Transforming Small Businesses 2025

AI agents – a new frontier in AI technology AI agents represent a new era in AI, with the promise of bringing end-to-end transformation across industries. AI agents are a type of AI that can observe their environment, use AI models for planning and access connected systems to take action and accomplish goals. They have the ability to remember across tasks and changing states, can use one AI model, or more, to complete tasks and can decide when to access internal or external systems on a user’s behalf. They are thus able to move beyond traditional AI systems, which are task-specific and require frequent human inputs. AI agents act in a continuous observe, plan and act cycle, as shown in Figure 10. This is achievedthrough five major components that characterize an AI agent system: 1. Agent-centric interfaces that allow them to observe their environment by connecting them to users, databases, sensors and other systems 2. A memory module with short-term memory for immediate context as well as long-term memory for factual knowledge and details of past conversations and tasks 3. A profile module to define the agent’s attributes, role, goals and behaviour patterns 4. A planning module to decompose tasks into logical steps or action plans 5. An action module to execute using internal and external systems AI agents will become the primary way we interact with computers in the future. Satya Nadella, Chief Executive Officer, Microsoft AI agents – the continuous observe, plan and act cycle FIGURE 10 AI agents function in a continuous observe, plan and act cycle Observe Gather information from the environment through: Interfaces such as APIs, user inputs, metrics, sensor outputs Memory and context of past interactionsPlan Evaluate and prioritize actions based on: Goals to be accomplished Roles that define agent behaviour and type Reasoning abilities through LLMs Context and memory built by the agentAct Execute planned actions through: Interfaces to digital systems and databases Delegation to other agents Clarification prompts to users for more input Plan ActObserve Agent Source: BCG Transforming Small Businesses: An AI Playbook for India’s SMEs 32