← Develop AI Apps and Agents o… Latent Shelf · Ch.10

Module Study Guide · Path 2 · AI agents

Build Knowledge-Enhanced AI Agents with Foundry IQ

Build the knowledge base once; every agent shares it — Foundry IQ turns retrieval into a managed service, not per-agent plumbing.

— the module's shift

Grounding agents without building RAG each time. This module covers RAG for agents, what Foundry IQ is and its domain knowledge bases, connecting data sources with automatic indexing, and configuring retrieval so answers are grounded and cited.

managed RAGknowledge basesMCP connection14 quiz questions
01What Foundry IQ is

Shared, managed retrieval

Foundry IQ is a managed knowledge platform for agents, built on Azure AI Search, that provides shared retrieval without building custom RAG infrastructure per agent. It solves the duplication problem: multiple agents share one set of knowledge bases, so you focus on agent experience rather than plumbing.

Key concept · Knowledge bases organized by domain

A knowledge base organizes information by business domain — "Product Documentation," "HR Policies" — not by technical storage location. One base can consolidate multiple sources: specs from SharePoint, API docs from Blob Storage, analytics from OneLake, tickets from existing indexes. Agents search a unified domain instead of "Site A" or "Container B," and one base can serve several agents at once (improvements benefit all of them immediately).

02Data & retrieval

Connect once, retrieve intelligently

Foundry IQ connects to existing storage (SharePoint, Blob, OneLake) and handles the pipeline automatically: discovery (scan for documents) → processing (chunk and embed) → indexing (make searchable) → monitoring (reindex on change). Configure once per source; all connected agents benefit.

Key concept · Built-in retrieval intelligence

Foundry IQ applies retrieval strategies with no custom code: query analysis (understand the information need), strategy selection (keyword for simple facts, semantic + query expansion for complex questions), result ranking (relevance scoring surfaces the best content, reducing tokens), and citations (source references for trust and verification).

Agents reach a knowledge base through the Model Context Protocol — an MCPTool pointed at the knowledge base's MCP endpoint. The agent retrieves like any other tool, with no custom retrieval logic.

03Configuring retrieval

Grounded, cited, and safe when unknown

Well-indexed content still fails if the agent answers from training data or searches without citing. The fix is precise agent instructions that specify three behaviors: when to retrieve (always search, never rely on training data), how to cite (an exact citation format), and fallback (what to say when information isn't found).

The retrieval behaviors, only one of which is enterprise-grade.
BehaviorVerdict
Answer from training data✕ Wrong / generic information
Search but don't cite✕ Unverifiable, no accountability
Search + cite + ground✓ Enterprise standard

Tailor instructions to agent type (customer support: never guess, escalate; internal research: synthesize with confidence notes; compliance: cite specific policy sections), test across straightforward/synthesis/out-of-scope/ambiguous queries, and monitor citation and fallback frequency in production.

★Test yourself

Chapter 10 quiz

Fourteen questions on Foundry IQ, knowledge bases, data sources and retrieval, and configuring grounded, cited answers. Answer first, then expand Show answer.

Part A · Multiple choice

Q1

What core problem does Foundry IQ solve?

  • A Slow token generation
  • B Building separate RAG infrastructure for every agent
  • C Model fine-tuning
  • D Image generation
Show answer

B. It provides shared, managed retrieval so multiple agents use one set of knowledge bases.

Q2

How does a knowledge base organize information?

  • A By storage location
  • B By business domain (e.g. Product Documentation, HR Policies)
  • C By file size
  • D By model
Show answer

B. Domains reflect how people think, and can consolidate multiple sources.

Q3

What is the automatic data-source workflow?

  • A Discovery → processing → indexing → monitoring
  • B Train → deploy → evaluate
  • C Map → measure → mitigate
  • D Sense → reason → act
Show answer

A. Scan, chunk & embed, make searchable, and reindex on change.

Q4

How does an agent connect to a Foundry IQ knowledge base?

  • A Through the Model Context Protocol, via an MCPTool
  • B By fine-tuning
  • C By copying files locally
  • D It can't
Show answer

A. The agent retrieves like any other tool, no custom retrieval logic.

Q5

Which retrieval behavior is the enterprise standard?

  • A Answer from training data
  • B Search but don't cite
  • C Search + cite + ground
  • D Refuse all questions
Show answer

C. Grounded in the knowledge base with source citations.

Q6

Which three behaviors should agent instructions specify for reliable retrieval?

  • A When to retrieve, how to cite, and fallback behavior
  • B Temperature, top-p, and max tokens
  • C Model, endpoint, and key
  • D Name, description, and parameters
Show answer

A. Always search, cite in an exact format, and handle "not found" gracefully.

Part B · True or false

Q7

One Foundry IQ knowledge base can serve multiple agents.

Show answer

True. Improvements to it benefit all connected agents immediately.

Q8

Foundry IQ requires you to write custom retrieval code for each agent.

Show answer

False. Retrieval intelligence (query analysis, ranking, citations) is applied automatically.

Q9

A well-indexed knowledge base guarantees the agent will cite its sources.

Show answer

False. Without precise instructions, an agent may answer from training data or search without citing.

Q10

You should monitor citation and fallback frequency in production.

Show answer

True. Real users ask differently than test scenarios; iterate on the patterns you see.

Q11

Foundry IQ is built on Azure AI Search.

Show answer

True. It's a managed knowledge platform layered on Azure AI Search.

Part C · Short answer

Q12

Name the four steps of the automatic data-source workflow.

Show answer

Discovery, processing (chunk & embed), indexing, and monitoring (reindex on change).

Q13

Name the four built-in retrieval-intelligence capabilities.

Show answer

Query analysis, strategy selection, result ranking, and citations.

Q14

Give an example of a source a single knowledge base might consolidate.

Show answer

Any of: SharePoint specs, Azure Blob API docs, OneLake analytics, or existing search indexes.