From Chat to Decisions: Bringing SLMs into Application Logic with Microsoft Olive and ONNX
1. Why Jev Matters: Accelerating the Next Action, Not Just the Next Reply Let us return to the automated ordering scenario we have been exploring. A customer says, “I’ll have a combo, but make the drink not too sweet.” A conversational model can produce a friendly response. For the ordering application, however, the real work is just beginning. Has the customer selected a particular combo? Does “not too sweet” map to a supported customization? Should the application ask a question, update the cart, or move to confirmation? The application does not need another paragraph. It needs a decision that advances the workflow. Traditional rules are excellent at explicit constraints: unavailable items cannot be ordered, checkout requires confirmation, and payment requires authorization. Models should not replace these rules. But as inputs become ambiguous and context-dependent, rule trees accumulate branches. At the other extreme, sending every small routing decision through a large model’s reasoning and generation loop can add unnecessary waiting. This is how I think about the value of Jev: turn semantic understanding into structured behavioral decisions, shortening the distance between understanding and action. An ordering application might decompose the conversation into a few bounded questions: Decision Output type Effect on the workflow Is a critical preference still ambiguous? noul: probability for a Boolean question Decide whether to clarify Which stage should handle the request next? choice: candidate action and distribution Route to clarification, cart editing, or confirmation How much human intervention is needed? score: expected value over ordered levels Decide whether to escalate These outputs are not permissions. A model can recommend confirmation, but that recommendation must not bypass inventory checks, allergen rules, or payment authorization. The application still needs explicit state transitions, constraints, and tool boundaries. The lesson I take from our ordering exploration is that structure does more than make an answer easier to parse: it can remove unnecessary decision steps from an agent’s workflow. If questions, options, and execution boundaries are defined in advance, the model does not have to reinvent the process on every turn. One distinction matters before we continue. This project does not fine-tune an official Jev model or reproduce its private implementation. It borrows the Jev-style typed-decision interface idea, follows the prompt conventions of the open-source Hmm project, and explores a deployable component built from our own small model. 2. Where Edge SLMs Fit: Put the Decision Close to the Action Beyond basic rules, the opportunity that interests me most is in vertical applications: can a model make a useful semantic decision where the action actually happens? An SLM—a small language model—is not automatically an edge-ready model. Model size, context length, runtime, memory, and hardware all determine whether it fits a target device. Nevertheless, small models suggest a useful division of responsibilities: Use large models for open-ended problems, small models for frequent and bounded semantic decisions, and deterministic code for constraints and execution. From ordering terminals to embodied systems At an ordering terminal, a local model could recognize a modification request, assess whether required information is complete, and select the appropriate business module. Some decisions could continue during network disruption, and sensitive context could avoid unnecessary transmission. Those benefits depend on the application’s complete data flow, not merely on storing model weights locally. In an embodied system, similar questions become task-level intent decisions: “Is the user asking the robot to approach, or only describing a location?” “Should the task continue, or wait for clarification?” There is an essential boundary here. A language model may participate in task-level decisions, but it should not be the sole mechanism for collision avoidance, emergency stopping, or low-level motion control. Millisecond-scale responsiveness is a worthwhile engineering objective—not an automatic consequence of using a small model or exporting to ONNX. We need to measure the complete path on the target device: input processing, inference, policy evaluation, and tool execution. From one assistant to multi-agent orchestration Multi-agent systems offer another opportunity. A complex request may involve research, planning, execution, and verification, but not every handoff requires an open-ended discussion. A local decision component might determine: Which agent should receive the request? Is the information required for execution complete? Does a tool result need independent review? Should the workflow continue, retry, or ask a human? I am exploring how hosted agents can handle longer orchestration flows while constrained autonomous execution moves work forward. Small models could serve as frequent, local decision points within that design. “Autonomous” does not mean unrestricted: tool permissions, timeouts, retry budgets, and human approval remain application responsibilities. This is a compelling role for ONNX: package a learned decision capability into an artifact that an inference runtime can load, without requiring every deployment target to carry the full training stack. However, ONNX is a deployment path, not a guarantee of portability or performance across all hardware. This workflow exports a CUDA FP16 model. Moving it to a CPU, mobile device, or NPU requires compatible execution providers and operators, and potentially re-export, quantization, and regression evaluation. 3. Fine-Tune a General Decision Component, Then Specialize It Rather than beginning with a complex industry system, I started with a general typed-decision experiment: Qwen3.5-0.8B → Olive LoRA fine-tuning → Olive ModelBuilder export → ONNX probability testing → a Hugging Face publishing workflow. The implementation lives in Qwen3_5_0.8B_FT.ipynb. Its purpose is not to claim that a notebook solves a vertical market. It makes the path from data to a deployable decision capability concrete. Stop one: learn a bounded choice, not a long answer The base model is Qwen/Qwen3.5-0.8B, and the dataset is n4ze3m/typed-decisions-synth. A state can contain several questions. Preprocessing expands each question into a training example while preserving the dataset’s case-level training and validation split. That prevents questions about the same state from leaking across the boundary. Each question becomes a choice among option letters: State (data to evaluate): Help! My payouts have failed for 3 days. I need the money today. Question: Which team should handle this? Options: A: billing — Payments, invoicing, refunds B: technical — Bugs, outages, integrations C: sales — Pricing, upgrades, new accounts Return only the option letter. choice represents categorical options, noul uses false / true, and score uses ordered levels. During preprocessing, choice options are shuffled deterministically using the state and question ID to reduce fixed-position bias. Score levels and Boolean options keep their intended ordering. Several small details protect the contract: use the same chat template, disable thinking, verify that training text begins with the inference prompt, verify that each option letter is one token, and discard examples longer than 768 tokens rather than blindly truncating them. This is not cosmetic data cleanup. It defines the protocol between the model and its application. Stop two: turn experiment settings into an inspectable Olive workflow The notebook builds Microsoft Olive from a fixed source revision. It uses olive finetune --dry_run to generate a version-matched configuration, then adjusts preprocessing and validation. Setting Notebook configuration Fine-tuning method LoRA, rank 32, alpha 64 Target modules q_proj/k_proj/v_proj/o_proj and gate_proj/up_proj/down_proj Learning rate and epochs 1e-4, one epoch Sequence length 768 Per-device batch / gradient accumulation 1 / 16 Training / export precision BF16 / FP16 Preprocessing line-by-line, one sequence per question Replacing the default JOIN strategy avoids concatenating independent questions into continuous text. Before training, RunConfig.model_validate(...) checks the configuration. Execution uses Olive’s Python API so failures remain visible in the notebook rather than being hidden behind a generic CalledProcessError. An important difference must remain explicit: this Olive workflow uses standard full-sequence language-model SFT, not Hmm’s candidate-letter hard-label / teacher soft-label mixture. Teacher probabilities are retained for analysis but do not contribute to this training loss. Consequently, Hmm’s accuracy and calibration results cannot be claimed for this 0.8B model. Stop three: export the runtime contract, not just the graph A LoRA adapter is not the deployment endpoint. The base model, adapter, tokenizer, configuration, and runtime must agree. The notebook uses Olive ModelBuilder to export the base model and adapter into CUDA FP16 ONNX. The result includes more than an .onnx file: external weights, tokenizer resources, and genai_config.json are part of the deployable unit. Consumers should load the complete directory. The most instructive part of the process was navigating version boundaries: Boundary encountered Approach in this workflow An unnecessary old TorchAO package conflicted with Transformers Remove it after dependency installation; standard BF16 LoRA does not require it Qwen3.5 kernels fell back to reference implementations Install and check causal-conv1d and Flash Linear Attention Export requested authentication for a public model Explicitly enable anonymous model access Qwen3.5 stored EOS information in text_config Add the top-level value to the local export configuration Newer CUDA packages did not match the runtime environment Pin the notebook’s ORT GPU 1.26.0 / GenAI CUDA 0.14.0 combination The Olive revision expected newer GenAI Builder APIs Add version-specific compatibility handling for this FP16 export path Text export behaved like a multimodal decoder Set exclude_embeds=False to retain token embeddings These are records of this environment, not universal patches. Compatibility code is technical debt: when upgrading, revisit the interfaces and outputs rather than copying the workaround indefinitely. Pinning an Olive commit also does not make the complete experiment reproducible. A stronger release record should include base-model and dataset revisions, the full dependency set, GPU and driver details, and the final publishing commit. Stop four: ask two different questions in testing The first question is: does the model run? The standalone Python test script loads the export, reads a validation example, generates an answer, and extracts an option letter. This is a smoke test for the model, tokenizer, and generation loop—not the end of quality evaluation. The second question is: can the application use the decision? Following Hmm’s approach, the ONNX probability cell reads logits at the first generated position after the prompt, selects only the valid option-letter logits, and applies softmax: # candidate_logits contains only valid first-token option logits. shifted = candidate_logits - candidate_logits.max() probabilities = np.exp(shifted) probabilities /= probabilities.sum() For options A, B, and C, this is a distribution over those three choices. It does not establish that the candidate set is complete or provide absolute confidence across every possible answer. The application then interprets the result: noul reads P(true), choice selects the highest-probability option, and score computes an expected value over ordered levels. The example’s confidence formula, (n × p_max - 1) / (n - 1), measures how concentrated the distribution is. It is not a calibrated probability of correctness. Evaluation therefore needs several lenses. Accuracy, candidate NLL, and ECE describe decision quality. P50/P95 latency, peak memory, fallback rate, and task completion on the target device describe application value. The notebook’s full validation-metric cell currently uses the PyTorch/PEFT path; the ONNX cell tests example probabilities. The former is not an evaluation report for the latter. Comparing candidate distributions and actual decisions before and after export remains necessary. This article does not claim unrecorded training times, accuracy improvements, or demonstrated millisecond edge latency. Stop five: publication begins the vertical journey The notebook contains a workflow to upload the ONNX directory and a Model Card to lokinfey/Qwen3_5_0.8B_jev. This is the configured publishing destination, not a claim that this article verified the remote upload. The Model Card should explain the base model, dataset, training-objective differences, runtime versions, intended use, and outstanding evaluation. Authentication uses interactive token entry rather than embedding credentials in source files or commit history. Once the general pipeline exists, specialization becomes the important work. In ordering, that means defining real business states and actions: menu version, cart contents, modification history, missing information, mandatory clarification, and operations that always require customer confirmation. Vertical data should reflect those boundaries, with validation splits based on conversations or business entities. Low confidence, out-of-distribution inputs, and rule conflicts need explicit rejection or escalation paths. The objective is not to force a choice for every request. It is to help the system move forward appropriately within known limits. 4. Conclusion: The Opportunity Is a Shorter Decision Path, Not a Smaller Chat Window An ordering clarification, a robot’s task-level intent check, and a local handoff in a multi-agent workflow share the same underlying problem: the system has tools, but it still needs to decide when to use them, who should act, and when to stop. Jev-style structured decisions offer an interface perspective. SLMs offer the possibility of moving some semantic judgments closer to the device. Microsoft Olive organizes fine-tuning and export into a workflow. ONNX Runtime provides an execution path for deployment. Together, they suggest something more useful than a smaller chatbot: a measurable, constrained, replaceable decision component. The direction I want to keep testing combines hosted agents for long-running coordination, edge small models for frequent local decisions, and deterministic code for business and safety boundaries. Success should be measured less by whether the reply sounds intelligent and more by whether the system completes the right action faster and more reliably. That is the next step from conversation to decisions. Implementation and references Fine-tuning notebook Microsoft Olive ONNX Runtime GenAI Qwen3.5-0.8B base model Hmm model card and prompt format typed-decisions-synth datasetFrom Jev to Your Laptop: Building "System One" Decision Models in ONNX with Mobius
0. Why I'm writing this now Two things landed on my radar in the same week. First, TypeSafe AI published "Introducing System One Models & Jev" (Sep 15, 2026) and the developer community immediately started arguing about it. The pitch is unusual: instead of another chat model, Jev is described as "a new class of frontier models built to make fast, structured decisions that software can use directly." The post frames Jev as "a frontier-intelligence function call: unstructured state in, typed probabilistic decisions out" — and notes that while "Jev gives up string generation, it's optimized for structured outputs and can't hallucinate." The numbers in that post are what got everyone's attention: end-to-end response times of 70ms–500ms versus 3–329 seconds for frontier LLMs, input tokens at $0.042/MTok with output tokens free, and a claim that every answer arrives with a calibrated probability — "higher confidence means higher accuracy." The name itself is a thesis: TypeSafe named Jev after William Stanley Jevons, expecting that "every order of magnitude drop in the cost of intelligence unlocks orders of magnitude more use cases." Second — and this is the part that matters for anyone who builds on Microsoft's AI stack — onnxruntime/mobius has been quietly shipping at a furious pace. It's the piece of infrastructure that makes it realistic to take a model like this, in whatever format it arrives, and run it as an ONNX graph on hardware you control. So I built the bridge. kinfey/JevONNX takes an open, community-fine-tuned model that reproduces the System One request shape, converts it from GGUF to CPU ONNX with Mobius, and serves typed probabilistic decisions locally. This post covers three things: what Mobius is, how it differs from the ONNX Runtime GenAI Model Builder you may already be using, and how the JevONNX sample puts it together. 1. What is Mobius? Mobius builds generative models in ONNX. That preposition is the whole idea. From the repo's own description, Mobius provides "ONNX model definitions for GenAI using the onnxscript.nn API" — model definitions for "LLMs, MoE, multimodal, encoder-only, encoder-decoder, vision, audio, and diffusion models — built directly as ONNX graphs using onnxscript.nn.Module." The key sentence, and the one worth reading twice: "Rather than tracing or exporting PyTorch models, it constructs the ONNX graph declaratively, then applies pretrained HuggingFace weights." Why "declarative construction" is a big deal If you've ever exported a model to ONNX the traditional way, you know the failure modes. You run torch.onnx.export, the tracer executes one concrete path through Python control flow, and anything dynamic — a KV cache branch, a rotary embedding computed with a Python if, a sliding-window mask — either silently bakes in a constant or explodes into an unreadable subgraph. You then spend a week diffing graphs. Mobius inverts this. The graph is the source of truth, written as composable modules, and the weights are applied afterwards. The architecture in the README is four clean layers: HuggingFace Hub │ ▼ ArchitectureConfig ◄── from_transformers() / from_diffusers() │ ▼ Model Module ◄── Reusable Components (Attention, MLP, RMSNorm, RoPE, …) │ ▼ Task ◄── CausalLMTask, VisionLanguageTask, VAETask, DenoisingTask, … │ ▼ ONNX Model ◄── preprocess_weights() + apply_weights() Components — onnxscript.nn.Module building blocks (Attention, MLP, DecoderLayer, RoPE, VisionEncoder, MoELayer…) Models — full architectures composed from those components Tasks — define the ONNX graph's I/O contract (inputs, outputs, KV cache) Registry — maps HuggingFace model_type strings to model classes Adding a new architecture becomes writing a model definition, not debugging an exporter. Mobius even ships developer skills in .agents/skills/ (adding-a-new-model, reusable-components, moe-models, multimodal-models, writing-tests, writing-rewrite-rules) so an AI coding agent can do the legwork with you. Coverage This isn't a toy. The repo claims 290+ Transformers model types and 10 Diffusers component types across 40+ task types and 100+ reusable components, spanning: Category Examples Text generation Llama 2/3/4, Mistral, Qwen 2/2.5/3/3.5/3.6, Phi-3/3.5, Gemma 1/2/3/4, Granite, GPT-2, OPT, OLMo, SmolLM3 Mixture of Experts PhiMoE, GPTOSS, Mixtral, OLMoE, DeepSeek-V2/V3, Qwen2-MoE, Qwen3-MoE, Qwen3-Next, GLM-4-MoE, Arctic, DBRX, Jamba Multimodal Gemma 3/4, Phi-4MM (vision + audio + LoRA), LLaVA, InternVL2, MiniCPM-V 4.6, Qwen2.5-VL, Qwen3-VL, Pixtral Encoder-only BERT, RoBERTa, ALBERT, DeBERTa, DistilBERT, ELECTRA, XLNet Encoder-decoder BART, T5/mT5, Marian, M2M-100, Pegasus, BigBird-Pegasus Speech-to-text Whisper, Moonshine, Moonshine Streaming, FastConformer-RNNT, FunASR, GLM-ASR, Qwen3-ASR, SenseVoice Audio Wav2Vec2, HuBERT, WavLM, SpeechT5 Vision ViT, BEiT, DeiT, DINOv2, Swin, CLIP, SigLIP Diffusion Stable Diffusion (UNet + VAE + ControlNet), Flux, SD3, DiT, QwenImage / Qwen-Image-Edit-2509, HunyuanDiT, CogVideoX Adapters T2I-Adapter, IP-Adapter The five-minute version pip install -e . from mobius import build pkg = build("meta-llama/Llama-3.2-1B") pkg.save("output/llama-3.2-1b/") Static KV cache, when you know your max sequence length up front: from mobius import build, CausalLMTask task = CausalLMTask(static_cache=True, max_seq_len=2048) pkg = build("meta-llama/Llama-3.2-1B", task=task) pkg.save("output/llama-3.2-1b-static/") EP-aware optimization — the graph itself is tuned per execution provider, "each with the right set of fused kernels and lowering passes applied automatically": # CUDA: GQA fusion, SkipLayerNorm, PackQKV pkg = build("meta-llama/Llama-3.2-1B", execution_provider="cuda", dtype="f16") # WebGPU: GQA fusion, Shape ops replaced with portable alternatives pkg = build("meta-llama/Llama-3.2-1B", execution_provider="webgpu", dtype="f16") And the CLI, which is what we'll use later: mobius build --model Qwen/Qwen2.5-0.5B --output output_dir/ mobius build --model meta-llama/Llama-3.2-1B --output output_dir/ --ep cuda --dtype f16 mobius build --model openai/whisper-tiny --output output_dir/ # encoder/ + decoder/ Build-mode toggles use a cargo-style --features flag — available features are static-cache, fp8-kv-cache, prune-prefill-prefix, and text-only: mobius build --model meta-llama/Llama-3.2-1B --output output_dir/ \ --features static-cache,prune-prefill-prefix --max-seq-len 2048 --release strips build-time debug and provenance metadata to reduce saved model size, while preserving functional metadata keyed with the mobius. prefix. 2. Mobius vs. the ONNX Runtime GenAI Model Builder This is the question I get every time I demo Mobius, so let's be precise. Both are Microsoft tools, both produce ONNX, and they are not competitors — they sit at different points on the same pipeline. The ONNX Runtime GenAI Model Builder describes itself as the tool "for quickly creating optimized and quantized ONNX models within a few minutes that run with ONNX Runtime GenAI." Its output is a deployment-ready package: model.onnx plus genai_config.json plus tokenizer files, wired for the onnxruntime-genai runtime. Its architecture list is explicitly curated — AMD OLMo, ChatGLM, DeepSeek, ERNIE 4.5, Gemma, gpt-oss, Granite, Granite MoE Hybrid, HunYuan Dense V1, InternLM2, LFM2, LFM2 MoE, Llama, Mistral, Nemotron, Phi, Qwen, SmolLM3, Whisper — and the README states plainly that "it is intended for supporting the latest, popular state-of-the-art models." Mobius, by contrast, is a model-definition library: a component algebra for describing generative architectures as ONNX graphs, with a registry mapping HuggingFace model_type strings to model classes. Here's how I'd separate them: Dimension ORT GenAI Model Builder Mobius Primary goal Produce a deployment-ready GenAI package, fast Define and construct the ONNX graph itself Output contract model.onnx + genai_config.json + tokenizer, targeted at the ORT GenAI runtime ONNX model package; you choose the runtime (plain ORT sessions included) How the graph is made Per-architecture builder subclasses (LlamaModel, QwenModel, Phi3MiniModel, WhisperModel…) overriding make_layer / make_attention / make_moe Declarative onnxscript.nn.Module composition from reusable Components → Models → Tasks Breadth Curated list of ~19 popular families, text + Whisper 290+ Transformers types, 10 Diffusers component types, 40+ tasks — including vision, audio, and diffusion Extending it Add a builder subclass inside the onnxruntime-genai tree Add a model definition from existing components; shipped .agents/skills/ guide it Tuning surface Rich --extra_options for quantization and runtime behavior (QMoE, paged attention, KV-cache quantization, QDQ, CUDA/WebGPU graph capture…) --features build toggles + execution_provider= EP-aware graph lowering + dtype control Diffusion / multi-component pipelines Not the target First-class (--model Qwen/Qwen-Image-2512 builds all components) When I reach for it "I have a Phi/Llama/Qwen chat model and I want an int4 CPU/CUDA package running under ORT GenAI today" "My architecture is hybrid, unusual, multimodal, diffusion, or I need graph-level control over what gets emitted" Notably, the two overlap on real capabilities. The Model Builder also consumes GGUF and handles Qwen3.5-class features (compact state updates, recurrent-operator selection). Mobius also emits ORT-GenAI-compatible metadata — though the repo is honest about limits: for Mage-VL, "ORT GenAI export is currently rejected because the runtime cannot supply its required patch_positions input or Mage-VL's 1D decoder positions." That single line tells you exactly where the boundary sits: the Model Builder is bounded by what the GenAI runtime can express; Mobius is bounded by what ONNX can express. My rule of thumb as an advocate: if your model is on the Model Builder's supported list and you want the GenAI runtime's generation loop, use the Model Builder — it is faster and gives you a complete package. The moment you're off that list, or you need the graph itself to be a first-class artifact you can reason about and modify, Mobius is the tool. The JevONNX sample is squarely in the second category. Let's look at why. 3. The sample: converting a Jev-style decision model to CPU ONNX Repo: github.com/kinfey/JevONNX 3.1 The honest framing first Jev is TypeSafe's proprietary model. You can't download it and convert it, and this project doesn't pretend otherwise. What the community did do is interesting: n4ze3m/Qwen3.5-4B-Hmm is "an experimental open-model attempt to reproduce the central idea and request shape of the System One workflow introduced with Jev." It works by "fine-tuning Qwen3.5-4B to answer typed questions through option probabilities instead of ordinary generated text." The README of JevONNX is emphatic about the boundaries, and I want to repeat them here rather than bury them: "Hmm is not Jev, is not affiliated with TypeSafe AI, and does not reproduce Jev's proprietary model architecture, parallel sampler, performance, calibration, or type-safety guarantees. The Hmm model card explicitly states that it is less capable than Jev." And: "The reproduction is behavioral rather than architectural." The distinction, straight from the project's comparison table: Property Jev Hmm in this project Model design Native System One Model Qwen3.5-4B fine-tuned to reproduce the typed-decision concept Output mechanism Native typed probabilistic outputs First-token option-letter probabilities Multiple questions Designed for parallel sampling Jev-like request shape, implemented as one model pass per question Output types Schema-constrained structured values noul, choice, and score adapter Runtime here TypeSafe service Local ONNX Runtime CPU Guarantees As documented by TypeSafe No equivalent guarantee is claimed The mechanism is refreshingly legible: the adapter turns each typed question into an exact multiple-choice prompt, then "reads the first generated-token logits for A, B, C, and subsequent option letters and normalizes them into probabilities." No JSON parsing, no retry-on-malformed-output, no regex. The probability distribution is the answer. 3.2 Why this needs Mobius specifically Qwen3.5 is a hybrid architecture, and that's the whole reason this is a Mobius story. The exported model has 32 hybrid decoder layers. Linear-attention layers carry conv_state and recurrent_state; full-attention layers carry key/value caches. In this artifact, full-attention layers sit at indices 3, 7, 11, 15, 19, 23, 27, and 31. The practical consequence, quoted from the README: "The prompt is processed one token at a time while every present.* output is fed back into its corresponding past_key_values.* input. This differs from a conventional decoder-only example that can prefill an entire prompt in one call." That is a graph-shape problem. You cannot handwave it with a config flag — you need the exported graph's state contract to be explicit and inspectable, which is exactly what declarative construction gives you. The implementation "follows the structure of Mobius examples/text_generation.py while adding the hybrid-state handling required by Qwen3.5." 3.3 The conversion pipeline n4ze3m/Qwen3.5-4B-Hmm-Q4_K_M.gguf │ SHA-256 verification ▼ Mobius GGUF reader/importer │ metadata and tensor mapping │ Qwen3.5 hybrid graph construction │ Q4_K_M → packed quantized target storage │ CPU execution-provider optimization ▼ onnx_outputs/ ├── model.onnx ├── model.onnx.data ├── quantization_report.json ├── tokenizer.json ├── tokenizer_config.json ├── chat_template.jinja └── cpu_test_summary.json │ ▼ ONNX Runtime CPUExecutionProvider │ token-by-token hybrid-state prefill │ first-token A/B/C/… probabilities ▼ typed decision JSON response One command does the conversion: mobius build-gguf Qwen3.5-4B-Hmm-Q4_K_M.gguf \ --output onnx_outputs \ --ep cpu \ --dtype f32 \ --release Two details worth internalizing: --dequantize is intentionally not used. Keeping quantized storage "substantially reduc[es] the output size compared with a fully dequantized FP32 model." The external-data file is still ~2.6 GB — imagine it dequantized. Don't trust the preset, read the report. "Q4_K conversion can involve a lossy affine repack; inspect quantization_report.json rather than assuming source-preset fidelity." This is the kind of line that separates a demo from a deployment. 3.4 Reproducibility — the part I actually want you to copy Every pin, in a table, in the README: Component Revision GGUF repository n4ze3m/Qwen3.5-4B-Hmm GGUF revision c27fa3c627dfaced343c6ba9d3a0d00243a3be51 GGUF filename Qwen3.5-4B-Hmm-Q4_K_M.gguf GGUF SHA-256 5e03cb057049c56b421bd3c506d77fd8e0a77996bb8464148a02cfc3caac5229 Mobius revision 6b27a3f08b8b5d08ba9b14b416e3b435942bb0bd Tokenizer repository Qwen/Qwen3.5-4B Tokenizer revision 851bf6e806efd8d0a36b00ddf55e13ccb7b8cd0a The notebook builds a Mobius wheel from the pinned Git source rather than installing a prebuilt package. On a project moving at 500+ commits, that is not paranoia — that is the only way your conversion is still reproducible next month. 3.5 Running it Two files carry the project: Qwen3_5_4B_Hmm_GGUF_to_CPU_ONNX_Mobius_fixed.ipynb (the Colab conversion and validation workflow) and run_hmm_onnx.py (the standalone typed-decision runner). Run the notebook in a high-memory Colab CPU runtime; it writes to /content/onnx_outputs on Colab and .mobius_colab_run/onnx_outputs elsewhere. Then: python run_hmm_onnx.py --model-dir .mobius_colab_run/onnx_outputs python run_hmm_onnx.py --model-dir .mobius_colab_run/onnx_outputs --request request.json A request is state plus typed questions: { "state": "Help! My payouts have failed for 3 days. I need the money today.", "questions": { "is_urgent": { "type": "noul", "instructions": "Does this message convey urgency?" }, "department": { "type": "choice", "instructions": "Which team should handle this?", "criteria": { "billing": "Payments, invoicing, refunds", "technical": "Bugs, outages, integrations", "sales": "Pricing, upgrades, new accounts" } }, "priority": { "type": "score", "instructions": "How urgent is this request?", "criteria": ["Not urgent", "Normal", "Urgent", "Critical"] } } } From Python: from pathlib import Path from run_hmm_onnx import HmmOnnx model = HmmOnnx(Path(".mobius_colab_run/onnx_outputs")) response = model.decide({ "state": "Help! My payouts have failed for 3 days.", "questions": { "is_urgent": { "type": "noul", "instructions": "Does this message convey urgency?", } }, }) print(response) 3.6 The three decision types noul — a nullable-style yes/no probability; the probability of the true option: { "type": "noul", "noul": 0.9745 } choice — the highest-probability key, all normalized option probabilities, and a confidence value measuring how peaked the distribution is: { "type": "choice", "choice": "billing", "probabilities": { "billing": 0.7216, "technical": 0.2759, "sales": 0.0025 }, "confidence": 0.5823 } score — the expected numeric level, the level legend, normalized probabilities, and confidence: { "type": "score", "score": 2.6653, "legend": { "0": "Not urgent", "1": "Normal", "2": "Urgent", "3": "Critical" }, "probabilities": { "0": 0.0061, "1": 0.0361, "2": 0.2443, "3": 0.7135 }, "confidence": 0.618 } Look at that score output for a second. You don't get "this is critical." You get 2.6653 — a distribution leaning hard on Critical but with real mass on Urgent. That's a number your routing code can threshold on, log, and A/B test. It's the difference between an LLM that says it's confident and a distribution you can actually calibrate against. One constraint: Hmm is trained with 26 option letters. Larger option sets are handled by splitting them into groups of 25 and adding a none_of_these option to each group, matching the reference Hmm server strategy. 3.7 Does it actually run? Yes — the README reports the generated model executed directly on an Apple Silicon CPU with ONNX Runtime. A 4B hybrid-architecture model, converted from GGUF, running typed decisions on a laptop CPU with no service dependency. 4. What I'd tell a room of developers The System One idea is portable even where the model isn't. You can't run Jev locally, but the shape — state in, typed decisions with probabilities out — is something you can prototype today with an open model and an ONNX graph. As TypeSafe puts it, structured outputs "slot into ordinary software as fuzzy decision rules: classify, route, score, extract, or branch where hand-written logic is too brittle." That's a pattern, not a product. Probabilities are the actual product. The reason this class of model matters isn't speed alone. TypeSafe's argument is sharp: "If a model can do a task 95% of the time but doesn't say when it's in the 5%, it can't automate that task." Every engineer who has shipped an LLM feature has felt that exact wall. Set expectations honestly. JevONNX is an educational reproduction. It gives you noul/choice/score on a local CPU. It does not give you Jev's calibration, parallel sampler, or type-safety guarantees — and the project says so in its own README. Ship that caveat with your demo. Mobius is the infrastructure bet worth learning. When a new architecture shows up — hybrid attention, a novel MoE routing scheme, a three-model multimodal export — the question stops being "will the exporter support it?" and becomes "which components do I compose?" That is a much better question to be asking. Links Mobius — https://github.com/onnxruntime/mobius (docs: https://onnxruntime.github.io/mobius/) ONNX Runtime GenAI Model Builder — https://github.com/microsoft/onnxruntime-genai/tree/main/src/python/py/models JevONNX sample — https://github.com/kinfey/JevONNX Introducing System One Models & Jev — https://typesafe.ai/blog/introducing-system-one-models-and-jev Hugging face - https://huggingface.co/lokinfey/Qwen3_5_4B_Hmm_ONNXBuilding HIPAA-Compliant Medical Transcription with Local AI
Building HIPAA-Compliant Medical Transcription with Local AI Introduction Healthcare organizations generate vast amounts of spoken content, patient consultations, research interviews, clinical notes, medical conferences. Transcribing these recordings traditionally requires either manual typing (time-consuming and expensive) or cloud transcription services (creating immediate HIPAA compliance concerns). Every audio file sent to external APIs exposes Protected Health Information (PHI), requires Business Associate Agreements, creates audit trails on third-party servers, and introduces potential breach vectors. This sample solution lies in on-premises voice-to-text systems that process audio entirely locally, never sending PHI beyond organizational boundaries. This article demonstrates building a sample medical transcription application using FLWhisper, ASP.NET Core, C#, and Microsoft Foundry Local with OpenAI Whisper models. You'll learn how to build sample HIPAA-compliant audio processing, integrate Whisper models for medical terminology accuracy, design privacy-first API patterns, and build responsive web UIs for healthcare workflows. Whether you're developing electronic health record (EHR) integrations, building clinical research platforms, or implementing dictation systems for medical practices, this sample could be a great starting point for privacy-first speech recognition. Why Local Transcription Is Critical for Healthcare Healthcare data handling is fundamentally different from general business data due to HIPAA regulations, state privacy laws, and professional ethics obligations. Understanding these requirements explains why cloud transcription services, despite their convenience, create unacceptable risks for medical applications. HIPAA compliance mandates strict controls over PHI. Every system that touches patient data must implement administrative, physical, and technical safeguards. Cloud transcription APIs require Business Associate Agreements (BAAs), but even with paperwork, you're entrusting PHI to external systems. Every API call creates logs on vendor servers, potentially in multiple jurisdictions. Data breaches at transcription vendors expose patient information, creating liability for healthcare organizations. On-premises processing eliminates these third-party risks entirely, PHI never leaves your controlled environment. US State laws increasingly add requirements beyond HIPAA. California's CCPA, New York's SHIELD Act, and similar legislation create additional compliance obligations. International regulations like GDPR prohibit transferring health data outside approved jurisdictions. Local processing simplifies compliance by keeping data within organizational boundaries. Research applications face even stricter requirements. Institutional Review Boards (IRBs) often require explicit consent for data sharing with external parties. Cloud transcription may violate study protocols that promise "no third-party data sharing." Clinical trials in pharmaceutical development handle proprietary information alongside PHI, double jeopardy for data exposure. Local transcription maintains research integrity while enabling audio analysis. Cost considerations favor local deployment at scale. Medical organizations generate substantial audio, thousands of patient encounters monthly. Cloud APIs charge per minute of audio, creating significant recurring costs. Local models have fixed infrastructure costs that scale economically. A modest GPU server can process hundreds of hours monthly at predictable expense. Latency matters for clinical workflows. Doctors and nurses need transcriptions available immediately after patient encounters to review and edit while details are fresh. Cloud APIs introduce network delays, especially problematic in rural health facilities with limited connectivity. Local inference provides <1 second turnaround for typical consultation lengths. Application Architecture: ASP.NET Core with Foundry Local The sample FLWhisper application implements clean separation between audio handling, AI inference, and state management using modern .NET patterns: The ASP.NET Core 10 minimal API provides HTTP endpoints for health checks, audio transcription, and sample file streaming. Minimal APIs reduce boilerplate while maintaining full middleware support for error handling, authentication, and CORS. The API design follows OpenAI's transcription endpoint specification, enabling drop-in replacement for existing integrations. The service layer encapsulates business logic: FoundryModelService manages model loading and lifetime, TranscriptionService handles audio processing and AI inference, and SampleAudioService provides demonstration files for testing. This separation enables easy testing, dependency injection, and service swapping. Foundry Local integration uses the Microsoft.AI.Foundry.Local.WinML SDK. Unlike cloud APIs requiring authentication and network calls, this SDK communicates directly with the local Foundry service via in-process calls. Models load once at startup, remaining resident in memory for sub-second inference on subsequent requests. The static file frontend delivers vanilla HTML/CSS/JavaScript, no framework overhead. This simplicity aids healthcare IT security audits and enables deployment on locked-down hospital networks. The UI provides file upload, sample selection, audio preview, transcription requests, and result display with copy-to-clipboard functionality. Here's the architectural flow for transcription requests: Web UI (Upload Audio File) ↓ POST /v1/audio/transcriptions (Multipart Form Data) ↓ ASP.NET Core API Route ↓ TranscriptionService.TranscribeAudio(audioStream) ↓ Foundry Local Model (Whisper Medium locally) ↓ Text Result + Metadata (language, duration) ↓ Return JSON/Text Response ↓ Display in UI This architecture embodies several healthcare system design principles: Data never leaves the device: All processing occurs on-premises, no external API calls No data persistence by default: Audio and transcripts are session-only, never saved unless explicitly configured Comprehensive health checks: System readiness verification before accepting PHI Audit logging support: Structured logging for compliance documentation Graceful degradation: Clear error messages when models unavailable rather than silent failures Setting Up Foundry Local with Whisper Models Foundry Local supports multiple Whisper model sizes, each with different accuracy/speed tradeoffs. For medical transcription, accuracy is paramount—misheard drug names or dosages create patient safety risks: # Install Foundry Local (Windows) winget install Microsoft.FoundryLocal # Verify installation foundry --version # Download Whisper Medium model (optimal for medical accuracy) foundry model add openai-whisper-medium-generic-cpu:1 # Check model availability foundry model list Whisper Medium (769M parameters) provides the best balance for medical use. Smaller models (Tiny, Base) miss medical terminology frequently. Larger models (Large) offer marginal accuracy gains at 3x inference time. Medium handles medical vocabulary well, drug names, anatomical terms, procedure names, while processing typical consultation audio (5-10 minutes) in under 30 seconds. The application detects and loads the model automatically: // Services/FoundryModelService.cs using Microsoft.AI.Foundry.Local.WinML; public class FoundryModelService { private readonly ILogger _logger; private readonly FoundryOptions _options; private ILocalAIModel? _loadedModel; public FoundryModelService( ILogger logger, IOptions options) { _logger = logger; _options = options.Value; } public async Task InitializeModelAsync() { try { _logger.LogInformation( "Loading Foundry model: {ModelAlias}", _options.ModelAlias ); // Load model from Foundry Local _loadedModel = await FoundryClient.LoadModelAsync( modelAlias: _options.ModelAlias, cancellationToken: CancellationToken.None ); if (_loadedModel == null) { _logger.LogWarning("Model loaded but returned null instance"); return false; } _logger.LogInformation( "Successfully loaded model: {ModelAlias}", _options.ModelAlias ); return true; } catch (Exception ex) { _logger.LogError( ex, "Failed to load Foundry model: {ModelAlias}", _options.ModelAlias ); return false; } } public ILocalAIModel? GetLoadedModel() => _loadedModel; public async Task UnloadModelAsync() { if (_loadedModel != null) { await FoundryClient.UnloadModelAsync(_loadedModel); _loadedModel = null; _logger.LogInformation("Model unloaded"); } } } Configuration lives in appsettings.json , enabling easy customization without code changes: { "Foundry": { "ModelAlias": "whisper-medium", "LogLevel": "Information" }, "Transcription": { "MaxAudioDurationSeconds": 300, "SupportedFormats": ["wav", "mp3", "m4a", "flac"], "DefaultLanguage": "en" } } Implementing Privacy-First Transcription Service The transcription service handles audio processing while maintaining strict privacy controls. No audio or transcript persists beyond the HTTP request lifecycle unless explicitly configured: // Services/TranscriptionService.cs public class TranscriptionService { private readonly FoundryModelService _modelService; private readonly ILogger _logger; public async Task TranscribeAudioAsync( Stream audioStream, string originalFileName, TranscriptionOptions? options = null) { options ??= new TranscriptionOptions(); var startTime = DateTime.UtcNow; try { // Validate audio format ValidateAudioFormat(originalFileName); // Get loaded model var model = _modelService.GetLoadedModel(); if (model == null) { throw new InvalidOperationException("Whisper model not loaded"); } // Create temporary file (automatically deleted after transcription) using var tempFile = new TempAudioFile(audioStream); // Execute transcription _logger.LogInformation( "Starting transcription for file: {FileName}", originalFileName ); var transcription = await model.TranscribeAsync( audioFilePath: tempFile.Path, language: options.Language, cancellationToken: CancellationToken.None ); var duration = (DateTime.UtcNow - startTime).TotalSeconds; _logger.LogInformation( "Transcription completed in {Duration:F2}s", duration ); return new TranscriptionResult { Text = transcription.Text, Language = transcription.Language ?? options.Language, Duration = transcription.AudioDuration, ProcessingTimeSeconds = duration, FileName = originalFileName, Timestamp = DateTime.UtcNow }; } catch (Exception ex) { _logger.LogError( ex, "Transcription failed for file: {FileName}", originalFileName ); throw; } } private void ValidateAudioFormat(string fileName) { var extension = Path.GetExtension(fileName).TrimStart('.'); var supportedFormats = new[] { "wav", "mp3", "m4a", "flac", "ogg" }; if (!supportedFormats.Contains(extension.ToLowerInvariant())) { throw new ArgumentException( $"Unsupported audio format: {extension}. " + $"Supported: {string.Join(", ", supportedFormats)}" ); } } } // Temporary file wrapper that auto-deletes internal class TempAudioFile : IDisposable { public string Path { get; } public TempAudioFile(Stream sourceStream) { Path = System.IO.Path.GetTempFileName(); using var fileStream = File.OpenWrite(Path); sourceStream.CopyTo(fileStream); } public void Dispose() { try { if (File.Exists(Path)) { File.Delete(Path); } } catch { // Ignore deletion errors in temp folder } } } This service demonstrates several privacy-first patterns: Temporary file lifecycle management: Audio written to temp storage, automatically deleted after transcription No implicit persistence: Results returned to caller, not saved by service Format validation: Accept only supported audio formats to prevent processing errors Comprehensive logging: Audit trail for compliance without logging PHI content Error isolation: Exceptions contain diagnostic info but no patient data Building the OpenAI-Compatible REST API The API endpoint mirrors OpenAI's transcription API specification, enabling existing integrations to work without modifications: // Program.cs var builder = WebApplication.CreateBuilder(args); // Configure services builder.Services.Configure( builder.Configuration.GetSection("Foundry") ); builder.Services.AddSingleton(); builder.Services.AddScoped(); builder.Services.AddHealthChecks() .AddCheck("foundry-health"); var app = builder.Build(); // Load model at startup var modelService = app.Services.GetRequiredService(); await modelService.InitializeModelAsync(); app.UseHealthChecks("/health"); app.MapHealthChecks("/api/health/status"); // OpenAI-compatible transcription endpoint app.MapPost("/v1/audio/transcriptions", async ( HttpRequest request, TranscriptionService transcriptionService, ILogger logger) => { if (!request.HasFormContentType) { return Results.BadRequest(new { error = "Content-Type must be multipart/form-data" }); } var form = await request.ReadFormAsync(); // Extract audio file var audioFile = form.Files.GetFile("file"); if (audioFile == null || audioFile.Length == 0) { return Results.BadRequest(new { error = "Audio file required in 'file' field" }); } // Parse options var format = form["format"].ToString() ?? "text"; var language = form["language"].ToString() ?? "en"; try { // Process transcription using var stream = audioFile.OpenReadStream(); var result = await transcriptionService.TranscribeAudioAsync( audioStream: stream, originalFileName: audioFile.FileName, options: new TranscriptionOptions { Language = language } ); // Return in requested format if (format == "json") { return Results.Json(new { text = result.Text, language = result.Language, duration = result.Duration }); } else { // Default: plain text return Results.Text(result.Text); } } catch (Exception ex) { logger.LogError(ex, "Transcription request failed"); return Results.StatusCode(500); } }) .DisableAntiforgery() // File uploads need CSRF exemption .WithName("TranscribeAudio") .WithOpenApi(); app.Run(); Example API usage: # PowerShell $audioFile = Get-Item "consultation-recording.wav" $response = Invoke-RestMethod ` -Uri "http://localhost:5192/v1/audio/transcriptions" ` -Method Post ` -Form @{ file = $audioFile; format = "json" } Write-Output $response.text # cURL curl -X POST http://localhost:5192/v1/audio/transcriptions \ -F "file=@consultation-recording.wav" \ -F "format=json" Building the Interactive Web Frontend The web UI provides a user-friendly interface for non-technical medical staff to transcribe recordings: SarahCare Medical Transcription The JavaScript handles file uploads and API interactions: // wwwroot/app.js let selectedFile = null; async function checkHealth() { try { const response = await fetch('/health'); const statusEl = document.getElementById('status'); if (response.ok) { statusEl.className = 'status-badge online'; statusEl.textContent = '✓ System Ready'; } else { statusEl.className = 'status-badge offline'; statusEl.textContent = '✗ System Unavailable'; } } catch (error) { console.error('Health check failed:', error); } } function handleFileSelect(event) { const file = event.target.files[0]; if (!file) return; selectedFile = file; // Show file info const fileInfo = document.getElementById('fileInfo'); fileInfo.textContent = `Selected: ${file.name} (${formatFileSize(file.size)})`; fileInfo.classList.remove('hidden'); // Enable audio preview const preview = document.getElementById('audioPreview'); preview.src = URL.createObjectURL(file); preview.classList.remove('hidden'); // Enable transcribe button document.getElementById('transcribeBtn').disabled = false; } async function transcribeAudio() { if (!selectedFile) return; const loadingEl = document.getElementById('loadingIndicator'); const resultEl = document.getElementById('resultSection'); const transcribeBtn = document.getElementById('transcribeBtn'); // Show loading state loadingEl.classList.remove('hidden'); resultEl.classList.add('hidden'); transcribeBtn.disabled = true; try { const formData = new FormData(); formData.append('file', selectedFile); formData.append('format', 'json'); const startTime = Date.now(); const response = await fetch('/v1/audio/transcriptions', { method: 'POST', body: formData }); if (!response.ok) { throw new Error(`HTTP ${response.status}: ${response.statusText}`); } const result = await response.json(); const processingTime = ((Date.now() - startTime) / 1000).toFixed(1); // Display results document.getElementById('transcriptionText').value = result.text; document.getElementById('resultDuration').textContent = `Duration: ${result.duration.toFixed(1)}s`; document.getElementById('resultLanguage').textContent = `Language: ${result.language}`; resultEl.classList.remove('hidden'); console.log(`Transcription completed in ${processingTime}s`); } catch (error) { console.error('Transcription failed:', error); alert(`Transcription failed: ${error.message}`); } finally { loadingEl.classList.add('hidden'); transcribeBtn.disabled = false; } } function copyToClipboard() { const text = document.getElementById('transcriptionText').value; navigator.clipboard.writeText(text) .then(() => alert('Copied to clipboard')) .catch(err => console.error('Copy failed:', err)); } // Initialize window.addEventListener('load', () => { checkHealth(); loadSamplesList(); }); Key Takeaways and Production Considerations Building HIPAA-compliant voice-to-text systems requires architectural decisions that prioritize data privacy over convenience. The FLWhisper application demonstrates that you can achieve accurate medical transcription, fast processing times, and intuitive user experiences entirely on-premises. Critical lessons for healthcare AI: Privacy by architecture: Design systems where PHI never exists outside controlled environments, not as a configuration option No persistence by default: Audio and transcripts should be ephemeral unless explicitly saved with proper access controls Model selection matters: Whisper Medium provides medical terminology accuracy that smaller models miss Health checks enable reliability: Systems should verify model availability before accepting PHI Audit logging without content logging: Track operations for compliance without storing sensitive data in logs For production deployment in clinical settings, integrate with EHR systems via HL7/FHIR interfaces. Implement role-based access control with Active Directory integration. Add digital signatures for transcript authentication. Configure automatic PHI redaction using clinical NLP models. Deploy on HIPAA-compliant infrastructure with proper physical security. Implement comprehensive audit logging meeting compliance requirements. The complete implementation with ASP.NET Core API, Foundry Local integration, sample audio files, and comprehensive tests is available at github.com/leestott/FLWhisper. Clone the repository and follow the setup guide to experience privacy-first medical transcription. Resources and Further Reading FLWhisper Repository - Complete C# implementation with .NET 10 Quick Start Guide - Installation and usage instructions Microsoft Foundry Local Documentation - SDK reference and model catalog OpenAI Whisper Documentation - Model architecture and capabilities HIPAA Compliance Guidelines - HHS official guidance Testing Guide - Comprehensive test suite documentationAgents League: The Esports-Inspired Hackathon Where AI Agents Battle for Glory
Ready to put your AI skills to the ultimate test? Agents League is here, a dynamic, esports-inspired developer challenge that brings the thrill of live competition to the world of agentic AI. Whether you're a seasoned AI developer or just getting started, this is your chance to build, compete, and win. What is Agents League? Agents League is a week-long hackathon running as part of AI Skills Fest (June 4–14, 2026). Unlike traditional hackathons, Agents League combines live AI coding battles, asynchronous project submissions, and a thriving Discord community all competing for a total prize pool of $55,000 USD. This isn't just about building it's about showcasing what's possible with agentic AI in a format that's fast, competitive, and globally accessible. Three Challenge Tracks Pick One or Compete in All 1. Creative Apps Build innovative applications using GitHub Copilot for AI-assisted development. Show off your creativity and demonstrate how AI can accelerate app creation from concept to code. 2. Reasoning Agents Create intelligent agents using Microsoft Foundry that solve complex problems through multi-step reasoning. This track is all about building agents that can think, plan, and execute. 3. Enterprise Agents Build business-ready knowledge agents integrated with Microsoft 365 Copilot, authored in Copilot Studio. Perfect for developers focused on real-world enterprise solutions. Live Microsoft Reactor Events—Don't Miss the Battles! The heart of Agents League beats through live Microsoft Reactor events. Watch experts go head-to-head in live coding battles, learn cutting-edge techniques, and get inspired for your own submissions: Event What You'll Learn Creative Apps Battle See GitHub Copilot in action as experts build innovative apps live Reasoning Agents Battle Watch multi-step reasoning agents come to life with Microsoft Foundry Enterprise Agents Battle Learn to build M365-integrated agents with Copilot Studio 👉 View the full event series Key Dates Registration Deadline: June 12, 2026, 12:00 PM PT Hacking Period: June 4–14, 2026 Submission Deadline: June 14, 2026, 11:59 PM PT What You Get Live coding battles with expert demonstrations Curated technical experiences and on-demand content Learning resources on Microsoft Learn and AI Skills Navigator Community support through Discord GitHub-based submissions for transparent, collaborative judging Why Participate? Agents League isn't just another hackathon. It's designed as a streamlined, competitive format that: ✅ Fits into your schedule with focused, time-boxed challenges ✅ Provides real-world product innovation experience ✅ Offers global accessibility—participate from anywhere ✅ Demonstrates the latest capabilities of agentic AI, including new IQ tools ✅ Connects you with a passionate developer community Ready to Enter the Arena? Register Now for Agents League Before you register: Review the Hackathon Rules and Regulations for prize categories and judging criteria Join the Microsoft Reactor event series for live battles and learning Check out the Microsoft Event Code of Conduct Join the Conversation Have questions? Want to connect with fellow competitors? Join the Agents League community on Discord and start strategizing with developers from around the world. Whether you're building creative apps, reasoning agents, or enterprise solutions—the arena awaits. May the best agent win! 🏆 Agents League hackathon is open to the public and offered at no cost. Government employees should check with their employers to ensure participation is permitted in accordance with applicable policies. Related Links: Agents League Hackathon Registration Microsoft Reactor Series AI Skills FestToken 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 DocsBuilding an On-Device Voice Assistant with Microsoft Foundry Local
Why on-device voice still matters Most "voice AI" tutorials assume your audio leaves the machine. You ship a WAV to Whisper-API, your transcript to GPT-4, and a synthesized response back over the wire. That works — but it also means three round trips, three per-token bills, and three places your user's voice gets logged. The new wave of small, hardware-optimised models changes the trade-off. NVIDIA's Nemotron Speech Streaming En 0.6B is a 600M-parameter streaming ASR model published into the Microsoft Foundry Local catalog. Paired with a small chat model like qwen2.5-0.5b or phi-4-mini , you can run the entire capture → transcribe → reason → respond loop in-process on a developer laptop, with no API keys and no network egress. This post walks through how the fl-nemotron sample does it, the SDK pitfalls we hit on the way, and the design decisions that made the pipeline reliable. What we're building A browser-hosted assistant served by FastAPI at http://127.0.0.1:8000 . The page captures microphone audio, posts it to /api/transcribe , then streams the chat reply back over Server-Sent Events from /api/chat . All inference runs locally through two Foundry Local models loaded into the same process. The shape of the pipeline: Microphone (browser MediaRecorder) │ WebM/Opus blob ▼ Client-side WAV encoder (16 kHz, mono, PCM-16) │ multipart/form-data ▼ FastAPI /api/transcribe │ ▼ Nemotron Speech Streaming En 0.6B (Foundry Local audio client) │ transcript text ▼ Chat LLM e.g. qwen2.5-0.5b (Foundry Local chat client) │ streamed tokens ▼ FastAPI /api/chat → SSE → browser bubble The version that bit us: foundry-local-sdk >= 1.1.0 Before any code, the single most important fact about this project: The Nemotron Speech Streaming model only appears in the Foundry Local 1.1.x catalog. Older SDKs (0.5.x / 0.6.x) cannot resolve the alias nemotron-speech-streaming-en-0.6b and fail with model not found . The module name also changed in 1.1.0 — it is now foundry_local_sdk (with the underscore- sdk suffix), not foundry_local . The pip wheel for foundry-local-core is bundled, so there is no separate MSI / winget install to worry about. Pin it explicitly: pip install --upgrade "foundry-local-sdk>=1.1.0,<2" And verify before anything else: python -c "import importlib.metadata as m; print('sdk', m.version('foundry-local-sdk'))" # expect: sdk 1.1.0 Loading both models from one manager The 1.1.x SDK exposes a single FoundryLocalManager that owns the runtime. Each loaded model gives you back a per-model OpenAI-compatible client — get_chat_client() for text models and get_audio_client() for ASR. There is no need to bring your own openai Python package; the SDK ships its own thin client. The wrapper used in the repo ( src/foundry_client.py ) does this: from foundry_local_sdk import Configuration, FoundryLocalManager FoundryLocalManager.initialize(Configuration(app_name="fl-nemotron")) manager = FoundryLocalManager.instance chat_model = manager.load_model("qwen2.5-0.5b") stt_model = manager.load_model("nemotron-speech-streaming-en-0.6b") chat_client = chat_model.get_chat_client() audio_client = stt_model.get_audio_client() Both models are downloaded on first use into the Foundry Local cache and stay resident for the lifetime of the process. On a laptop with 16 GB RAM, the combined working set sits comfortably under 4 GB. The transcription surprise The first naive approach was the obvious one: with open(wav_path, "rb") as f: result = audio_client.transcribe(file=f, model="nemotron-speech-streaming-en-0.6b") That call fails on Nemotron. The bundled ONNX Runtime GenAI in foundry-local-core does not register the nemotron_speech multi-modal model type that the standard AudioClient.transcribe() path tries to instantiate. The error surfaces as a cryptic model-type registration failure deep inside the native runtime. The fix is to use the streaming session API instead — a different native entry point ( core_interop.start_audio_stream ) that the streaming model does support. The repo isolates this in src/_nemotron_live.py : def transcribe_wav_live(audio_client, wav_path, *, language="en"): with wave.open(str(wav_path), "rb") as w: sample_rate = w.getframerate() channels = w.getnchannels() sample_width = w.getsampwidth() pcm = w.readframes(w.getnframes()) session = audio_client.create_live_transcription_session() session.settings.sample_rate = sample_rate session.settings.channels = channels session.settings.bits_per_sample = sample_width * 8 session.settings.language = language session.start() # Feed PCM in ~100 ms chunks from a worker thread, then stop. bytes_per_sec = sample_rate * channels * sample_width chunk_bytes = max(bytes_per_sec // 10, 1024) def _pusher(): try: for offset in range(0, len(pcm), chunk_bytes): session.append(pcm[offset:offset + chunk_bytes]) finally: session.stop() threading.Thread(target=_pusher, daemon=True).start() parts = [] for resp in session.get_stream(): for cp in getattr(resp, "content", []) or []: text = getattr(cp, "text", "") or getattr(cp, "transcript", "") or "" if text: parts.append(text) return " ".join(p.strip() for p in parts if p.strip()).strip() Two things to notice: Push from a thread, read from the main coroutine. session.append() is a blocking write into the native stream and session.get_stream() is a blocking generator. Run one in a worker thread so the other can drain in parallel — otherwise you deadlock the session. Chunk to ~100 ms. Smaller chunks (e.g. 10 ms) spend more time crossing the FFI boundary than transcribing; larger chunks (e.g. 1 s) hold back partial results and hurt perceived latency. Always session.stop() . Without it the generator never terminates and the request hangs. The other transcription surprise: browsers don't send WAV Inside the browser, MediaRecorder defaults to audio/webm; codecs=opus . That's great for size but bad for our STT model, which expects a 16-bit mono PCM WAV at a known sample rate. Decoding WebM/Opus server-side would require ffmpeg as a runtime dependency — which is exactly the kind of friction this project exists to remove. The cleaner solution is to encode WAV on the client. AudioContext.decodeAudioData already understands WebM/Opus, so the page can decode the recording, resample to 16 kHz, mix to mono, and emit a PCM-16 WAV blob in 30 lines of JavaScript: // Inside src/static/index.html async function webmToWav(blob) { const ctx = new (window.AudioContext || window.webkitAudioContext)({ sampleRate: 16000 }); const buf = await ctx.decodeAudioData(await blob.arrayBuffer()); // Mix to mono const ch = buf.numberOfChannels; const mono = new Float32Array(buf.length); for (let c = 0; c < ch; c++) { const data = buf.getChannelData(c); for (let i = 0; i < data.length; i++) mono[i] += data[i] / ch; } return encodeWav(mono, 16000); } function encodeWav(samples, sampleRate) { const buffer = new ArrayBuffer(44 + samples.length * 2); const view = new DataView(buffer); // RIFF header writeStr(view, 0, "RIFF"); view.setUint32(4, 36 + samples.length * 2, true); writeStr(view, 8, "WAVE"); // fmt chunk writeStr(view, 12, "fmt "); view.setUint32(16, 16, true); // PCM chunk size view.setUint16(20, 1, true); // PCM format view.setUint16(22, 1, true); // mono view.setUint32(24, sampleRate, true); view.setUint32(28, sampleRate * 2, true); // byte rate view.setUint16(32, 2, true); // block align view.setUint16(34, 16, true); // bits per sample // data chunk writeStr(view, 36, "data"); view.setUint32(40, samples.length * 2, true); // PCM-16 samples let o = 44; for (let i = 0; i < samples.length; i++, o += 2) { const s = Math.max(-1, Math.min(1, samples[i])); view.setInt16(o, s < 0 ? s * 0x8000 : s * 0x7FFF, true); } return new Blob([view], { type: "audio/wav" }); } Now the server's /api/transcribe endpoint just writes the bytes to a temp file and hands them to transcribe_wav_live() — no audio decoding libraries on the Python side. Wiring it into FastAPI The server ( src/app.py ) is deliberately small. The notable detail is that the same process holds both Foundry Local model handles for its entire lifetime, so there is no warm-up cost per request: @app.post("/api/transcribe") async def transcribe(audio: UploadFile = File(...)): data = await audio.read() with tempfile.NamedTemporaryFile(suffix=".wav", delete=False) as f: f.write(data); path = f.name text = _ai_client.transcribe(path) return {"text": text} @app.post("/api/chat") async def chat(req: ChatRequest): if req.stream: return StreamingResponse( _sse(_ai_client.stream_completion(req.messages)), media_type="text/event-stream", ) return {"text": _ai_client.chat_completion(req.messages)} Streaming uses Server-Sent Events because they are trivially supported in both fetch() and the FastAPI runtime, and they don't require a WebSocket upgrade through any proxy a developer might have in front of localhost . What it looks like The repo includes screenshots of the running UI: a welcome screen with both models loaded, a streamed haiku reply, an inline code block with copy-to-clipboard, and the recording state for the microphone. Performance, honestly This is a small-model, CPU-friendly stack. On an Arm64 Surface running the x64 SDK under emulation: First model load (cold cache): tens of seconds — downloads ~600 MB for Nemotron and ~400 MB for qwen2.5-0.5b . Subsequent loads (warm cache): a few seconds per model. End-to-end transcription of a 5-second utterance: well under a second after warm-up. First chat token from qwen2.5-0.5b : typically 200–500 ms; full short reply within 1–2 s. On x64 silicon with a recent CPU the numbers improve substantially, and the SDK will pick the best execution provider it finds (CPU / DirectML / CUDA) for each model. Trade-offs to know about Model quality. qwen2.5-0.5b is a 500M-parameter model. It is fast and small enough to ship on a laptop, but it is not GPT-4. Swap in phi-4-mini or mistral-nemo-12b-instruct if you have the RAM and want better reasoning — the wrapper accepts any chat alias in the Foundry Local catalog. STT is English-only here. The current Nemotron streaming model in the catalog is ...-en-0.6b . Multilingual variants are likely to follow. Browser microphone needs a real browser. Headless / automated browsers (Playwright, Puppeteer) deny getUserMedia by default. Open the page in Edge / Chrome / Firefox to grant the permission and capture audio for real. No agent framework yet. This sample is deliberately a single-turn loop over a chat client — there is no tool calling, planning, or multi-agent orchestration. Adding the Microsoft Agent Framework on top would be a natural next step for richer behaviour. Responsible AI considerations Running locally removes the cloud-egress class of privacy concerns, but it does not remove responsibility: Disclose recording. The browser prompts for mic permission; your UI should make it obvious when capture is active. The sample shows a red ⏹ button and a "Recording…" banner for that reason. Don't log raw audio. The sample writes audio to a per-request NamedTemporaryFile and deletes it after transcription. Treat the WAV as sensitive data even when it never leaves the device. Small models hallucinate. A 0.5B chat model is great for snappy local replies, but unsuitable for high-stakes answers. Pair it with retrieval, ground it on your own data, or escalate to a larger model when accuracy matters. Try it Clone github.com/leestott/fl-nemotron. ./setup.ps1 (or ./setup.sh ) to create a virtualenv and install the pinned SDK. python scripts/prefetch.py nemotron-speech-streaming-en-0.6b qwen2.5-0.5b to download both models. .venv\Scripts\uvicorn.exe app:app --app-dir src --port 8000 Open http://127.0.0.1:8000 in a real browser and click the 🎤 button. Where to go next Foundry Local documentation — official docs for the runtime, catalog, and SDK. microsoft/Foundry-Local — upstream samples and issue tracker. NVIDIA Nemotron model family — background on the speech and language models being published into the catalog. leestott/fl-nemotron — the full source for this post. Key takeaways Pin foundry-local-sdk >= 1.1.0 . Earlier SDKs cannot see the Nemotron Speech Streaming model. Use the LiveAudioTranscriptionSession API for Nemotron, not AudioClient.transcribe() . Encode WAV in the browser. It eliminates a heavy server-side ffmpeg dependency for a few lines of JS. Push audio chunks on a worker thread and drain the response generator on the main one to avoid deadlocks. A small Foundry Local chat model plus Nemotron STT gives you a credible local voice loop in a single Python process — no cloud, no keys, no data egress.If You're Building AI on Azure, ECS 2026 is Where You Need to Be
Let me be direct: there's a lot of noise in the conference calendar. Generic cloud events. Vendor showcases dressed up as technical content. Sessions that look great on paper but leave you with nothing you can actually ship on Monday. ECS 2026 isn't that. As someone who will be on stage at Cologne this May, I can tell you the European Collaboration Summit combined with the European AI & Cloud Summit and European Biz Apps Summit is one of the few events I've seen where engineers leave with real, production-applicable knowledge. Three days. Three summits. 3,000+ attendees. One of the largest Microsoft-focused events in Europe, and it keeps getting better. If you're building AI systems on Azure, designing cloud-native architectures, or trying to figure out how to take your AI experiments to production — this is where the conversation is happening. What ECS 2026 Actually Is ECS 2026 runs May 5–7 at Confex in Cologne, Germany. It brings together three co-located summits under one roof: European Collaboration Summit — Microsoft 365, Teams, Copilot, and governance European AI & Cloud Summit — Azure architecture, AI agents, cloud security, responsible AI European BizApps Summit — Power Platform, Microsoft Fabric, Dynamics For Azure engineers and AI developers, the European AI & Cloud Summit is your primary destination. But don't ignore the overlap, some of the most interesting AI conversations happen at the intersection of collaboration tooling and cloud infrastructure. The scale matters here: 3,000+ attendees, 100+ sessions, multiple deep-dive tracks, and a speaker lineup that includes Microsoft executives, Regional Directors, and MVPs who have built, broken, and rebuilt production systems. The Azure + AI Track - What's Actually On the Agenda The AI & Cloud Summit agenda is built around real technical depth. Not "intro to AI" content, actual architecture decisions, patterns that work, and lessons from things that didn't. Here's what you can expect: AI Agents and Agentic Systems This is where the energy is right now, and ECS is leaning in. Expect sessions covering how to design agent workflows, chain reasoning steps, handle memory and state, and integrate with Azure AI services. Marco Casalaina, VP of Products for Azure AI at Microsoft, is speaking if you want to understand the direction of the Azure AI platform from the people building it, this is a direct line. Azure Architecture at Scale Cloud-native patterns, microservices, containers, and the architectural decisions that determine whether your system holds up under real load. These sessions go beyond theory you'll hear from engineers who've shipped these designs at enterprise scale. Observability, DevOps, and Production AI Getting AI to production is harder than the demos suggest. Sessions here cover monitoring AI systems, integrating LLMs into CI/CD pipelines, and building the operational practices that keep AI in production reliable and governable. Cloud Security and Compliance Security isn't optional when you're putting AI in front of users or connecting it to enterprise data. Tracks cover identity, access patterns, responsible AI governance, and how to design systems that satisfy compliance requirements without becoming unmaintainable. Pre-Conference Deep Dives One underrated part of ECS: the pre-conference workshops. These are extended, hands-on sessions typically 3–6 hours that let you go deep on a single topic with an expert. Think of them as intensive short courses where you can actually work through the material, not just watch slides. If you're newer to a particular area of Azure AI, or you want to build fluency in a specific pattern before the main conference sessions, these are worth the early travel. The Speaker Quality Is Different Here The ECS speaker roster includes Microsoft executives, Microsoft MVPs, and Regional Directors, people who have real accountability for the products and patterns they're presenting. You'll hear from over 20 Microsoft speakers: Marco Casalaina — VP of Products, Azure AI at Microsoft Adam Harmetz — VP of Product at Microsoft, Enterprise Agent And dozens of MVPs and Regional Directors who are in the field every day, solving the same problems you are. These aren't keynote-only speakers — they're in the session rooms, at the hallway track, available for real conversations. The Hallway Track Is Not a Cliché I know "networking" sounds like a corporate afterthought. At ECS it genuinely isn't. When you put 3,000 practitioners, engineers, architects, DevOps leads, security specialists in one venue for three days, the conversations between sessions are often more valuable than the sessions themselves. You get candid answers to "how are you actually handling X in production?" that you won't find in documentation. The European Microsoft community is tight-knit and collaborative. ECS is where that community concentrates. Why This Matters Right Now We're in a period where AI development is moving fast but the engineering discipline around it is still maturing. Most teams are figuring out: How to move from AI prototype to production system How to instrument and observe AI behaviour reliably How to design agent systems that don't become unmaintainable How to satisfy security and compliance requirements in AI-integrated architectures ECS 2026 is one of the few places where you can get direct answers to these questions from people who've solved them — not theoretically, but in production, on Azure, in the last 12 months. If you go, you'll come back with practical patterns you can apply immediately. That's the bar I hold events to. ECS consistently clears it. Register and Explore the Agenda Register for ECS 2026: ecs.events Explore the AI & Cloud Summit agenda: cloudsummit.eu/en/agenda Dates: May 5–7, 2026 | Location: Confex, Cologne, Germany Early registration is worth it the pre-conference workshops fill up. And if you're coming, find me, I'll be the one talking too much about AI agents and Azure deployments. See you in Cologne.GitHub Copilot SDK and Hybrid AI in Practice: Automating README to PPT Transformation
Introduction In today's rapidly evolving AI landscape, developers often face a critical choice: should we use powerful cloud-based Large Language Models (LLMs) that require internet connectivity, or lightweight Small Language Models (SLMs) that run locally but have limited capabilities? The answer isn't either-or—it's hybrid models—combining the strengths of both to create AI solutions that are secure, efficient, and powerful. This article explores hybrid model architectures through the lens of GenGitHubRepoPPT, demonstrating how to elegantly combine Microsoft Foundry Local, GitHub Copilot SDK, and other technologies to automatically generate professional PowerPoint presentations from GitHub README files. 1. Hybrid Model Scenarios and Value 1.1 What Are Hybrid Models? Hybrid AI Models strategically combine locally-running Small Language Models (SLMs) with cloud-based Large Language Models (LLMs) within the same application, selecting the most appropriate model for each task based on its unique characteristics. Core Principles: Local Processing for Sensitive Data: Privacy-critical content analysis happens on-device Cloud for Value Creation: Complex reasoning and creative generation leverage cloud power Balancing Cost and Performance: High-frequency, simple tasks run locally to minimize API costs 1.2 Typical Hybrid Model Use Cases Use Case Local SLM Role Cloud LLM Role Value Proposition Intelligent Document Processing Text extraction, structural analysis Content refinement, format conversion Privacy protection + Professional output Code Development Assistant Syntax checking, code completion Complex refactoring, architecture advice Fast response + Deep insights Customer Service Systems Intent recognition, FAQ handling Complex issue resolution Reduced latency + Enhanced quality Content Creation Platforms Keyword extraction, outline generation Article writing, multilingual translation Cost control + Creative assurance 1.3 Why Choose Hybrid Models? Three Core Advantages: Privacy and Security Sensitive data never leaves local devices Compliant with GDPR, HIPAA, and other regulations Ideal for internal corporate documents and personal information Cost Optimization Reduces cloud API call frequency Local models have zero usage fees Predictable operational costs Performance and Reliability Local processing eliminates network latency Partial functionality in offline environments Cloud models ensure high-quality output 2. Core Technology Analysis 2.1 Large Language Models (LLMs): Cloud Intelligence Representatives What are LLMs? Large Language Models are deep learning-based natural language processing models, typically with billions to trillions of parameters. Through training on massive text datasets, they've acquired powerful language understanding and generation capabilities. Representative Models: Claude Sonnet 4.5: Anthropic's flagship model, excelling at long-context processing and complex reasoning GPT-5.2 Series: OpenAI's general-purpose language models Gemini: Google's multimodal large models LLM Advantages: ✅ Exceptional text generation quality ✅ Powerful contextual understanding ✅ Support for complex reasoning tasks ✅ Continuous model updates and optimization Typical Applications: Professional document writing (technical reports, business plans) Code generation and refactoring Multilingual translation Creative content creation 2.2 Small Language Models (SLMs) and Microsoft Foundry Local 2.2.1 SLM Characteristics Small Language Models typically have 1B-7B parameters, designed specifically for resource-constrained environments. Mainstream SLM Model Families: Microsoft Phi Family (Phi Family): Inference-optimized efficient models Alibaba Qwen Family (Qwen Family): Excellent Chinese language capabilities Mistral Series: Outstanding performance with small parameter counts SLM Advantages: ⚡ Low-latency response (millisecond-level) 💰 Zero API costs 🔒 Fully local, data stays on-device 📱 Suitable for edge device deployment 2.2.2 Microsoft Foundry Local: The Foundation of Local AI Foundry Local is Microsoft's local AI runtime tool, enabling developers to easily run SLMs on Windows or macOS devices. Core Features: OpenAI-Compatible API # Using Foundry Local is like using OpenAI API from openai import OpenAI from foundry_local import FoundryLocalManager manager = FoundryLocalManager("qwen2.5-7b-instruct") client = OpenAI( base_url=manager.endpoint, api_key=manager.api_key ) Hardware Acceleration Support CPU: General computing support GPU: NVIDIA, AMD, Intel graphics acceleration NPU: Qualcomm, Intel AI-specific chips Apple Silicon: Neural Engine optimization Based on ONNX Runtime Cross-platform compatibility Highly optimized inference performance Supports model quantization (INT4, INT8) Convenient Model Management # View available models foundry model list # Run a model foundry model run qwen2.5-7b-instruct-generic-cpu:4 # Check running status foundry service ps Foundry Local Application Value: 🎓 Educational Scenarios: Students can learn AI development without cloud subscriptions 🏢 Enterprise Environments: Process sensitive data while maintaining compliance 🧪 R&D Testing: Rapid prototyping without API cost concerns ✈️ Offline Environments: Works on planes, subways, and other no-network scenarios 2.3 GitHub Copilot SDK: The Express Lane from Agent to Business Value 2.3.1 What is GitHub Copilot SDK? GitHub Copilot SDK, released as a technical preview on January 22, 2026, is a game-changer for AI Agent development. Unlike other AI SDKs, Copilot SDK doesn't just provide API calling interfaces—it delivers a complete, production-grade Agent execution engine. Why is it revolutionary? Traditional AI application development requires you to build: ❌ Context management systems (multi-turn conversation state) ❌ Tool orchestration logic (deciding when to call which tool) ❌ Model routing mechanisms (switching between different LLMs) ❌ MCP server integration ❌ Permission and security boundaries ❌ Error handling and retry mechanisms Copilot SDK provides all of this out-of-the-box, letting you focus on business logic rather than underlying infrastructure. 2.3.2 Core Advantages: The Ultra-Short Path from Concept to Code Production-Grade Agent Engine: Battle-Tested Reliability Copilot SDK uses the same Agent core as GitHub Copilot CLI, which means: ✅ Validated in millions of real-world developer scenarios ✅ Capable of handling complex multi-step task orchestration ✅ Automatic task planning and execution ✅ Built-in error recovery mechanisms Real-World Example: In the GenGitHubRepoPPT project, we don't need to hand-write the "how to convert outline to PPT" logic—we simply tell Copilot SDK the goal, and it automatically: Analyzes outline structure Plans slide layouts Calls file creation tools Applies formatting logic Handles multilingual adaptation # Traditional approach: requires hundreds of lines of code for logic def create_ppt_traditional(outline): slides = parse_outline(outline) for slide in slides: layout = determine_layout(slide) content = format_content(slide) apply_styling(content, layout) # ... more manual logic return ppt_file # Copilot SDK approach: focus on business intent session = await client.create_session({ "model": "claude-sonnet-4.5", "streaming": True, "skill_directories": [skills_dir] }) session.send_and_wait({"prompt": prompt}, timeout=600) Custom Skills: Reusable Encapsulation of Business Knowledge This is one of Copilot SDK's most powerful features. In traditional AI development, you need to provide complete prompts and context with every call. Skills allow you to: Define once, reuse forever: # .copilot_skills/ppt/SKILL.md # PowerPoint Generation Expert Skill ## Expertise You are an expert in business presentation design, skilled at transforming technical content into easy-to-understand visual presentations. ## Workflow 1. **Structure Analysis** - Identify outline hierarchy (titles, subtitles, bullet points) - Determine topic and content density for each slide 2. **Layout Selection** - Title slide: Use large title + subtitle layout - Content slides: Choose single/dual column based on bullet count - Technical details: Use code block or table layouts 3. **Visual Optimization** - Apply professional color scheme (corporate blue + accent colors) - Ensure each slide has a visual focal point - Keep bullets to 5-7 items per page 4. **Multilingual Adaptation** - Choose appropriate fonts based on language (Chinese: Microsoft YaHei, English: Calibri) - Adapt text direction and layout conventions ## Output Requirements Generate .pptx files meeting these standards: - 16:9 widescreen ratio - Consistent visual style - Editable content (not images) - File size < 5MB Business Code Generation Capability This is the core value of this project. Unlike generic LLM APIs, Copilot SDK with Skills can generate truly executable business code. Comparison Example: Aspect Generic LLM API Copilot SDK + Skills Task Description Requires detailed prompt engineering Concise business intent suffices Output Quality May need multiple adjustments Professional-grade on first try Code Execution Usually example code Directly generates runnable programs Error Handling Manual implementation required Agent automatically handles and retries Multi-step Tasks Manual orchestration needed Automatic planning and execution Comparison of manual coding workload: Task Manual Coding Copilot SDK Processing logic code ~500 lines ~10 lines configuration Layout templates ~200 lines Declared in Skill Style definitions ~150 lines Declared in Skill Error handling ~100 lines Automatically handled Total ~950 lines ~10 lines + Skill file Tool Calling & MCP Integration: Connecting to the Real World Copilot SDK doesn't just generate code—it can directly execute operations: 🗃️ File System Operations: Create, read, modify files 🌐 Network Requests: Call external APIs 📊 Data Processing: Use pandas, numpy, and other libraries 🔧 Custom Tools: Integrate your business logic 3. GenGitHubRepoPPT Case Study 3.1 Project Overview GenGitHubRepoPPT is an innovative hybrid AI solution that combines local AI models with cloud-based AI agents to automatically generate professional PowerPoint presentations from GitHub repository README files in under 5 minutes. Technical Architecture: 3.2 Why Adopt a Hybrid Model? Stage 1: Local SLM Processes Sensitive Data Task: Analyze GitHub README, extract key information, generate structured outline Reasons for choosing Qwen-2.5-7B + Foundry Local: Privacy Protection README may contain internal project information Local processing ensures data doesn't leave the device Complies with data compliance requirements Cost Effectiveness Each analysis processes thousands of tokens Cloud API costs are significant in high-frequency scenarios Local models have zero additional fees Performance Qwen-2.5-7B excels at text analysis tasks Outstanding Chinese support Acceptable CPU inference latency (typically 2-3 seconds) Stage 2: Cloud LLM + Copilot SDK Creates Business Value Task: Create well-formatted PowerPoint files based on outline Reasons for choosing Claude Sonnet 4.5 + Copilot SDK: Automated Business Code Generation Traditional approach pain points: Need to hand-write 500+ lines of code for PPT layout logic Require deep knowledge of python-pptx library APIs Style and formatting code is error-prone Multilingual support requires additional conditional logic Copilot SDK solution: Declare business rules and best practices through Skills Agent automatically generates and executes required code Zero-code implementation of complex layout logic Development time reduced from 2-3 days to 2-3 hours Ultra-Short Path from Intent to Execution Comparison: Different ways to implement "Generate professional PPT" 3. Production-Grade Reliability and Quality Assurance Battle-tested Agent engine: Uses the same core as GitHub Copilot CLI Validated in millions of real-world scenarios Automatically handles edge cases and errors Consistent output quality: Professional standards ensured through Skills Automatic validation of generated files Built-in retry and error recovery mechanisms 4. Rapid Iteration and Optimization Capability Scenario: Client requests PPT style adjustment The GitHub Repo https://github.com/kinfey/GenGitHubRepoPPT 4. Summary 4.1 Core Value of Hybrid Models + Copilot SDK The GenGitHubRepoPPT project demonstrates how combining hybrid models with Copilot SDK creates a new paradigm for AI application development. Privacy and Cost Balance The hybrid approach allows sensitive README analysis to happen locally using Qwen-2.5-7B, ensuring data never leaves the device while incurring zero API costs. Meanwhile, the value-creating work—generating professional PowerPoint presentations—leverages Claude Sonnet 4.5 through Copilot SDK, delivering quality that justifies the per-use cost. From Code to Intent Traditional AI development required writing hundreds of lines of code to handle PPT generation logic, layout selection, style application, and error handling. With Copilot SDK and Skills, developers describe what they want in natural language, and the Agent automatically generates and executes the necessary code. What once took 3-5 days now takes 3-4 hours, with 95% less code to maintain. Automated Business Code Generation Copilot SDK doesn't just provide code examples—it generates complete, executable business logic. When you request a multilingual PPT, the Agent understands the requirement, selects appropriate fonts, generates the implementation code, executes it with error handling, validates the output, and returns a ready-to-use file. Developers focus on business intent rather than implementation details. 4.2 Technology Trends The Shift to Intent-Driven Development We're witnessing a fundamental change in how developers work. Rather than mastering every programming language detail and framework API, developers are increasingly defining what they want through declarative Skills. Copilot SDK represents this future: you describe capabilities in natural language, and AI Agents handle the code generation and execution automatically. Edge AI and Cloud AI Integration The evolution from pure cloud LLMs (powerful but privacy-concerning) to pure local SLMs (private but limited) has led to today's hybrid architectures. GenGitHubRepoPPT exemplifies this trend: local models handle data analysis and structuring, while cloud models tackle complex reasoning and professional output generation. This combination delivers fast, secure, and professional results. Democratization of Agent Development Copilot SDK dramatically lowers the barrier to building AI applications. Senior engineers see 10-20x productivity gains. Mid-level engineers can now build sophisticated agents that were previously beyond their reach. Even junior engineers and business experts can participate by writing Skills that capture domain knowledge without deep technical expertise. The future isn't about whether we can build AI applications—it's about how quickly we can turn ideas into reality. References Projects and Code GenGitHubRepoPPT GitHub Repository - Case study project Microsoft Foundry Local - Local AI runtime GitHub Copilot SDK - Agent development SDK Copilot SDK Getting Started Tutorial - Official quick start Deep Dive: Copilot SDK Build an Agent into Any App with GitHub Copilot SDK - Official announcement GitHub Copilot SDK Cookbook - Practical examples Copilot CLI Official Documentation - CLI tool documentation Learning Resources Edge AI for Beginners - Edge AI introductory course Azure AI Foundry Documentation - Azure AI documentation GitHub Copilot Extensions Guide - Extension development guideoBeaver — A Beaver That Runs LLMs on Your Machine 🦫
Hi there! I'm the creator of oBeaver. This project started from a pretty simple desire: I wanted to run large language models on my own computer. No data sent to the cloud. No API keys. No per-call charges. I'm guessing you've had the same thought. There are already great tools out there — Ollama being the most prominent. But in my day-to-day work, I spend a lot of time in the ONNX ecosystem — the cross-platform reach of ONNX Runtime, its native NPU support, the turnkey experience of Microsoft Foundry Local. It kept nagging at me: the ONNX ecosystem deserves a more complete local inference toolkit. That's how oBeaver was born. Here are the links if you want to jump straight in: GitHub: https://github.com/microsoft/obeaver Docs: https://microsoft.github.io/obeaver Up and Running in Three Minutes Getting started with oBeaver is dead simple. You need Python 3.12+, then it's clone, install, chat: git clone https://github.com/microsoft/obeaver.git cd obeaver pip install -e . # Initialize the model directory (auto-creates ort/, foundrylocal/, cache_dir/ sub-folders) obeaver init # Make sure everything looks good obeaver check If you're on macOS or Windows, install Foundry Local and you're one command away from chatting with a model: obeaver run phi-4-mini The first run downloads the model automatically — give it a minute. After that, it's instant. On Linux, or if you want to use models from Hugging Face, the ORT engine has you covered: # Convert Qwen3-0.6B from Hugging Face to ONNX format obeaver convert Qwen/Qwen3-0.6B # Run it with the ORT engine obeaver run --engine ort ./models/ort/Qwen3-0.6B_ONNX_INT4_CPU Want to turn your model into an HTTP service? One line: obeaver serve Phi-4-mini Then point any OpenAI-compatible client at it — just change one base_url and your existing code works as-is: from openai import OpenAI client = OpenAI(base_url="http://127.0.0.1:18000/v1", api_key="unused") response = client.chat.completions.create( model="Phi-4-mini", messages=[{"role": "user", "content": "What is the capital of France?"}], stream=True, ) for chunk in response: print(chunk.choices[0].delta.content or "", end="", flush=True) LangChain, LlamaIndex, Microsoft Agent Framework, CrewAI — anything that speaks the OpenAI protocol plugs right in. This was a non-negotiable design principle from day one: local inference shouldn't be an island; it should fit seamlessly into your existing dev workflow. "Why Not Just Use Ollama?" I get this question a lot, and it deserves a straight answer. Ollama is a fantastic project. It pioneered the "one command to run a model" experience and made local LLM inference accessible to everyone. If all you need is a quick way to chat with a model locally, Ollama is still a wonderful choice. oBeaver itself draws heavy inspiration from it. But Ollama and oBeaver take different technical paths. Ollama is built on llama.cpp and uses the GGUF model format. oBeaver is built on ONNX Runtime and uses the ONNX model format. Behind these two formats are two very different philosophies. GGUF: Grab and Go GGUF's strength is ultimate portability. One file bundles everything — weights, tokenizer, metadata. Hugging Face is packed with pre-quantized GGUF models ready to download and run. Quantization options are rich (Q2_K through Q8_0), and the community is incredibly active. For individual developers, this "grab and go" experience is hard to beat. ONNX: Convert Once, Accelerate Everywhere ONNX shines in a different dimension. As a cross-platform industrial standard, ONNX Runtime has something called Execution Providers — the same ONNX model, without any changes, can run on CPU, GPU, and even NPU. This matters more than it might seem at first glance. With chips like Intel Core Ultra, Qualcomm Snapdragon X, and Apple Neural Engine becoming mainstream, NPUs are quickly becoming standard hardware in AI PCs. ONNX Runtime already supports NPU acceleration natively, while the GGUF ecosystem doesn't have this capability yet. This means ONNX naturally adapts to a far wider range of devices — from servers to laptops, from desktops to edge devices, even phones and IoT endpoints. The ONNX model you run on CPU today can be accelerated on an NPU-equipped machine tomorrow — no re-conversion, no code changes, just switch the Execution Provider. ONNX does have a higher barrier to entry — models need to be converted first. But oBeaver's built-in obeaver convert command, powered by Microsoft's Olive toolkit, reduces that to a single line. Another project worth mentioning is oMLX, which also explores local inference in the ONNX ecosystem, but focuses specifically on Apple Silicon. oBeaver aims to be more comprehensive — spanning macOS, Windows, and Linux, covering text chat, embeddings, and vision-language scenarios. Here's a quick comparison of all three: Ollama oMLX oBeaver Model format GGUF ONNX ONNX Inference backend llama.cpp ONNX Runtime Foundry Local + ORT GenAI Platforms macOS/Linux/Windows macOS macOS/Windows/Linux NPU acceleration ❌ ❌ ✅ Embedding models ✅ ✅ ✅ VL models ✅ ✅ ✅ Function Calling ✅ ✅ ✅ Docker deployment ✅ ✅ ✅ I'm not saying oBeaver is better than Ollama. They serve different needs. But if your work involves the ONNX ecosystem, NPU acceleration, or a combination of embedding and multimodal capabilities, oBeaver offers a path that Ollama doesn't currently cover. Why a "Dual Engine"? This is oBeaver's most distinctive design decision, and the one I spent the most time thinking about. oBeaver has two inference engines under the hood: Foundry Local and ONNX Runtime GenAI (ORT). Why not just pick one? Because reality is messier than ideals. Foundry Local is Microsoft's local inference runtime, and the experience is lovely — pass a catalog alias like Phi-4-mini, and it auto-downloads, loads, and runs the model with smart hardware scheduling (NPU > GPU > CPU). But it has two clear limitations: first, the model catalog is still small, mostly centered around Microsoft's Phi family; second, it only supports macOS and Windows — Linux users are left out. ONNX Runtime GenAI fills exactly those gaps. It supports macOS, Windows, and Linux — all three platforms. And with obeaver convert, you can transform almost any model on Hugging Face into ONNX format, giving you a much wider model selection. Right now, oBeaver can already run models from Phi, Qwen, Gemma, GLM, and other SLM families through the ORT engine. On top of that, the ORT engine powers capabilities that Foundry Local simply can't do: Embedding models — The ORT engine includes a dedicated embedding engine supporting Qwen3-Embedding and EmbeddingGemma, perfect for local RAG pipelines: # Start the embedding service obeaver serve-embed ./models/Qwen3-Embedding-0.6B from openai import OpenAI client = OpenAI(base_url="http://127.0.0.1:18001/v1", api_key="unused") response = client.embeddings.create( model="Qwen3-Embedding-0.6B", input=["Hello, world!", "Embeddings are useful."], ) for item in response.data: print(f"index={item.index} dim={len(item.embedding)}") Vision-Language models (VL) — When the ORT engine detects vision.onnx in a model directory, it automatically switches to VL mode. Currently supported: Qwen-2.5-VL-3B and Qwen-3-VL-2B. You can send images alongside text for multimodal understanding: obeaver serve ./models/Qwen3-VL-2B-Instruct_VL_ONNX_INT4_CPU Converting a VL model is just one command too: obeaver convert Qwen/Qwen2.5-VL-3B-Instruct --type vl So the dual engine isn't redundancy — it's the optimal choice given reality: Foundry Local covers only macOS/Windows; ORT GenAI covers all platforms. Foundry Local has fewer models but zero friction; ORT GenAI has more models and more flexibility. oBeaver automatically picks the right engine for your platform and task — Foundry Local by default on macOS/Windows, ORT on Linux, auto-switching to ORT for embedding or VL workloads. You can always override with --engine ort. In short: Foundry Local handles the "just works" path, ORT handles the "I need more" path. Together, they give oBeaver an answer for every platform and every scenario. Cloud-Native? Of Course oBeaver isn't just a local toy. Deployment was baked into the design from the start. The architecture is cleanly layered: CLI (Typer) → FastAPI Server → pluggable inference engines. We ship a Docker image supporting both linux/amd64 and linux/arm64 (Apple Silicon included): # Build the image docker buildx build --platform=linux/amd64 \ -f docker/Dockerfile.cpu -t obeaver-cpu . # Start the API server docker run -d --rm -p 18000:18000 \ -v /path/to/models:/models \ obeaver-cpu serve -m /models -E ort --host 0.0.0.0 --port 18000 Local dev, CI/CD pipelines, headless servers, Kubernetes clusters — it all works. Combined with the OpenAI-compatible API, you can develop against oBeaver locally and switch to a cloud endpoint in production by changing a single URL. Not a single line of application code needs to change. Not Just a CLI — There's a Dashboard Too So far everything I've shown has been terminal commands. But sometimes you just want a visual interface — especially when you're evaluating models, comparing performance, or showing a demo. oBeaver ships with a built-in web dashboard. One command to launch: obeaver dashboard # Foundry Local engine (macOS/Windows) obeaver dashboard -e ort # ORT engine (scans local ONNX models) Open http://127.0.0.1:1573/ and you'll see something like this: It's a real-time monitoring and chat interface rolled into one. Here's what you get: Model Selector — Switch between your cached models on the fly. If a model supports NPU acceleration, it's marked with a ⚡ badge. With Foundry Local, you'll see the models from your local catalog: With the ORT engine, it scans your model directory for all available ONNX models: Chat + Live Benchmarking — Send messages and get streaming responses, with real-time performance stats right in the interface — TTFT (Time to First Token), tokens per second, total token count. This makes it incredibly easy to benchmark different models side by side: System Monitoring — Real-time memory gauges for CPU, GPU, NPU, and process memory. A system info bar shows the current model, engine type, platform, and health status at a glance. Inference Parameters — Adjust temperature, top-p, top-k, and max tokens with built-in presets, all without restarting the server. VL Mode — When you load a Vision-Language model in the ORT dashboard, the interface automatically switches to a dedicated VL mode where you can provide an image URL alongside your text prompt: And more — Conversation history with save/load, system prompt configuration, live server logs showing every request with method/path/status/timing, and export to JSON or Markdown. The dashboard isn't a separate product — it's just obeaver dashboard. Everything runs locally, nothing phones home. It's particularly useful when you want to quickly evaluate how a model performs on your hardware before committing to it in your application. Being Honest: CPU Only for Now oBeaver is currently in Tech Preview, and I want to be upfront about this — it only supports CPU inference right now. This is a deliberate, stage-by-stage choice. We wanted to make sure the entire toolchain — model conversion, inference, API serving, Docker deployment — is rock solid on CPU first. Almost every machine has a CPU; it's the best baseline for validating the complete workflow. But GPU and NPU support are coming soon. They're at the very top of the roadmap. ONNX Runtime already ships mature CUDA (GPU) and QNN/OpenVINO (NPU) Execution Providers. Foundry Local already has NPU > GPU > CPU auto-scheduling built in. What oBeaver needs to do is integrate these into its engine selection logic and model conversion pipeline — and that work is actively underway. Ultimately, one of the key reasons oBeaver chose the ONNX path is the NPU future. The AI PC era is arriving, and when NPUs become standard hardware, ONNX will be the ecosystem most ready for it. Acknowledgements oBeaver is inspired by and builds upon the ideas from the following excellent projects: Project Description Ollama Run large language models locally with a simple CLI OMLX Run large language models on Apple Silicon, ONNX-based vLLM High-throughput and memory-efficient inference engine for LLMs Foundry Local Microsoft's local model inference runtime with NPU/GPU/CPU acceleration ONNX Runtime GenAI Generative AI extensions for ONNX Runtime Olive Microsoft's model optimization toolkit for ONNX Runtime I Need Your Feedback That's the tour. But oBeaver is still in its early days, and there's so much room to improve. As the creator of this project, what I fear most isn't criticism — it's silence. So I genuinely hope you'll give it a try and let me know what you think: Which models do you most want to run? How urgent is GPU / NPU acceleration for your use case? What do you think of the dual-engine design — does it add value, or does it add complexity? In your real-world projects, what's the biggest pain point with local inference? What else does the Docker story need? Helm Charts? Compose files? GitHub Issues, PRs, or just reaching out on social media — any form of feedback is deeply appreciated. The name oBeaver comes from the beaver — nature's most remarkable engineer. Beavers build dams stick by stick, creating the environment they need to thrive. I hope oBeaver can help you do the same: build your local AI infrastructure, one piece at a time, on your own hardware. Build local. Dam the cloud. 🦫 GitHub: https://github.com/microsoft/obeaver Docs: https://microsoft.github.io/obeaver If you find oBeaver useful, a ⭐ on GitHub means the world to us!Build a Fully Offline AI App with Foundry Local and CAG
A hands-on guide to building an on-device AI support agent using Context-Augmented Generation, JavaScript, and Foundry Local. You have probably heard the AI pitch: "just call our API." But what happens when your application needs to work without an internet connection? Perhaps your users are field engineers standing next to a pipeline in the middle of nowhere, or your organisation has strict data privacy requirements, or you simply want to build something that works without a cloud bill. This post walks you through how to build a fully offline, on-device AI application using Foundry Local and a pattern called Context-Augmented Generation (CAG). By the end, you will have a clear understanding of what CAG is, how it compares to RAG, and the practical steps to build your own solution. The finished application: a browser-based AI support agent that runs entirely on your machine. What Is Context-Augmented Generation? Context-Augmented Generation (CAG) is a pattern for making AI models useful with your own domain-specific content. Instead of hoping the model "knows" the answer from its training data, you pre-load your entire knowledge base into the model's context window at startup. Every query the model handles has access to all of your documents, all of the time. The flow is straightforward: Load your documents into memory when the application starts. Inject the most relevant documents into the prompt alongside the user's question. Generate a response grounded in your content. There is no retrieval pipeline, no vector database, and no embedding model. Your documents are read from disc, held in memory, and selected per query using simple keyword scoring. The model generates answers grounded in your content rather than relying on what it learnt during training. CAG vs RAG: Understanding the Trade-offs If you have explored AI application patterns before, you have likely encountered Retrieval-Augmented Generation (RAG). Both CAG and RAG solve the same core problem: grounding an AI model's answers in your own content. They take different approaches, and each has genuine strengths and limitations. CAG (Context-Augmented Generation) How it works: All documents are loaded at startup. The most relevant ones are selected per query using keyword scoring and injected into the prompt. Strengths: Drastically simpler architecture with no vector database, no embeddings, and no retrieval pipeline Works fully offline with no external services Minimal dependencies (just two npm packages in this sample) Near-instant document selection with no embedding latency Easy to set up, debug, and reason about Limitations: Constrained by the model's context window size Best suited to small, curated document sets (tens of documents, not thousands) Keyword scoring is less precise than semantic similarity for ambiguous queries Adding documents requires an application restart RAG (Retrieval-Augmented Generation) How it works: Documents are chunked, embedded into vectors, and stored in a database. At query time, the most semantically similar chunks are retrieved and injected into the prompt. Strengths: Scales to thousands or millions of documents Semantic search finds relevant content even when the user's wording differs from the source material Documents can be added or updated dynamically without restarting Fine-grained retrieval (chunk-level) can be more token-efficient for large collections Limitations: More complex architecture: requires an embedding model, a vector database, and a chunking strategy Retrieval quality depends heavily on chunking, embedding model choice, and tuning Additional latency from the embedding and search steps More dependencies and infrastructure to manage Want to compare these patterns hands-on? There is a RAG-based implementation of the same gas field scenario using vector search and embeddings. Clone both repositories, run them side by side, and see how the architectures differ in practice. When Should You Choose Which? Consideration Choose CAG Choose RAG Document count Tens of documents Hundreds or thousands Offline requirement Essential Optional (can run locally too) Setup complexity Minimal Moderate to high Document updates Infrequent (restart to reload) Frequent or dynamic Query precision Good for keyword-matchable content Better for semantically diverse queries Infrastructure None beyond the runtime Vector database, embedding model For the sample application in this post (20 gas engineering procedure documents on a local machine), CAG is the clear winner. If your use case grows to hundreds of documents or requires real-time ingestion, RAG becomes the better choice. Both patterns can run offline using Foundry Local. Foundry Local: Your On-Device AI Runtime Foundry Local is a lightweight runtime from Microsoft that downloads, manages, and serves language models entirely on your device. No cloud account, no API keys, no outbound network calls (after the initial model download). In this sample, your application is responsible for deciding which model to use, and it does that through the foundry-local-sdk . The app creates a FoundryLocalManager , asks the SDK for the local model catalogue, and then runs a small selection policy from src/modelSelector.js . That policy looks at the machine's available RAM, filters out models that are too large, ranks the remaining chat models by preference, and then returns the best fit for that device. Why does it work this way? Because shipping one fixed model would either exclude lower-spec machines or underuse more capable ones. A 14B model may be perfectly reasonable on a 32 GB workstation, but the same choice would be slow or unusable on an 8 GB laptop. By selecting at runtime, the same codebase can run across a wider range of developer machines without manual tuning. What makes it particularly useful for developers: No GPU required — runs on CPU or NPU, making it accessible on standard laptops and desktops Native SDK bindings — in-process inference via the foundry-local-sdk npm package, with no HTTP round-trips to a local server Automatic model management — downloads, caches, and loads models automatically Dynamic model selection — the SDK can evaluate your device's available RAM and pick the best model from the catalogue Real-time progress callbacks — ideal for building loading UIs that show download and initialisation progress The integration code is refreshingly minimal. Here is the core pattern: import { FoundryLocalManager } from "foundry-local-sdk"; // Create a manager and get the model catalogue const manager = FoundryLocalManager.create({ appName: "my-app" }); // Auto-select the best model for this device based on available RAM const models = await manager.catalog.getModels(); const model = selectBestModel(models); // Download if not cached, then load into memory if (!model.isCached) { await model.download((progress) => { console.log(`Download: ${progress.toFixed(0)}%`); }); } await model.load(); // Create a chat client for direct in-process inference const chatClient = model.createChatClient(); const response = await chatClient.completeChat([ { role: "system", content: "You are a helpful assistant." }, { role: "user", content: "How do I detect a gas leak?" } ]); That is it. No server configuration, no authentication tokens, no cloud provisioning. The model runs in the same process as your application. The download step matters for a simple reason: offline inference only works once the model files exist locally. The SDK checks whether the chosen model is already cached on the machine. If it is not, the application asks Foundry Local to download it once, store it locally, and then load it into memory. After that first run, the cached model can be reused, which is why subsequent launches are much faster and can operate without any network dependency. Put another way, there are two cooperating pieces here. Your application chooses which model is appropriate for the device and the scenario. Foundry Local and its SDK handle the mechanics of making that model available locally, caching it, loading it, and exposing a chat client for inference. That separation keeps the application logic clear whilst letting the runtime handle the heavy lifting. The Technology Stack The sample application is deliberately simple. No frameworks, no build steps, no Docker: Layer Technology Purpose AI Model Foundry Local + auto-selected model Runs locally via native SDK bindings; best model chosen for your device Back end Node.js + Express Lightweight HTTP server, everyone knows it Context Markdown files pre-loaded at startup No vector database, no embeddings, no retrieval step Front end Single HTML file with inline CSS No build step, mobile-responsive, field-ready The total dependency footprint is two npm packages: express and foundry-local-sdk . Architecture Overview The four-layer architecture, all running on a single machine. The system has four layers, all running in a single process on your device: Client layer: a single HTML file served by Express, with quick-action buttons and a responsive chat interface Server layer: Express.js starts immediately and serves the UI plus an SSE status endpoint; API routes handle chat (streaming and non-streaming), context listing, and health checks CAG engine: loads all domain documents at startup, selects the most relevant ones per query using keyword scoring, and injects them into the prompt AI layer: Foundry Local runs the auto-selected model on CPU/NPU via native SDK bindings (in-process inference, no HTTP round-trips) Building the Solution Step by Step Prerequisites You need two things installed on your machine: Node.js 20 or later: download from nodejs.org Foundry Local: Microsoft's on-device AI runtime: winget install Microsoft.FoundryLocal Foundry Local will automatically select and download the best model for your device the first time you run the application. You can override this by setting the FOUNDRY_MODEL environment variable to a specific model alias. Getting the Code Running # Clone the repository git clone https://github.com/leestott/local-cag.git cd local-cag # Install dependencies npm install # Start the server npm start Open http://127.0.0.1:3000 in your browser. You will see a loading overlay with a progress bar whilst the model downloads (first run only) and loads into memory. Once the model is ready, the overlay fades away and you can start chatting. Desktop view Mobile view How the CAG Pipeline Works Let us trace what happens when a user asks: "How do I detect a gas leak?" The query flow from browser to model and back. 1 Server starts and loads documents When you run npm start , the Express server starts on port 3000. All .md files in the docs/ folder are read, parsed (with optional YAML front-matter for title, category, and ID), and grouped by category. A document index is built listing all available topics. 2 Model is selected and loaded The model selector evaluates your system's available RAM and picks the best model from the Foundry Local catalogue. If the model is not already cached, it downloads it (with progress streamed to the browser via SSE). The model is then loaded into memory for in-process inference. 3 User sends a question The question arrives at the Express server. The chat engine selects the top 3 most relevant documents using keyword scoring. 4 Prompt is constructed The engine builds a messages array containing: the system prompt (with safety-first instructions), the document index (so the model knows all available topics), the 3 selected documents (approximately 6,000 characters), the conversation history, and the user's question. 5 Model generates a grounded response The prompt is sent to the locally loaded model via the Foundry Local SDK's native bindings. The response streams back token by token through Server-Sent Events to the browser. A response with safety warnings and step-by-step guidance The sources panel shows which documents were used Key Code Walkthrough Loading Documents (the Context Module) The context module reads all markdown files from the docs/ folder at startup. Each document can have optional YAML front-matter for metadata: // src/context.js export function loadDocuments() { const files = fs.readdirSync(config.docsDir) .filter(f => f.endsWith(".md")) .sort(); const docs = []; for (const file of files) { const raw = fs.readFileSync(path.join(config.docsDir, file), "utf-8"); const { meta, body } = parseFrontMatter(raw); docs.push({ id: meta.id || path.basename(file, ".md"), title: meta.title || file, category: meta.category || "General", content: body.trim(), }); } return docs; } There is no chunking, no vector computation, and no database. The documents are held in memory as plain text. Dynamic Model Selection Rather than hard-coding a model, the application evaluates your system at runtime: // src/modelSelector.js const totalRamMb = os.totalmem() / (1024 * 1024); const budgetMb = totalRamMb * 0.6; // Use up to 60% of system RAM // Filter to models that fit, rank by quality, boost cached models const candidates = allModels.filter(m => m.task === "chat-completion" && m.fileSizeMb <= budgetMb ); // Returns the best model: e.g. phi-4 on a 32 GB machine, // or phi-3.5-mini on a laptop with 8 GB RAM This means the same application runs on a powerful workstation (selecting a 14B parameter model) or a constrained laptop (selecting a 3.8B model), with no code changes required. This is worth calling out because it is one of the most practical parts of the sample. Developers do not have to decide up front which single model every user should run. The application makes that decision at startup based on the hardware budget you set, then asks Foundry Local to fetch the model if it is missing. The result is a smoother first-run experience and fewer support headaches when the same app is used on mixed hardware. The System Prompt For safety-critical domains, the system prompt is engineered to prioritise safety, prevent hallucination, and enforce structured responses: // src/prompts.js export const SYSTEM_PROMPT = `You are a local, offline support agent for gas field inspection and maintenance engineers. Behaviour Rules: - Always prioritise safety. If a procedure involves risk, explicitly call it out. - Do not hallucinate procedures, measurements, or tolerances. - If the answer is not in the provided context, say: "This information is not available in the local knowledge base." Response Format: - Summary (1-2 lines) - Safety Warnings (if applicable) - Step-by-step Guidance - Reference (document name + section)`; This pattern is transferable to any safety-critical domain: medical devices, electrical work, aviation maintenance, or chemical handling. Adapting This for Your Own Domain The sample project is designed to be forked and adapted. Here is how to make it yours in three steps: 1. Replace the documents Delete the gas engineering documents in docs/ and add your own markdown files. The context module handles any markdown content with optional YAML front-matter: --- title: Troubleshooting Widget Errors category: Support id: KB-001 --- # Troubleshooting Widget Errors ...your content here... 2. Edit the system prompt Open src/prompts.js and rewrite the system prompt for your domain. Keep the structure (summary, safety, steps, reference) and update the language to match your users' expectations. 3. Override the model (optional) By default the application auto-selects the best model. To force a specific model: # See available models foundry model list # Force a smaller, faster model FOUNDRY_MODEL=phi-3.5-mini npm start # Or a larger, higher-quality model FOUNDRY_MODEL=phi-4 npm start Smaller models give faster responses on constrained devices. Larger models give better quality. The auto-selector picks the largest model that fits within 60% of your system RAM. Building a Field-Ready UI The front end is a single HTML file with inline CSS. No React, no build tooling, no bundler. This keeps the project accessible to beginners and easy to deploy. Design decisions that matter for field use: Dark, high-contrast theme with 18px base font size for readability in bright sunlight Large touch targets (minimum 48px) for operation with gloves or PPE Quick-action buttons for common questions, so engineers do not need to type on a phone Responsive layout that works from 320px to 1920px+ screen widths Streaming responses via SSE, so the user sees tokens arriving in real time The mobile chat experience, optimised for field use. Visual Startup Progress with SSE A standout feature of this application is the loading experience. When the user opens the browser, they see a progress overlay showing exactly what the application is doing: Loading domain documents Initialising the Foundry Local SDK Selecting the best model for the device Downloading the model (with a percentage progress bar, first run only) Loading the model into memory This works because the Express server starts before the model finishes loading. The browser connects immediately and receives real-time status updates via Server-Sent Events. Chat endpoints return 503 whilst the model is loading, so the UI cannot send queries prematurely. // Server-side: broadcast status to all connected browsers function broadcastStatus(state) { initState = state; const payload = `data: ${JSON.stringify(state)}\n\n`; for (const client of statusClients) { client.write(payload); } } // During initialisation: broadcastStatus({ stage: "downloading", message: "Downloading phi-4...", progress: 42 }); This pattern is worth adopting in any application where model loading takes more than a few seconds. Users should never stare at a blank screen wondering whether something is broken. Testing The project includes unit tests using the built-in Node.js test runner, with no extra test framework needed: # Run all tests npm test Tests cover configuration, server endpoints, and document loading. Use them as a starting point when you adapt the project for your own domain. Ideas for Extending the Project Once you have the basics running, there are plenty of directions to explore: Conversation memory: persist chat history across sessions using local storage or a lightweight database Hybrid CAG + RAG: add a vector retrieval step for larger document collections that exceed the context window Multi-modal support: add image-based queries (photographing a fault code, for example) PWA packaging: make it installable as a standalone offline application on mobile devices Custom model fine-tuning: fine-tune a model on your domain data for even better answers Ready to Build Your Own? Clone the CAG sample, swap in your own documents, and have an offline AI agent running in minutes. Or compare it with the RAG approach to see which pattern suits your use case best. Get the CAG Sample Get the RAG Sample Summary Building a local AI application does not require a PhD in machine learning or a cloud budget. With Foundry Local, Node.js, and a set of domain documents, you can create a fully offline, mobile-responsive AI agent that answers questions grounded in your own content. The key takeaways: CAG is ideal for small, curated document sets where simplicity and offline capability matter most. No vector database, no embeddings, no retrieval pipeline. RAG scales further when you have hundreds or thousands of documents, or need semantic search for ambiguous queries. See the local-rag sample to compare. Foundry Local makes on-device AI accessible: native SDK bindings, in-process inference, automatic model selection, and no GPU required. The architecture is transferable. Replace the gas engineering documents with your own content, update the system prompt, and you have a domain-specific AI agent for any field. Start simple, iterate outwards. Begin with CAG and a handful of documents. If your needs outgrow the context window, graduate to RAG. Both patterns can run entirely offline. Clone the repository, swap in your own documents, and start building. The best way to learn is to get your hands on the code. This project is open source under the MIT licence. It is a scenario sample for learning and experimentation, not production medical or safety advice. local-cag on GitHub · local-rag on GitHub · Foundry Local
