What is Microsoft 365 Copilot?

Microsoft 365 Copilot is an AI-powered productivity assistant that integrates large language models (LLMs) with Microsoft Graph and Microsoft 365 apps and services. It helps users work more efficiently by providing real-time suggestions, automating repetitive tasks, and enhancing content creation across applications like Word, Excel, PowerPoint, Outlook, Teams, and more.

How Does It Work?

Copilot leverages advanced AI, including OpenAI’s GPT-4 and Microsoft’s proprietary models, to analyze the context of your work and provide intelligent assistance. It respects organizational security and compliance policies, ensuring that users can safely interact with their data while maintaining privacy and access controls.

Key Features of Microsoft 365 Copilot:

• Enhanced Content Creation: Helps draft, rewrite, and summarize text in different tones and styles.
• Advanced Data Analysis: In Excel, Copilot can analyze trends, generate visualizations, and automate complex formulas using natural language prompts.
• Meeting & Email Assistance: Summarizes Teams meetings, suggests email responses in Outlook, and retrieves relevant project details from previous conversations.
• Business Chat: A powerful feature that connects data across different apps, allowing users to ask questions and receive insights based on emails, meetings, documents, and chat history.
• Copilot Lab: Provides guidance on how to use Copilot effectively for various workplace scenarios.

With these capabilities, Microsoft 365 Copilot is transforming the way users interact with their tools, making everyday tasks faster and more intuitive.

Other Microsoft Copilots

While this guide focuses on Microsoft 365 Copilot, Microsoft has expanded AI-powered assistance across its ecosystem with several specialized Copilots:

• GitHub Copilot – Helps developers write, debug, and optimize code with AI-powered suggestions.
• Copilot for Dynamics 365 – Enhances CRM and ERP processes, automating data entry, generating insights, and improving customer interactions.
• Copilot for Azure – Assists IT admins and cloud engineers in managing cloud resources, troubleshooting, and optimizing Azure workloads.
• Copilot in Power Platform – Enables users to create automated workflows, apps, and chatbots with natural language prompts.

Each Copilot is tailored to specific tasks and industries, helping users maximize productivity across different workflows. If you’re interested in learning more, check out Microsoft’s official Copilot pages or reach out to our experts for guidance on the best Copilot for your needs.

Who is Microsoft 365 Copilot for?

Microsoft 365 Copilot is designed for a wide range of users across various industries, helping professionals streamline tasks and improve productivity. Whether you’re a writer, editor, developer, business executive, sales professional, IT administrator, or frontline worker, Copilot can assist in automating workflows, generating insights, and enhancing collaboration.

Copilot excels at:

• Content creation & editing: Drafting reports, refining emails, summarizing documents, and improving grammar.
• Data analysis & visualization: Automating complex formulas in Excel, generating charts, and identifying trends.
• Meeting & email management: Summarizing discussions in Teams, suggesting email responses, and retrieving relevant information.
• Task automation: Helping HR teams generate job descriptions, sales teams draft proposals, and IT teams troubleshoot issues.

Prerequisites for Microsoft 365 Copilot

To use Microsoft 365 Copilot, your organization must meet the following requirements:

• A Microsoft 365 license with Copilot add-on, such as:
  • Microsoft 365 E3 or E5
  • Microsoft 365 Apps for Enterprise
  • Microsoft 365 for Business Plans
  • Microsoft A3 or A5 (Education Plans)
  • Office 365 E3 or E5 Plans
• Microsoft Entra ID account (formerly Azure AD)
• Microsoft Outlook (must be on the new Outlook experience)
• Microsoft Teams
• Windows 11 recommended for Copilot+ PCs
• Current Channel or Monthly Enterprise Channel for updates
• Alignment with M365 Network Connectivity Principles
• OneDrive and Microsoft Loop (optional but enhance functionality)

For a full list and explanation of the requirements, please visit the Microsoft website.

Example Use Cases for Microsoft 365 Copilot

• Marketing & Content Teams: Generate blog post ideas and refine messaging.
• Editors & Writers: Check grammar, style, and clarity in documents.
• Developers & IT Teams: Retrieve code snippets, troubleshoot issues, and generate documentation.
• Sales & Account Managers: Create compelling presentations and summarize key client communications.
• HR Professionals: Draft job descriptions, training materials, and policy documents.

M365 Copilot – Availability and Licensing

Microsoft 365 Copilot was initially introduced as an enterprise-focused AI assistant but is now available globally, including for small and midsize businesses.

Organizations can purchase Copilot through the following licensing programs:

• Enterprise Agreement (EA)
• Microsoft Customer Agreement (MCA)
• Cloud Solution Provider (CSP)

For business users, Copilot is offered as an add-on for:

• Microsoft 365 E3 and E5
• Microsoft 365 Business Standard and Business Premium

For individual users, Microsoft 365 Personal and Family subscriptions now include Copilot features, but with a $3 per month price increase. Existing subscribers can choose to disable AI features to maintain their original pricing.

By expanding availability across different license types, Microsoft aims to make Copilot accessible to a broader range of users while ensuring flexibility in how organizations and individuals adopt AI-powered productivity tools.

Functional Differences: Copilot for Microsoft 365 (Business & Enterprise) vs. Copilot for Individuals (Personal & Family)

M365 Copilot – Pricing and Cost Impact

Microsoft 365 Copilot is available as a paid add-on for business and enterprise users, priced at $30 per user per month, regardless of the underlying Microsoft 365 plan (E3, E5, Business Premium, or Business Standard).

For individual users, Microsoft 365 Personal & Family plans now include Copilot features, with a $3 per month price increase. Subscribers can choose to disable AI features to maintain their original pricing.

Evaluating ROI

Before purchasing, organizations should assess:

• Who benefits most from Copilot? (Writers, analysts, executives, etc.)
• Time saved vs. cost impact – Does Copilot improve efficiency enough to justify the investment
• Licensing strategy – Selective deployment can optimize costs by focusing on users with the highest productivity gains.

*Note: The cost increase assumes all users are licensed for Copilot. However, organizations can selectively assign Copilot licenses to specific roles or departments, significantly reducing the overall budget impact while still benefiting from AI-driven productivity enhancements.

AI Credits System in Microsoft 365 Copilot

To enhance flexibility in AI-powered features, Microsoft has introduced an AI credits system for select Copilot functionalities, such as image generation. This system allows users to access AI features based on their needs without requiring an all-inclusive subscription.

Here’s how it works:

• Copilot Pro Users: Enjoy unlimited access to AI-powered tools, including image generation, without additional charges.
• Microsoft 365 Users: Receive a base allocation of AI credits for features like AI-driven content creation. Once the free quota is exhausted, users can purchase additional AI credits to continue using these tools.
• Enterprise & Business Plans: Licensing agreements may include bundled AI credits, and organizations can work with Microsoft or licensing experts to evaluate their credit needs based on usage patterns.

Managing Microsoft 365 Copilot Licenses

Once your organization purchases Microsoft 365 Copilot, you can manage licenses through the Microsoft 365 Admin Center, Entra ID (formerly Azure AD) Groups, or PowerShell.

License Assignment Methods

• Microsoft 365 Admin Center: Assign or remove Copilot licenses for individual users.
• Entra ID Group-Based Licensing: Automatically assign licenses based on group membership.
• PowerShell: Automate bulk license assignments and modifications.

Deployment Best Practices

• Copilot does not require all users to be licensed. You can choose to deploy it selectively to roles that benefit most, such as content creators, analysts, and executives.
• Ensure users are on the correct update channel. Copilot requires the Current Channel or Monthly Enterprise Channel for Microsoft 365 Apps.
• Verify compliance with Microsoft 365 Network Connectivity Principles for optimal performance.

How to Avoid High Costs & Overspending for Microsoft 365 Copilot

Microsoft 365 Copilot is a powerful tool, but organizations should carefully manage deployment to maximize value while controlling costs. Here are key strategies to avoid overspending:

• Start with a pilot deployment – Instead of rolling out Copilot to all users, begin with a small test group in key roles (e.g., content creators, analysts, executives). Assess its impact before expanding usage.
• Optimize license assignments – Copilot does not need to be assigned to every user. Identify where it delivers the most value and focus licensing on those who will benefit most.
• Track usage & measure ROI – Use LicenseQ Hub to monitor Copilot adoption and identify underutilized licenses. Data-driven insights help you refine deployment and justify costs to management.
• Negotiate for Enterprise Agreements – Enterprise customers may have room for negotiation through Volume Licensing. Including Copilot in your Enterprise Agreement (EA) or Microsoft Customer Agreement (MCA) could lead to more favorable pricing and terms. Contact a Microsoft account representative or consult licensing experts like LicenseQ. Our team can help you analyze your current and future needs to ensure you’re making the most cost-effective decisions. Check out our services page to learn more.

Features of Microsoft 365 Copilot

Microsoft 365 Copilot continues to evolve, with regular feature enhancements designed to improve productivity, creativity, and workflow efficiency. It seamlessly integrates with Microsoft 365 applications like Word, Excel, PowerPoint, Outlook, Teams, and more, helping users work smarter with AI-driven assistance.

Key Features & Capabilities

• Content Generation & Refinement – Copilot can draft emails, reports, blog posts, and other documents, helping users create high-quality content faster. It also provides suggestions to refine tone, clarity, and structure.
• Data Analysis & Visualization – In Excel, Copilot helps users identify trends, create complex formulas, and generate visual representations of data without manual effort.
• Presentation Assistance – In PowerPoint, Copilot can instantly transform written content into slide decks, generate speaker notes, and suggest design improvements.
• Email & Communication Optimization – In Outlook and Teams, Copilot summarizes long email threads, drafts responses, and suggests key talking points, improving communication efficiency.
• Meeting Insights & Recap – Copilot in Teams provides real-time transcription, automatically summarizes discussions, and generates action items, helping teams stay aligned.
• Code Assistance – Developers can use Copilot to generate code snippets, automate repetitive tasks, and debug common errors in supported development environments.

Maximizing Copilot’s Potential

To get the most out of Copilot, users can leverage AI best practices, including:

• Crafting Effective Prompts – The quality of Copilot’s output depends on how well instructions are framed. Microsoft provides guidance on writing precise, structured prompts to get optimal results.
• Staying Updated on New Features – Microsoft regularly updates Copilot with new capabilities and refinements. Users can check Microsoft’s official support page for the latest enhancements and best practices.

M365 Copilot – Security, Privacy and Data Residency

Microsoft 365 Copilot is built with the same security, privacy, and compliance principles that apply to all Microsoft products. Microsoft ensures that user data is not used to train AI models, and any data processed by Copilot remains within the Microsoft 365 service boundary.

Data Protection & Privacy

• Data Isolation – Copilot processes user prompts and generates responses within a secure environment, ensuring that your data is used only for your own purposes and is never shared across organizations.
• Encryption – All data, both in transit and at rest, is encrypted using Microsoft’s security protocols. Copilot relies on Azure Key Vault for secure key management.
• Access Control – Copilot follows strict authentication and role-based access policies, using Microsoft Entra ID (formerly Azure Active Directory) to enforce least-privilege access.

Azure OpenAI Services & Data Residency

• Copilot uses Azure OpenAI Services rather than OpenAI’s public models, meaning all AI processing happens within Microsoft’s secure cloud infrastructure.
• Regional Processing – Microsoft automatically routes requests to the nearest available datacenter where your Microsoft 365 tenant is hosted.

Updates to EU Data Residency Policies

• Microsoft recently strengthened its EU Data Boundary protections, ensuring that data belonging to European users stays within the EU for processing, except in cases where additional processing outside the region is necessary.
• Global users’ data may still be processed in other Microsoft regions, depending on service availability.

Security Monitoring & Compliance

• Microsoft employs continuous security monitoring, including threat detection, vulnerability management, and automated security responses to protect Copilot from potential risks.
• Organizations can configure compliance policies and audit logs within Microsoft 365 to track Copilot usage and ensure alignment with regulatory requirements.

Microsoft provides detailed documentation on data residency, security protocols, and compliance measures for organizations requiring additional assurances. Businesses operating in highly regulated industries should review these policies to ensure Copilot meets their security and compliance need.

FAQs

How do I get Copilot in Microsoft 365 apps?

You can access Copilot in Microsoft 365 apps by purchasing a Copilot license through the Enterprise Agreement (EA), Microsoft Customer Agreement (MCA), or Cloud Solution Provider (CSP) program. Copilot is also included in Microsoft 365 Personal and Family subscriptions with an additional $3 per month price increase.

What is Microsoft 365 Copilot?

Microsoft 365 Copilot is an AI-powered assistant that enhances productivity in apps like Word, Excel, Outlook, and Teams by helping users write, edit, summarize, analyze data, and automate tasks.

Who is Microsoft 365 Copilot for?

Copilot is designed for businesses of all sizes and individual users who want to improve efficiency in Microsoft 365. It is now available for Enterprise, SMB, and personal users worldwide.

How does Microsoft 365 Copilot work?

Copilot combines natural language processing (NLP) and machine learning to assist users by understanding and generating text, summarizing content, and automating workflows. It operates within Microsoft 365 apps while maintaining enterprise-grade security and compliance.

Is Microsoft 365 Copilot safe to use?

Yes, Copilot follows Microsoft’s security and compliance standards, including data encryption, access control, and compliance with global regulations. EU users benefit from data residency protections ensuring processing within the EU Data Boundary.

How much does Microsoft 365 Copilot cost?

• Enterprise & Business users: $30 per user per month (add-on to Microsoft 365 E3, E5, Business Standard, or Business Premium).
• Personal & Family users: Included in subscriptions with a $3 per month price increase.

Is Microsoft 365 Copilot available?

• Enterprise customers: Available since November 1, 2023.
• Small and midsize businesses: Available since January 16, 2024.
• Personal & Family plans: Available since February 2024 with an added subscription cost.