Microsoft 365 Copilot: what it does, what it costs and when to add your own AI layer

The short answer. Microsoft 365 Copilot is the AI assistant in Word, Excel, PowerPoint, Outlook and Teams. Copilot Chat comes at no extra cost with eligible business Microsoft 365 plans, and works mainly with the web and with whatever you give it yourself. The paid Copilot licence also searches your own email, files, chats and meetings automatically, within the permissions people already have. It works well once permissions in SharePoint and Teams are right and your people learn how to use it. What it does not do by itself: answer from systems outside Microsoft, such as AFAS, Exact or your CRM, or run processes that span several systems. For that you add your own AI layer alongside it, not instead of it.

This piece is written for organisations of 20 to 250 employees that already work in Microsoft 365. The facts about Copilot come from Microsoft's own documentation (as of October 2026). Names and plans change regularly, so we link to the source.

What Microsoft 365 Copilot is today

First, the name. Microsoft is renaming Microsoft 365 Copilot to Microsoft Copilot, and Microsoft 365 Copilot Chat to Microsoft Copilot Chat. During the transition you will come across both names. We use Microsoft 365 Copilot here, because that is still the name most people search for.

In Microsoft's overview, three layers matter for most organisations:

• Copilot Chat. No extra cost on eligible business plans. Answers are grounded in the web. It only uses work documents if you hand them over, have them open in Outlook or Teams, or go through an agent you pay for per use.
• The paid Copilot licence. Copilot automatically searches your work data through Microsoft Graph: email, files, calendar, chats and meetings. Microsoft calls this context layer Work IQ. You also get priority on capacity, Copilot in Teams and the apps, and ready-made agents such as Researcher and Analyst.
• Usage-based features. Parts such as Copilot Cowork, which carries out tasks across your Microsoft 365 environment on your behalf, are billed on usage, on top of the licence.

Then there are agents: scoped versions of Copilot for a specific task or team. In Copilot Studio you build agents and workflows yourself, low-code, and connect them to other data sources. With a Copilot licence, staff can build and use internal agents at no extra cost. For an agent on your website, or for people without a licence, you need a separate Copilot Studio licence.

What Copilot does well inside Microsoft 365

Copilot is at its strongest where your people already work. Microsoft lists per app: drafting, rewriting and summarising documents in Word; analysing data and creating charts in Excel; building a presentation in PowerPoint; drafting emails and summarising threads in Outlook; recapping meetings with action items in Teams.

The difference from a standalone chat window is context. With a licence, Copilot combines your documents and email with what you are working on, such as the meeting you are in right now. For anyone who spends the day in Outlook and Teams, that is the most direct time saving there is. No standalone tool can match it.

The data basics are well handled. Prompts, responses and the data Copilot retrieves through Microsoft Graph are not used to train the underlying language models. For users in the EU, traffic stays within the EU Data Boundary. One caveat from the same documentation: models from Anthropic, which Microsoft offers as a subprocessor, are currently excluded from it. Your administrator decides whether those models are switched on.

What Copilot needs to work well

Copilot is only as good as the environment it searches. Three things determine that.

1. Permissions in order, or oversharing becomes visible

Copilot only surfaces data that someone has at least view permission for. That also means anything a person can technically reach, Copilot can find. Nobody went looking for a salary overview in an overshared folder, but with Copilot it can turn up in an answer. And according to Microsoft, SharePoint's sharing settings are set to the most permissive option by default.

Microsoft has its own approach to this in three steps: remediate oversharing, set up guardrails and meet regulations. SharePoint Advanced Management, included with the Copilot licence, reports on overshared content, inactive sites and sites without an owner. The tools are there. Deciding who belongs where is up to your organisation, so agree up front who owns which data (data governance).

2. Order in SharePoint and Teams

If there are three versions of the same work instruction in three Teams channels, Copilot finds all three. Old project sites, copies with "final_v2" in the name and documents without an owner make answers less sharp and raise the risk of a hallucination. Archiving inactive sites helps Copilot work with current content, Microsoft writes. How to organise knowledge so that one version leads is covered under knowledge management and single source of truth.

3. The right licence in the right place

The paid licence is an add-on to an existing Microsoft 365 plan. The licensing page lists which plans qualify, from Business Basic to E5. For organisations with up to 300 users there is Microsoft 365 Copilot Business, with an annual commitment and a maximum of 300 licences per tenant. Above that, the enterprise options apply; Microsoft 365 E7 already includes Copilot. Licences are assigned per user.

What does Copilot cost?

We deliberately leave out amounts, because Microsoft adjusts prices and promotions regularly. The current figures are on Microsoft's pricing page for Copilot for business. What we can say is what Copilot costs are made of.

• Licences per user per month. As an add-on to your plan or as a bundle, such as Microsoft 365 Business Standard or Business Premium with Copilot. The Business add-on runs on an annual commitment.
• The number of licences. The biggest lever. People who mainly need information from the web, or occasionally have a text rewritten, can often manage with Copilot Chat. A licence pays off for those who spend all day in email, documents and meetings.
• Usage on top of the licence. Features such as Cowork, Autopilot and the Work IQ API are billed in Copilot Credits. Administrators set spending limits for these, organisation-wide and per user.
• Preparation. Reviewing permissions, cleaning up SharePoint and archiving sites takes hours from IT or a partner. No licence covers that.
• Adoption. Time for training and agreements. Without that investment you pay for licences nobody uses.
• Integrations. Opening up data outside Microsoft 365 takes build and maintenance work, see below.

An honest calculation therefore starts with the question of which roles Copilot demonstrably saves time for every week. Start there, measure, and expand afterwards.

Copilot training and adoption

Assigning a licence is not the same as using Copilot. The pattern is familiar: Copilot is ready, the first results disappoint and usage drops back to a handful of enthusiasts. Usually people do not know which tasks suit it, or they do not trust the outcome.

Microsoft provides plenty of material itself: an adoption site with a prompt gallery, a programme for internal champions and kits for administrators. In the admin centre, usage reports show how many people actively use Copilot and how many prompts they send. What works in a mid-sized organisation:

• Start by role. Pick three to five recurring tasks per role, such as summarising a client meeting or rewriting a quote, and practise on real work.
• Appoint champions. One or two people per team who field questions and share good prompts.
• Make agreements. Which data may go in, who checks the output and what do you do with mistakes? Put it in a short AI policy.
• Measure after thirty and ninety days. Move licences from people who do not use them to people who ask for them.

Training is also a legal matter. Article 4 of the AI Act requires you to support the AI literacy of your people, and a licence does not take care of that. More in our piece on Article 4. Copilot training does not need to be big. Our AI workshop is one day on site: the basics of AI, hands-on prompting and a concrete action plan for your team. For policy and agreements there is AI governance.

What Copilot does not solve for you

This is not criticism, it is the scope. Copilot is built around Microsoft 365 and around the employee asking a question. Three things fall outside it.

Data outside Microsoft 365

Your customers sit in a CRM, your accounts in AFAS or Exact, your case files in an industry package. Copilot can reach them through Copilot connectors: by indexing the data into Microsoft Graph, or by fetching it in real time through MCP. Microsoft and partners offer more than a hundred prebuilt connectors, including for Salesforce, ServiceNow, Confluence and Google services. For AFAS and Exact, there was none in the gallery at the time of writing. Then you build one yourself, which someone has to secure and maintain as the source system changes. How such a connection works is covered under system integration.

Processes that span systems

A lot of time goes into work that runs the same way every day: a request comes in, data from two systems is added, someone checks it and prepares a proposal. Copilot helps the employee doing that. Designing the process itself is a different job. Copilot Studio has building blocks for it, but someone has to decide which steps, which data, which checks and where a person reviews (human-in-the-loop). That is AI implementation, not a licence.

Sourced answers from non-Microsoft systems

Copilot cites the sources it was able to consult. If the underwriting policy, the contract or the product specification sits in a system without a connector, Copilot cannot draw on them. For HypotheekCompany we built an internal search tool on underwriting policy that answers within 2 to 3 seconds, with source and version included. That reliability comes from how the knowledge is organised, with techniques such as RAG, not from a licence.

When to add your own AI layer alongside Copilot

Your own AI layer, what we call an AI Operating System (AIOS), does not replace Copilot. It is the layer underneath: your systems connected, your data reliable in one place (single source of truth), and questions and processes running on that data. Copilot remains the assistant in Outlook, Word and Teams; the layer does the work across your systems. They also reinforce each other: if you expose your data through an open standard such as MCP, agents in Copilot Studio can work with it too.

That layer pays off when:

• important data sits outside Microsoft 365, in systems without a prebuilt connector;
• people lose a lot of time looking things up, retyping and reporting across three or more systems;
• answers must be demonstrably correct, with source and version;
• you want recurring work to run as a process, not just have questions answered.

An example from our work: for EVOKE we built a finance platform that connects to AFAS and forms one unified data layer. Exactly the kind of data Copilot does not reach by itself.

Copilot alone is enough if your data mostly sits in Microsoft 365 and you are mainly after personal productivity: writing, summarising, wrapping up meetings and searching your own documents. You can always add a layer later. For many organisations it becomes both. We made the same assessment for ChatGPT Business and Enterprise.

Frequently asked questions about Microsoft 365 Copilot

Is Copilot Chat free?

Copilot Chat comes at no extra cost with eligible business Microsoft 365 plans. It works with the web and with content you provide yourself. Agents that search your work data on their own are paid per use.

What is Microsoft 365 Copilot Business?

The Copilot licence for organisations with up to 300 users on an eligible Microsoft 365 Business plan. The same Copilot capabilities, with an annual commitment and a maximum of 300 licences per tenant.

Does Copilot work with AFAS, Exact or our CRM?

Only through a connector. For some CRM systems one is available off the shelf; for AFAS and Exact there was none in Microsoft's gallery at the time of writing. Then you need your own integration, or a layer on your own data.

Where do you start?

With an honest picture of where time goes in your organisation. In an AI audit we map which tasks Copilot already solves and which processes call for an integration or a layer of your own. We do not advise what you do not need.