlists. Allow only approved tools and operations, and block any attempt to call unregistered endpoints. Validate parameters. Reject tool calls that include unexpected tenant identifiers, subscription scopes, or resource paths. Throttle and quota. Rate‑limit tool calls per tenant and per user, and cap token/tool usage to prevent cost spikes and degraded service. Cross‑system actions (constrain outbound impact at the boundary you control) Runtime guardrails cannot “reach into” external systems and stop independent agents operating elsewhere. What publishers can do is enforce policy at your solution’s outbound boundary: the tool adapter, connector, API gateway, or orchestration layer that your app or agent controls. Concrete examples include: Block high‑risk operations by default (delete, approve, transfer, send) unless a human approves. Restrict write operations to specific resources (only this resource group, only this SharePoint site, only these CRM entities). Require idempotency keys and safe retries so repeated calls do not duplicate side effects. Log every attempted cross‑system write with identity, scope, and outcome, and fail closed when policy checks cannot run. Done well, runtime guardrails produce evidence, not just intent. They show reviewers that your AI app or agent enforces least privilege, prevents runaway execution, and limits blast radius—even when the model output is unpredictable. Guardrails across data, identity, and autonomy boundaries Guardrails don't work in silos. They are only effective when they align across the three core boundaries that shape how an AI app or agent operates — identity, data, and autonomy. Guardrails must align across: Identity boundaries (who the agent acts for) — represent the credentials the agent uses, the roles it assumes, and the permissions that flow from those identities. Without clear identity boundaries, agent actions can appear legitimate while quietly exceeding the authority that was actually intended. Data boundaries (what the agent can see or retrieve) — ensuring access is governed by explicit authorization and context, not by what the model infers or assumes. A poorly scoped data boundary doesn't just create exposure — it creates exposure that is hard to detect until something goes wrong. Autonomy boundaries (what the agent can decide or execute) — defining which actions require human approval, which can proceed automatically, and which are never permitted regardless of context. Autonomy without defined limits is one of the fastest ways for behavior to drift beyond what was ever intended. When these boundaries are misaligned, the consequences are subtle but serious. An agent may act under the authority of one identity, access data scoped to another, and execute with broader autonomy than was ever granted — not because a single control failed, but because the boundaries were never reconciled with each other. This is how unintended privilege escalation happens in well-intentioned systems. Balancing safety, usefulness, and customer trust Getting guardrails right is less about adding controls and more about placing them well. Too restrictive, and legitimate workflows break down, safe autonomy shrinks, and the system becomes more burden than benefit. Too permissive, and the risks accumulate quietly — surfacing later as incidents, audit findings, or eroded customer trust. Effective guardrails share three characteristics that help strike that balance: Transparent — customers and operators understand what the system can and cannot do, and why those limits exist Context-aware — boundaries tighten or relax based on identity, environment, and risk, without blocking safe use Adjustable — guardrails evolve as models and integrations change, without compromising the protections that matter most When these characteristics are present, guardrails naturally reinforce the foundational principles of information security — protecting confidentiality through scoped data access, preserving integrity by constraining actions to authorized paths, and supporting availability by preventing runaway execution and cascading failures. How guardrails support Marketplace readiness For AI apps and agents in Microsoft Marketplace, guardrails are a practical enabler — not just of security, but of the entire Marketplace journey. They make complex AI systems easier to evaluate, certify, and operate at scale. Guardrails simplify three critical aspects of that journey: Security and compliance review — explicit, architectural guardrails give reviewers something concrete to assess. Rather than relying on documentation or promises, behavior is observable and boundaries are enforceable from day one. Customer onboarding and trust — when customers can see what an AI system can and cannot do, and how those limits are enforced, adoption decisions become easier and time to value shortens. Clarity is a competitive advantage. Long-term operation and scale — as AI apps evolve and integrate with more systems, guardrails keep the blast radius contained and prevent hidden privilege escalation paths from forming. They are what makes growth manageable. Marketplace-ready AI systems don't describe their guardrails — they demonstrate them. That shift, from assurance to evidence, is what accelerates approvals, builds lasting customer trust, and positions an AI app or agent to scale with confidence. What’s next in the journey Guardrails establish the foundation for safe, predictable AI behavior — but they are only the beginning. The next phase extends these boundaries into governance, compliance, and day‑to‑day operations through policy definition, auditing, and lifecycle controls. Together, these mechanisms ensure that guardrails remain effective as AI apps and agents evolve, scale, and operate within enterprise environments. Key resources See curated, step-by-step guidance to help you build, publish, or sell your app or agent (no matter where you start) in App Advisor, Quick-Start Development Toolkit can connect you with code templates for AI solution patterns Microsoft AI Envisioning Day Events How to build and publish AI apps and agents for Microsoft Marketplace Get over $126K USD in benefits and technical consultations to help you replicate and publish your app with ISV SuccessSecuring AI apps and agents on Microsoft Marketplace
Why security must be designed in—not validated later AI apps and agents expand the security surface beyond that of traditional applications. Prompt inputs, agent reasoning, tool execution, and downstream integrations introduce opportunities for misuse or unintended behavior when security assumptions are implicit. These risks surface quickly in production environments where AI systems interact with real users and data. Deferring security decisions until late in the lifecycle often exposes architectural limitations that restrict where controls can be enforced. Retrofitting security after deployment is costly and can force tradeoffs that affect reliability, performance, or customer trust. Designing security early establishes clear boundaries, enables consistent enforcement, and reduces friction during Marketplace review, onboarding, and long‑term operation. In the Marketplace context, security is a foundational requirement for trust and scale. This post is part of a series on building and publishing well-architected AI apps and Agents on Microsoft Marketplace. How AI apps and agents expand the attack surface Without a clear view of where trust boundaries exist and how behavior propagates across systems, security controls risk being applied too narrowly or too late. AI apps and agents introduce security risks that extend beyond those of traditional applications. AI systems accept open‑ended prompts, reason dynamically, and often act autonomously across systems and data sources. These interaction patterns expand the attack surface in several important ways: New trust boundaries introduced by prompts and inputs, where unstructured user input can influence reasoning and downstream actions Autonomous behavior, which increases the blast radius when authentication or authorization gaps exist Tool and integration execution, where agents interact with external APIs, plugins, and services across security domains Dynamic model responses, which can unintentionally expose sensitive data or amplify errors if guardrails are incomplete Each API, plugin, or external dependency becomes a security choke point where identity validation, audit logging, and data handling must be enforced consistently—especially when AI systems span tenants, subscriptions, or ownership boundaries. Using OWASP GenAI Top 10 as a threat lens The OWASP GenAI Top 10 provides a practical, industry‑recognized lens for identifying and categorizing AI‑specific security threats that extend beyond traditional application risks. Rather than serving as a checklist, the OWASP GenAI Top 10 helps teams ask the right questions early in the design process. It highlights where assumptions about trust, input handling, autonomy, and data access can break down in AI‑driven systems—often in ways that are difficult to detect after deployment. Common risk categories highlighted by OWASP include: Prompt injection and manipulation, where malicious input influences agent behavior or downstream actions Sensitive data exposure, including leakage through prompts, responses, logs, or tool outputs Excessive agency, where agents are granted broader permissions or action scope than intended Insecure integrations, where tools, plugins, or external systems become unintended attack paths Highly regulated industries, sensitive data domains, or mission‑critical workloads may require additional risk assessment and security considerations that extend beyond the OWASP categories. The OWASP GenAI Top 10 allows teams to connect high‑level risks to architectural decisions by creating a shared vocabulary that sets the foundation for designing guardrails that are enforceable both at design time and at runtime. Designing security guardrails into the architecture Security guardrails must be designed into the architecture, shaping where and how policies are enforced, evaluated, and monitored throughout the solution lifecycle. Guardrails operate at two complementary layers: Design time, where architectural decisions determine what is possible, permitted, or blocked by default Runtime, where controls actively govern behavior as the AI app or agent interacts with users, data, and systems When architectural boundaries are not defined early, teams often discover that critical controls—such as input validation, authorization checks, or action constraints—cannot be applied consistently without redesign: Tenancy boundaries, defining how isolation is enforced between customers, environments, or subscriptions Identity boundaries, governing how users, agents, and services authenticate and what actions they can perform Environment separation, limiting the blast radius of experimentation, updates, or failures Control planes, where configuration, policy, and behavior can be adjusted without redeploying core logic Data planes, controlling how data is accessed, processed, and moved across trust boundaries Designing security guardrails into the architecture transforms security from reactive to preventative, while also reducing friction later in the Marketplace journey. Clear enforcement boundaries simplify review, clarify risk ownership, and enable AI apps and agents to evolve safely as capabilities and integrations expand. Identity as a security boundary for AI apps and agents Identity defines who can access the system, what actions can be taken, and which resources an AI app or agent is permitted to interact with across tenants, subscriptions, and environments. Agents often act on behalf of users, invoke tools, and access downstream systems autonomously. Without clear identity boundaries, these actions can unintentionally bypass least‑privilege controls or expand access beyond what users or customers expect. Strong identity design shapes security in several key ways: Authentication and authorization, determines how users, agents, and services establish trust and what operations they are allowed to perform Delegated access, constraints agents to act with permissions tied to user intent and context Service‑to‑service trust, ensures that all interactions between components are explicitly authenticated and authorized Auditability, traces actions taken by agents back to identities, roles, and decisions A zero-trust approach is essential in this context. Every request—whether initiated by a user, an agent, or a backend service—should be treated as untrusted until proven otherwise. Identity becomes the primary control plane for enforcing least privilege, limiting blast radius, and reducing downstream integration risk. This foundation not only improves security posture, but also supports compliance, simplifies Marketplace review, and enables AI apps and agents to scale safely as integrations and capabilities evolve. Protecting data across boundaries Data may reside in customer‑owned tenants, subscriptions, or external systems, while the AI app or agent runs in a publisher‑managed environment or a separate customer environment. Protecting data across boundaries requires teams to reason about more than storage location. Several factors shape the security posture: Data ownership, including whether data is owned and controlled by the customer, the publisher, or a third party Boundary crossings, such as cross‑tenant, cross‑subscription, or cross‑environment access patterns Data sensitivity, particularly for regulated, proprietary, or personally identifiable information Access duration and scope, ensuring data access is limited to the minimum required context and time When these factors are implicit, AI systems can unintentionally broaden access through prompts, retrieval‑augmented generation, or agent‑initiated actions. This risk increases when agents autonomously select data sources or chain actions across multiple systems. To mitigate these risks, access patterns must be explicit, auditable, and revocable. Data access should be treated as a continuous security decision, evaluated on every interaction rather than trusted by default once a connection exists. This approach aligns with zero-trust principles, where no data access is implicitly trusted and every request is validated based on identity, context, and intent. Runtime protections and monitoring For AI apps and agents, security does not end at deployment. In customer environments, these systems interact continuously with users, data, and external services, making runtime visibility and control essential to a strong security posture. AI behavior is also dynamic: the same prompt, context, or integration can produce different outcomes over time as models, data sources, and agent logic evolve, so monitoring must extend beyond infrastructure health to include behavioral signals that indicate misuse, drift, or unintended actions. Effective runtime protections focus on five core capabilities: Vulnerability management, including regular scanning of the full solution to identify missing patches, insecure interfaces, and exposure points Observability, so agent decisions, actions, and outcomes can be traced and understood in production Behavioral monitoring, to detect abnormal patterns such as unexpected tool usage, unusual access paths, or excessive action frequency Containment and response, enabling rapid intervention when risky or unauthorized behavior is detected Forensics readiness, ensuring system-state replicability and chain-of-custody are retained to investigate what happened, why it happened, and what was impacted Monitoring that only tracks availability or performance is insufficient. Runtime signals must provide enough context to explain not just what happened, but why an AI app or agent behaved the way it did, and which identities, data sources, or integrations were involved. Equally important is integration with broader security event and incident management workflows. Runtime insights should flow into existing security operations so AI-related incidents can be triaged, investigated, and resolved alongside other enterprise security events—otherwise AI solutions risk becoming blind spots in a customer’s operating environment. Preparing for incidents and abuse scenarios No AI app or agent operates in a perfectly controlled environment. Once deployed, these systems are exposed to real users, unpredictable inputs, evolving data, and changing integrations. Preparing for incidents and abuse scenarios is therefore a core security requirement, not a contingency plan. AI apps and agents introduce unique incident patterns compared to traditional software. In addition to infrastructure failures, teams must be prepared for prompt abuse, unintended agent actions, data exposure, and misuse of delegated access. Because agents may act autonomously or continuously, incidents can propagate quickly if safeguards and response paths are unclear. Effective incident readiness starts with acknowledging that: Abuse is not always malicious, misuse can stem from ambiguous prompts, unexpected context, or misunderstood capabilities Agent autonomy may increase impact, especially when actions span multiple systems or data sources Security incidents may be behavioral, not just technical, requiring interpretation of intent and outcomes Preparing for these scenarios requires clearly defined response strategies that account for how AI systems behave in production. AI solutions should be designed to support pause, constrain, or revoke agent capabilities when risk is detected, and to do so without destabilizing the broader system or customer environment. Incident response must also align with customer expectations and regulatory obligations. Customers need confidence that AI‑related issues will be handled transparently, proportionately, and in accordance with applicable security and privacy standards. Clear boundaries around responsibility, communication, and remediation help preserve trust when issues arise. How security decisions shape Marketplace readiness From initial review to customer adoption and long‑term operation, security posture is a visible and consequential signal of readiness. AI apps and agents with clear boundaries—around identity, data access, autonomy, and runtime behavior—are easier to evaluate, onboard, and trust. When security assumptions are explicit, Marketplace review becomes more predictable, customer expectations are clearer, and operational risk is reduced. Ambiguous trust boundaries, implicit data access, or uncontrolled agent actions can introduce friction during review, delay onboarding, or undermine customer confidence after deployment. Marketplace‑ready security is therefore not about meeting a minimum bar. It is about enabling scale. Well-designed security allows AI apps and agents to integrate into enterprise environments, align with customer governance models, and evolve safely as capabilities expand. When security is treated as a first‑class architectural concern, it becomes an enabler rather than a blocker—supporting faster time to market, stronger customer trust, and sustainable growth through Microsoft Marketplace. What’s next in the journey Security for AI apps and agents is not a one‑time decision, but an ongoing design discipline that evolves as systems, data, and customer expectations change. By establishing clear boundaries, embedding guardrails into the architecture, and preparing for real‑world operation, publishers create a foundation that supports safe iteration, predictable behavior, and long‑term trust. This mindset enables AI apps and agents to scale confidently within enterprise environments while meeting the expectations of customers adopting solutions through Microsoft Marketplace. Key resources See curated, step-by-step guidance to help you build, publish, or sell your app or agent (no matter where you start) in App Advisor, Quick-Start Development Toolkit Microsoft AI Envisioning Day Events How to build and publish AI apps and agents for Microsoft Marketplace Get over $126K USD in benefits and technical consultations to help you replicate and publish your app with ISV SuccessProduction ready architectures for AI apps and agents on Marketplace
Why “production‑ready” architecture matters for Marketplace AI apps and agents A working AI prototype is not the same as a production‑ready AI app in Microsoft Marketplace. Marketplace solutions are expected to operate reliably in real customer environments, alongside mission‑critical workloads and under enterprise constraints. As a result, AI apps published through Marketplace must meet a higher bar than “it works in a demo.” Production‑ready Marketplace AI apps must assume: Alignment with enterprise expectations and the Azure Well‑Architected Framework, including cost optimization, security, reliability, operational excellence, and performance efficiency Architectural decisions made early are difficult to reverse, especially once customers, tenants, and billing relationships are in place A higher trust bar from customers, who expect Marketplace solutions to be Microsoft‑vetted, certified, and safe to run in production Customers come to Marketplace expecting solutions that are ready to run, ready to scale, and ready to be supported—not experiments. This post focuses on the architectural principles and patterns required to meet those expectations. Specific services and implementation details are covered later in the series. This post is part of a series on building and publishing well-architected AI apps and Agents on Microsoft Marketplace. Aligning offer type and architecture early sets you up for success A strong indicator of a smooth Marketplace journey is early alignment between offer type and solution architecture. Offer type defines more than how an AI app is listed—it establishes clear roles and responsibilities between publishers and customers, which in turn shape architectural boundaries. Across all other offer types, architecture must clearly answer three questions: Who owns the runtime? Where does the AI execute? Who controls updates and ongoing operations? These decisions will vary depending on whether the solution resides in the customer’s or publisher’s tenant based on the attributes associated with the following transactable marketplace offer types: SaaS offers, where the AI runtime lives in the publisher’s environment and architecture must support multi‑tenancy, strong isolation, and centralized operations Container offers, where workloads run in the customer’s Kubernetes environment and architecture emphasizes portability and clear operational assumptions Virtual Machine offers, where preconfigured environments run in the customer’s subscription and architecture is more tightly coupled to the OS and infrastructure footprint Azure Managed Applications, where the solution is deployed into the customer's subscription and architecture must balance customer control with defined lifecycle boundaries. What makes this model distinctive is its flexibility: an Azure Managed Application can package containers, virtual machines, or a combination of both — making it a natural fit for solutions that require customer-controlled infrastructure without sacrificing publisher-managed operations. The packaging choice shapes the underlying architecture, but the managed application wrapper is what defines how the solution is deployed, updated, and governed within the customer's environment. Architecture decisions naturally reinforce Marketplace requirements and reduce certification and operational friction later. Key factors that benefit from early alignment include: Roles and responsibilities, such as who operates the AI runtime and who is responsible for uptime, patching, scaling, and ongoing operations Proximity to data, particularly for AI solutions that rely on customer‑specific or proprietary data, where placement affects performance, data movement, and compliance Core architectural building blocks of AI apps Designing a production‑ready AI app starts with treating the solution as a system, not a single service. AI apps—especially agent‑based solutions—are composed of multiple cooperating layers that together enable reasoning, action, and safe operation at scale. At a high level, most production‑ready AI apps include the following building blocks: Interaction layer, which serves as the entry point for users or systems and is responsible for authentication, request shaping, and consistent responses Orchestration layer, which coordinates reasoning, tool selection, workflow execution, and retrieval‑augmented generation (RAG) flows across multi‑step interactions Model endpoints, which provide inference and generation capabilities and introduce distinct latency, cost, and dependency characteristics Data sources, including vector stores, operational data, documents, and logs that the AI system reasons over Control planes, such as identity, configuration, policy enforcement, feature flags, and secrets management, which govern behavior without redeploying core logic Observability, which enables tracing, monitoring, and diagnosis of agent decisions, actions, and outcomes Networking, which connects components using a zero‑trust posture where every call is authenticated and outbound access is explicitly controlled Together, these components form the foundation of most Marketplace‑ready AI architectures. How they are composed—and where boundaries are drawn—varies by offer type, tenancy model, and customer requirements. Specific services, patterns, and implementation guidance for each layer are explored later in the series. Tenancy design choices as an early architectural decision One of the earliest and most consequential architectural decisions is where the AI solution is hosted. Does it run in the publisher’s tenant, or is it deployed into the customer’s tenant? This choice establishes foundational boundaries and is difficult to change later without significant redesign. If the solution runs in the publisher’s tenant, it is inherently multi‑tenant and must be designed with strong logical isolation across customers. If it runs in the customer’s tenant, deployments are typically single‑tenant by default, with isolation provided through infrastructure boundaries. Many Marketplace AI apps fall between these extremes, making it essential to define the tenancy model early. Common tenancy approaches include: Publisher‑hosted, multi‑tenant solutions, where a shared AI runtime serves multiple customers and requires strict isolation of customer data, inference requests, identity, and cost attribution Customer‑hosted, single‑tenant deployments, where each customer operates an isolated instance within their own Azure subscription, often preferred for regulated or tightly controlled environments Hybrid models, which combine centralized AI services with customer‑hosted data or execution layers and require carefully defined trust and access boundaries Tenancy decisions influence several core architectural dimensions, including: Identity and access boundaries, which define how users and agents authenticate and act across tenants Data isolation, including how customer data is stored, processed, and protected Model usage patterns, such as shared models versus tenant‑specific models Cost allocation and scale, including how usage is tracked and attributed per customer These considerations are not implementation details—they shape how the AI system behaves, scales, and is governed in production. Reference architecture guidance for multi‑tenant AI and machine learning solutions in the Azure Architecture Center explores these tradeoffs in more detail. Understanding your customer’s needs Designing a production‑ready AI architecture starts with understanding the environment your customers expect your solution to operate in. Marketplace customers vary widely in their security posture, compliance obligations, operational practices, and tolerance for change. Architectures that reflect those realities reduce friction during onboarding, certification, and long‑term operation. Key customer considerations that shape architecture include: Security and compliance expectations, such as industry regulations, internal governance policies, or regional data requirements Target environments, including whether customers expect solutions to run in their own Azure subscription or are comfortable consuming centrally hosted services Change and outage windows, where operational constraints or seasonal restrictions require predictable and controlled updates Architectural alignment with customer needs is not about designing for every edge case. It is about making intentional tradeoffs that reflect how customers will deploy, operate, and depend on your AI solution in production. Specific security controls, compliance enforcement mechanisms, and operational policies are explored later in the series. This section establishes the architectural mindset required to support them. Separating environments for safe iteration Production AI systems must evolve continuously while remaining stable for customers. Separating environments is how publishers enable safe iteration without destabilizing live usage—and how customers maintain confidence when adopting and operating AI solutions in their own environments. From the publisher’s perspective, environment separation enables: Iteration on prompts, models, and orchestration logic without impacting production customers Validation of behavior changes before rollout, especially for AI‑driven systems where small changes can produce materially different outcomes Controlled release strategies that reduce operational risk From the customer’s perspective, environment separation shapes how the solution fits into their own development and operational practices: Where the solution is deployed across development, staging, and production environments How deployments are repeated or promoted, particularly when the solution runs in the customer’s tenant Whether environments can be recreated predictably, or whether customers are forced to manually reconfigure deployments with each iteration When AI solutions are deployed into the customer’s tenant, environment design becomes especially important. Customers should not be required to reverse‑engineer deployment logic, recreate environments from scratch, or re‑establish trust boundaries every time the solution evolves. These concerns should be addressed architecturally, not deferred to operational workarounds. Environment separation is therefore not just a DevOps choice—it is an architectural decision. It influences identity boundaries, deployment topology, validation strategies, and the shared operational contract between publisher and customer. Designing for AI‑specific scalability patterns AI workloads do not scale like traditional web or CRUD‑based applications. While front‑end and API layers may follow familiar scaling patterns, AI systems introduce behaviors that require different architectural assumptions. Production‑ready AI architectures must account for: Bursty inference demand, where usage can spike unpredictably based on user behavior or downstream automation Long‑running or multi‑step agent workflows, which may span tools, data sources, and time Model‑driven latency and cost characteristics, which influence throughput and responsiveness independently of application logic As a result, scalability decisions often vary by layer. Horizontal scaling is typically most effective in interaction, orchestration, and retrieval components, while model endpoints may require separate capacity planning, isolation, or throttling strategies. Treating identity as an architectural boundary Identity is foundational to Marketplace AI apps, but architecture must plan for it explicitly. Identity decisions define trust boundaries across users, agents, and services, and shape how the solution scales, secures access, and meets compliance requirements. Key architectural considerations include: Microsoft Entra ID as a foundation, where identity is treated as a core control plane rather than a late‑stage integration How users sign in, including: Their own corporate Microsoft Entra ID tenant B2B scenarios where one Entra ID tenant trusts another B2C identity providers for customer‑facing experiences How tenants authenticate, particularly in multi‑tenant or cross‑organization scenarios How AI agents act on behalf of users, including delegated access, authorization scope, and auditability How services communicate securely, using a zero‑trust posture where every call is authenticated and authorized Treating identity as an architectural boundary helps ensure that trust relationships remain explicit, enforceable, and consistent across tenants and environments. This foundation is critical for supporting secure operation, compliance enforcement, and future tenant‑linking scenarios. Designing for observability and auditability Production‑ready AI apps must be observable and auditable by design. Marketplace customers expect visibility into how systems behave in production, and publishers need clear insight to diagnose issues, operate reliably, and meet enterprise trust and compliance expectations. Key architectural considerations include: End‑to‑end observability, covering user interactions, agent reasoning steps, tool invocations, and downstream service calls Clear audit trails, capturing who initiated an action, what the AI system did, and how decisions were executed—especially when agents act on behalf of users Tenant‑aware visibility, ensuring logs, metrics, and traces are correctly attributed without exposing data across tenants Operational transparency, enabling effective troubleshooting, incident response, and continuous improvement without ad‑hoc instrumentation For AI systems, observability goes beyond infrastructure health. It must also account for AI‑specific behavior, such as prompt execution, model selection, retrieval outcomes, and tool usage. Without this visibility, diagnosing failures, validating changes, or explaining outcomes becomes difficult in real customer environments. Auditability is equally critical. Identity, access, and action histories must be traceable to support security reviews, regulatory obligations, and customer trust—particularly in regulated or enterprise settings. Common architectural pitfalls in Marketplace AI apps Even experienced teams run into similar challenges when moving from an AI prototype to a production‑ready Marketplace solution. The following pitfalls often surface when architectural decisions are deferred or made implicitly. Common pitfalls include: Treating AI as a single service instead of a system, where model inference is implemented without considering orchestration, data access, identity, observability, and operational boundaries Hard‑coding tenant assumptions, such as assuming a single tenant, identity model, or deployment topology, which becomes difficult to unwind as customer requirements diversify Not planning for a resilient model strategy, leaving the architecture fragile when model versions change, capabilities evolve, or providers introduce breaking behavior Assuming data lives within the same boundary as the solution, when in practice it may reside in a different tenant, subscription, or control plane Tightly coupling prompt logic to application code, making it harder to iterate on AI behavior, validate changes, or manage risk without full redeployments Assuming issues can be fixed after go‑live, which underestimates the cost and complexity of changing architecture once customers, subscriptions, and trust relationships are in place While these pitfalls may be caused by a lack of technical skill on the customer’s side, they could typically emerge when architectural decisions are postponed in favor of speed, or when AI behavior is treated as an isolated concern rather than part of a production system. What’s next in the journey The architectural decisions made early—around offer type, tenancy, identity, environments, and observability—establish the foundation on which everything else is built. When these choices are intentional, they reduce friction as the solution evolves, scales, and adapts to real customer needs. The next set of posts builds on this foundation, exploring different dimensions of operating, securing, and evolving Marketplace AI apps in production. Key resources See curated, step-by-step guidance to help you build, publish, or sell your app or agent (no matter where you start) in App Advisor Quick-Start Development Toolkit can connect you with code templates for AI solution patterns Microsoft AI Envisioning Day Events How to build and publish AI apps and agents for Microsoft Marketplace Get over $126K USD in benefits and technical consultations to help you replicate and publish your app with ISV SuccessAI apps and agents: choosing your Marketplace offer type
Choosing your Marketplace offer type is one of the earliest—and most consequential—decisions you’ll make when preparing an AI app for Microsoft Marketplace. It’s also one of the hardest to change later. This post is the second in our Marketplace‑ready AI app series. Its goal is not to push you toward a specific option, but to help you understand how Marketplace offer types map to different AI delivery models—so you can make an informed decision before architecture, security, and publishing work begins. This post is part of a series on building and publishing well-architected AI apps and agents on Microsoft Marketplace. Why offer type is an important Marketplace decision Offer type is more than a packaging choice. It defines the operating model of your AI app on Marketplace: How customers acquire your solution Where the AI runtime executes Determining the right security and business boundaries for the AI solution and associated contextual data Who operates and updates the system How transactions and billing are handled Once an offer type is selected, it cannot be changed without creating a new offer. Teams that choose too quickly often discover later that the decision creates friction across architecture, security boundaries, or publishing requirements. Microsoft’s Publishing guide by offer type explains the structural differences between offer types and why this decision must be made up front. How Marketplace offer types map to AI delivery models AI apps differ from traditional software in a few critical ways: Contextual data may need to remain in a specific tenant or geography Agents may operate autonomously and continuously Control over infrastructure often determines trust and compliance How the solution is charged and monetized, including whether pricing is usage‑based, metered, or subscription‑driven (for example, billing per inference, per workflow execution, or as a flat monthly fee) The buyer’s technical capability, including the level of engineering expertise required to deploy and operate the solution (for example, SaaS is generally easier to consume, while container‑based and managed application offers often require stronger cloud engineering and DevOps skills) Marketplace offer types don’t describe features. They define responsibility boundaries—who controls the AI runtime, who owns the infrastructure, and where customer data is processed. At a high level, Marketplace supports four primary delivery models for AI solutions: SaaS Azure Managed Application Azure Container Virtual Machine Each represents a different balance between publisher control and customer control. The sections below explain what each model means in practice. Check out the interactive offer selection wizard in App Advisor for decision support. Below, we unpack each of the offer types. SaaS offers for AI apps SaaS is the most common model for AI apps and agents on Marketplace—and often the default starting point. With a SaaS offer, the AI service runs in the publisher’s Azure environment and is accessed by customers through a centralized endpoint. This model works well for: Multi‑tenant AI platforms and agents Continuous model and prompt updates Rapid experimentation and iteration Usage‑based or subscription billing Because the service is centrally hosted, publishers retain full control over deployment, updates, and operational behavior. For multi-tenant AI apps, this also means making early decisions about Microsoft Entra ID configuration—such as how customers are onboarded, whether access is granted through tenant-level consent or external identities, and how user identities, roles, and data are isolated across tenants to prevent cross-tenant access or data leakage. For official guidance, see the SaaS section of the Marketplace publishing guide and the AI agent overview, which describes SaaS‑based agent deployments. Plan a SaaS offer for Microsoft Marketplace. Azure Managed Applications for AI solutions In this model, the solution is deployed into the customer’s Azure subscription, not the publisher’s. There are two variants: Managed applications, where the publisher retains permissions to operate and update the deployed resources Solution templates, where the customer fully manages the deployment after installation This model is a strong fit when AI workloads must run inside customer‑controlled environments, such as: Regulated or sensitive data scenarios Customer‑owned networking and identity boundaries Infrastructure‑heavy AI solutions that can’t be centralized Willingness or need on part of the customer or IT team to tailor the app to the needs of the end customer specific environment Managed Applications sit between SaaS and fully customer‑run deployments. They offer more customer control than SaaS, while still allowing publishers to manage lifecycle aspects when appropriate. Marketplace guidance for Azure Applications is covered in the publishing guide. For more information, see the following links: Plan an Azure managed application for an Azure application offer. Azure Container offers for AI workloads With container offers, the customer runs the AI workload—typically on AKS—using container images supplied by the publisher. This model is best suited for scenarios that require: Strict data residency Air‑gapped or tightly controlled environments Customer‑managed Kubernetes infrastructure The publisher delivers the container artifacts, but deployment, scaling, and runtime operations occur in the customer’s environment. This shifts operational responsibility, risk and compute costs away from the publisher and toward the customer. Container offer requirements are covered in the Marketplace publishing guide. Plan a Microsoft Marketplace Container offer. Virtual Machine offers for AI solutions Virtual Machine offers still play a role, particularly for specialized or legacy AI solutions. VM offers package a pre‑configured AI environment that customers deploy into their Azure subscription. Compared to other models, they offer: Updates and scaling are more tightly scoped Iteration cycles tend to be longer The solution is more closely aligned with specific OS or hardware requirements They are most commonly used for: Legacy AI stacks Fixed‑function AI appliances Solutions with specialized hardware or driver dependencies VM publishing requirements are also documented in the Marketplace publishing guide. Plan a virtual machine offer for Microsoft Marketplace. Comparing offer types across AI‑specific decision dimensions Rather than asking “which offer type is best,” it’s more useful to ask what trade‑offs you’re making. Key lenses to consider include: Who operates the AI runtime day‑to‑day Where customer data and AI prompts inputs and outputs are processed and stored How quickly models, prompts, and logic can evolve The balance between publisher control and customer control How Marketplace transactions and billing align with runtime behavior SaaS Container (AKS / ACI) Virtual Machine (VM) Azure Managed Application What it is Fully managed, externally hosted app integrated with Marketplace for billing and entitlement Containerized app deployed into customer-managed Azure container environments VM image deployed directly into the customer’s Azure subscription Azure native solution deployed into the customer’s subscription, managed by the publisher Control plane Publisher‑owned Customer owned Customer owned Customer owned (with publisher access) Operational model Centralized operations, updates, and scaling Customer operates infra; publisher provides containers Customer operates infra; publisher provides VM image Per customer deployment and lifecycle Good fit scenarios • Multi‑tenant AI apps serving many customers • Fast onboarding and trials • Frequent model or feature updates • Publisher has full runtime control • AI apps or agents built as microservices • Legacy or lift-and-shift AI workloads • Enterprise AI solutions requiring customer owned infrastructure Avoid when • Customers require deployment into their own subscription • Strict data residency mandates customer control • Offline or air‑gapped environments are required • Customers standardize on Kubernetes • Custom OS or driver dependencies • Tight integration with customer Azure resources Typical AI usage pattern Centralized inference and orchestration across tenants • Portability across environments is important • Specialized runtime requirements • Strong compliance and governance needs Different AI solutions land in different places across these dimensions. The right choice is the one that matches your operational reality—not just your product vision. Note: If your solution primarily delivers virtual machines or containerized workloads, use a Virtual Machine or Container offer instead of an Azure Managed Application. Supported sales models and pricing options by Marketplace offer type Marketplace offer types don’t just define how an AI app and agent is deployed — they also determine how it can be sold, transacted, and expanded through Microsoft Marketplace. Understanding the supported sales models early helps avoid misalignment between architecture, pricing, and go‑to‑market strategy. Supported sales models Offer type Transactable listing Public listing Private offers Resale enabled Multiparty private offers Azure IP Co‑sell eligible SaaS Yes Yes Yes Yes Yes Yes Container Yes Yes Yes No Yes Yes Virtual Machine Yes Yes Yes Yes Yes Yes Azure Managed Application Yes Yes Yes No Yes Yes What these sales models mean Transactable listing A Marketplace listing that allows customers to purchase the solution directly through Microsoft Marketplace, with billing handled through Microsoft. Public listing A listing that is discoverable by any customer browsing Microsoft Marketplace and available for self‑service acquisition. Private offers Customer‑specific offers created by the publisher with negotiated pricing, terms, or configurations, purchased through Marketplace. Resale enabled Using resale enabled offers, software companies can authorize their channel partners to sell their existing Marketplace offers on their behalf. After authorization, channel partners can independently create and sell private offers without direct involvement from the software company. Multiparty private offers Private offers that involve one or more Microsoft partners (such as resellers or system integrators) as part of the transaction. Azure IP Co‑sell eligible When all requirements are met this allows your offers to contribute toward customers' Microsoft Azure Consumption Commitments (MACC). Pricing section Marketplace offer types determine the pricing models available. Make sure you build towards a marketplace offer type that aligns with how you want to deploy and price your solution. SaaS – Subscription or flat‑rate pricing, per‑user pricing, and usage‑based (metered) pricing. Container – Kubernetes‑based offers support multiple Marketplace‑transactable pricing models aligned to how the workload runs in the customer’s environment, including per core, per core in cluster, per node, per node in cluster, per pod, or per cluster pricing, all billed on a usage basis. Container offers can also support custom metered dimensions for application‑specific usage. Alternatively, publishers may offer Bring Your Own License (BYOL) plans, where customers deploy through Marketplace but bring an existing software license. Virtual Machine – Usage-based hourly pricing (flat rate, per vCPU, or per vCPU size), with optional 1-year or 3-year reservation discounts. Publishers may also offer Bring Your Own License (BYOL) plans, where customers bring an existing software license and are billed only for Azure infrastructure. Azure Managed Application – A monthly management or service fee charged by the publisher; Azure infrastructure consumption is billed separately to the customer. Note: Azure Managed Applications are designed to charge for management and operational services, not for SaaS‑style application usage or underlying infrastructure consumption. Buyer‑side assumptions to be aware of For customers to purchase AI apps and agents through these sales models: The customer must be able to purchase through Microsoft Marketplace using their existing Microsoft procurement setup Marketplace purchases align with enterprise buying and governance controls, rather than ad‑hoc vendor contracts For private and multiparty private offers, the customer must be willing to engage in a negotiated Marketplace transaction, rather than pure self‑service checkout Important clarification Supported sales models are consistent across Marketplace offer types. What varies by offer type is how the solution is provisioned, billed, operated, and updated. Sales flexibility alone should not drive offer‑type selection — it must align with the architecture and operating model of the AI app and agent. How this decision impacts everything that follows Offer type decisions ripple through the rest of the Marketplace journey. They directly shape: Architecture design choices Security and compliance boundaries Fulfillment APIs and billing integration Publishing and certification requirements Cost, scalability, and operational responsibility Follow the series for updates on new posts. What’s next in the journey With the offer type decision in place, the focus shifts to turning that choice into a production‑ready solution. This includes designing an architecture that aligns with your delivery model, establishing clear security and compliance boundaries, and preparing the operational foundations required to run, update, and scale your AI app or agent confidently in customer environments. Getting these elements right early reduces rework and sets the stage for a smoother Marketplace journey. Key resources See curated, step-by-step guidance to help you build, publish, or sell your app or agent (no matter where you start) in App Advisor Quick-Start Development Toolkit Microsoft AI Envisioning Day Events How to build and publish AI apps and agents for Microsoft Marketplace Get over $126K USD in benefits and technical consultations with ISV SuccessSuccess with AI apps and agents on Marketplace: the end-to-end
Preparing an AI app or agent for Microsoft Marketplace requires solving a broader set of problems—ones that extend beyond the model and into architecture, security, compliance, operations, and commerce. These requirements often surface late, when teams are already moving toward launch. Teams often reach the same milestone: the AI works, the demo is compelling, and early customers are interested. But when it’s time to publish, transact, and operate that solution through Marketplace, gaps emerge—around security, compliance, reliability, operations, or commerce integration. Whether you are demo ready or starting with a great AI idea, this series is designed to address those challenges through a connected, end‑to‑end journey. It brings together the decisions and requirements needed to build AI apps and agents that are not only functional, but Marketplace‑ready from day one. This post is part of a series on building and publishing well-architected AI apps and Agents on Microsoft Marketplace. Why an end‑to‑end journey matters A working AI app does not automatically mean a Marketplace‑ready AI app. Marketplace readiness spans far more than model selection or prompt engineering. It requires a holistic approach across: Architecture and hosting design Security and AI guardrails Compliance and governance Operational maturity Commerce, billing, and lifecycle integration While guidance exists across each of these areas, it is often fragmented. This series connects those pieces into a single, reusable mental model that software companies can use to design, build, publish, and operate AI apps and agents with confidence. This first post frames the journey. Each subsequent post goes deep into one stage. The marketplace‑ready AI app and agent lifecycle At a high level, Marketplace‑ready AI apps and agents follow this lifecycle: Define how the AI app and agent will be delivered Identify industry compliance and regulatory requirements Design a production‑ready AI architecture Embed security and AI guardrails into the design Validate compliance and governance Build and test an MVP with potential customers Build for quality, reliability, and scale Integrate with Marketplace commerce Prepare for publishing and go‑live Operate, monitor, and evolve safely Promoting your AI app and agent to close initial sales This lifecycle is intentionally introduced once, at a high level. Decisions made early will shape everything that follows. Throughout the series, this lifecycle serves as a shared reference point. Step 1: Decide how your AI app and agent will be packaged and delivered The first decision is how the AI app and agent will be delivered through Marketplace. Offer types—such as SaaS, Azure Managed Applications, Containers, and Virtual Machines—are not just listing formats. They are delivery models that directly impact: Identity and authentication Billing and metering Deployment responsibilities Operational ownership Customer onboarding experience Supported sales models Choosing an offer type early helps avoid costly redesigns later. Step 2: Design a production‑ready AI architecture Marketplace AI apps and agents are expected to meet enterprise customer expectations for performance, reliability, and security. Architecture decisions must account for: Customer business, compliance, and security needs Offer‑specific hosting best practices For example, SaaS offers typically require: Tenant isolation Environment separation Strong identity boundaries Architecture must also support both AI behavior and Marketplace lifecycle events, such as provisioning, subscription changes, and entitlement checks. Step 3: Secure the AI app and agent and define guardrails Security cannot be treated as a certification checklist at the end of the process. AI introduces new risks beyond traditional applications, including expanded attack surfaces through prompts and inputs. Frameworks such as the OWASP GenAI Top 10 provide a useful lens for identifying these risks. Guardrails must be enforced: At design time through architecture and policy decisions At runtime through monitoring, enforcement, and response AI‑specific incident response must also factor in privacy regulations and customer trust. Step 4: Treat AI agents as compliance‑governed systems AI agents and their data are first‑class compliance subjects. This includes: Prompts and responses Contextual and training data Actions taken by the agent These artifacts must be auditable and governed inline, not retroactively. At the same time, publishers must balance compliance with intellectual property protection by enabling explainability and transparency without exposing proprietary logic. Step 5: Build for quality, reliability, and scale Marketplace buyers expect predictable behavior. AI apps and agents should formalize: Quality and evaluation frameworks Reliability and performance targets Scaling and cost optimization strategies Quality, reliability, and performance directly influence customer trust and satisfaction. Step 6: Integrate with Marketplace commerce and lifecycle APIs Marketplace is not “just a listing.” For transactable offers that help you sell globally direct to customers or through channel and allow customers to count sales of your app against their cloud commitments, Marketplace becomes an operational contract. Subscription state, entitlements, billing, and metering are runtime responsibilities of the application. For SaaS offers, SaaS Fulfillment APIs define the source of truth for subscription lifecycle events. Integrate Marketplace lead flows with your CRM using the Marketplace lead connector for CRM Step 7: Prepare for publishing, certification, and go‑live Publishing requires more than code completion. Marketplace certification validates: Security posture Customer experience Operational readiness Using templates, checklists, and tooling such as Quick Start Development Toolkit, Marketplace Rewards resources, and App Advisor reduces friction and rework. Step 8: Operate and evolve safely after go‑live Launch is not the end of the journey. AI apps and agents evolve continuously, making: Safe deployment strategies CI/CD discipline Rollback and monitoring practices This is essential for protecting both customers and publishers. Operational maturity also includes maintaining Marketplace offer assets (store images) as the product evolves. Use this framework to help you build a production ready AI app and agent, well architected, secured, reliable, scalable and integrated with Microsoft Marketplace global commerce engine. Step 9: Promote your AI app and agent Becoming Marketplace‑ready does not end at publication. AI app and agent success also depends on how effectively the solution is discovered, evaluated, and trusted by customers within Microsoft Marketplace and the broader Microsoft ecosystem. Promotion in Microsoft Marketplace is tightly integrated with how customers discover and purchase solutions. AI apps and agents are surfaced through Marketplace search, categories, and in‑product experiences, and once your AI app or agent becomes Azure IP co-sell eligible - the purchase of your offer can count towards your customers' Microsoft Azure Consumption Commitments (MACC) motivating customers to buy your offer. This reduces buying friction and accelerates evaluation‑to‑purchase transitions. Top activities to grow your sales: Optimize your listing once you publish your app, by getting an agentic review of your published listing in seconds, based on Marketplace listing best practices and expert Microsoft editorial guidance. Promote your Marketplace offer and track your engagement following best practices. Manage and nurture leads from trials to purchase, and from purchase to higher level SKUs. Private offers, which allow publishers to create customer-specific or negotiated offers directly through Marketplace, including multiparty private offers involving Microsoft channel partners Sell through channel, use resale enabled offers to enable resellers and channel partners to sell your app to their customers, Co-sell motions, where eligible AI apps and agents are sold jointly with Microsoft sellers and count toward customer cloud consumption commitments Effective customer engagement depends on alignment between how the AI app and agent is positioned and how it is delivered. Clear descriptions, accurate architectural boundaries, and transparent operational expectations help customers move confidently from discovery to production adoption. For publishers, programs such as ISV Success provide guidance and tooling to help align technical readiness, Marketplace requirements, and go‑to‑market execution as AI apps and agents scale through Microsoft Marketplace. Sales don't happen by accident, it's essential you engage in promoting your marketing. When promotion is treated as a first‑class step in the lifecycle, it reinforces trust, accelerates evaluation, and increases the likelihood that an AI app and agent transitions from initial interest to sustained use. How to use this series This series is designed to be used in two ways: Read sequentially to understand the full Marketplace‑ready journey Use individual posts alongside Microsoft Learn content, App Advisor, and Quick Start resources for deeper implementation guidance This series provides a structured, end‑to‑end view of what it takes to move from a working AI app and agent to a solution that customers can trust, deploy, and buy through Marketplace. It is designed to complement hands‑on implementation guidance, including Microsoft Learn resources such as Publishing AI agents to the Microsoft marketplace, and to help software companies navigate Marketplace readiness with fewer surprises and less rework. Stay tuned for the upcoming post about choosing your marketplace offer type which defines the operating model of your AI app or agent on Marketplace and influences key architectural decisions for your app or agent. Key resources See curated, step-by-step guidance to help you build, publish, or sell your app or agent (no matter where you start) in App Advisor, Quick-Start Development Toolkit Microsoft AI Envisioning Day Events How to build and publish AI apps and agents for Microsoft Marketplace Get over $126K USD in benefits and technical consultations to help you replicate and publish your app with ISV Success
