What Is Microsoft 365 Copilot and How Does It Work?
Microsoft 365 Copilot is an AI assistant built into the Microsoft 365 apps your team already uses, including Word, Excel, PowerPoint, Outlook and Teams. You ask it for help in plain English, and it drafts, summarises, analyses or organises the work for you without anyone leaving the app they are in.
It works in three steps. You type a request, such as “summarise this email thread” or “turn this report into a short presentation”. Copilot then combines your request with your own business information, including the emails, documents, meetings and chats you already have access to. Finally, an AI language model uses all of that to produce a first draft or answer, which you review, edit and decide whether to use.
That use of your own information is what separates Microsoft 365 Copilot from a standalone AI tool, which only knows what you paste into it. Copilot only draws on what each person already has permission to see, which is why getting your permissions in order matters before you switch it on. We cover that later in this guide.
Microsoft 365 Copilot is also a paid add-on, not a feature that arrives with every plan. It sits on top of an eligible Microsoft 365 subscription, with its own licence for each person who uses it. Plenty of businesses assume it is already included, and some confuse it with the free Copilot Chat tool, which we explain further down. It is also not something to switch on and leave. Setting it up properly, with the right licences, permissions and training, is where an IT partner earns its place, and it is what we do for our clients.
Think of it as a capable assistant sitting beside every member of staff who has a licence. It does not replace anyone’s judgement, and it still needs a person to check its work. What it does well is take away the slow, repetitive parts of the working day, such as the first draft, the meeting notes and the tidy-up.
What Does Microsoft 365 Copilot Do?
What Microsoft 365 Copilot does depends on the app you are in. The core features follow the same idea everywhere: you describe what you need, Copilot produces a first version, and you refine it. Here is how that looks in the apps most businesses use every day.
Microsoft 365 Copilot in Word
In Word, Copilot drafts documents from a short prompt, rewrites sections in a different tone and summarises long reports. It can also pull in information from other files you have access to, so a proposal can start from your existing material and not from a blank page.
Microsoft 365 Copilot in Excel
In Excel, Copilot helps you make sense of data without needing to be a formula expert. You can ask it to spot trends, explain a calculation, suggest a formula or highlight figures that stand out. It works best on tidy, well-structured data, so a clean spreadsheet gets far better results than a messy one.
Microsoft 365 Copilot in Outlook
In Outlook, Copilot summarises long email threads, drafts replies and helps you prepare for a meeting using the emails and files linked to it. Anyone who starts the day facing a full inbox will notice the difference quickly.
Microsoft 365 Copilot in Teams
In Teams, Copilot summarises meetings, lists the actions agreed and catches you up on a chat you missed. It saves the most time on recurring meetings, where notes would otherwise be written up by hand.
PowerPoint and Beyond
In PowerPoint, Copilot can build a first draft of a presentation from a document or a short brief, leaving you to adjust the design and message. The wider Microsoft 365 Copilot features also include searching across your work content to answer questions such as “what did we agree with this client last month?”, without anyone digging through folders and inboxes.
Benefits of Microsoft 365 Copilot
- Faster first drafts
- Shorter meetings to write up
- Quicker email catch-up
- Easier data analysis
- Less repetitive admin
- More time for work that needs a person
Microsoft 365 Copilot vs Copilot Chat vs ChatGPT
These three get mixed up constantly, and the confusion can lead to buying the wrong thing. Microsoft 365 Copilot is the paid, fully integrated assistant described above. Copilot Chat is a free chat tool available with eligible work accounts. ChatGPT is a separate, general-purpose AI tool from a different company. Here is how they compare.
| Microsoft 365 Copilot | Copilot Chat | ChatGPT | |
|---|---|---|---|
| Cost | Paid add-on licence for each user | Included with eligible work accounts | Free and paid options |
| Works with your business data | Yes, within each person’s permissions | Limited to what you share in the chat | Only what you paste or upload |
| Where you use it | Word, Excel, PowerPoint, Outlook and Teams | A chat window in the browser and Microsoft 365 app | A separate website or app |
| Business controls | Sits inside your Microsoft 365 security and permissions | Sits inside your Microsoft 365 account | Outside your Microsoft 365 controls |
| Best suited to | Staff who work in Microsoft 365 all day | Everyone, as a starting point | Individual, general-purpose use |
What Is Microsoft 365 Copilot Chat?
Microsoft 365 Copilot Chat is the free version most people meet first. It works like a chat assistant: you ask a question, and it replies. It suits general questions, brainstorming and summarising a document you share with it, and it runs under your business’s Microsoft 365 account, so it carries more protection than a personal tool.
What it does not do is search your emails, documents and meetings, or work inside Word, Excel and Outlook the way the licensed version does. That is the main reason to pay for Microsoft 365 Copilot, and it is a good test of whether you need it. If Copilot Chat already covers what your team asks for, you may not need the licence yet, and we can test that with your team before you commit to anything.
Microsoft 365 Copilot vs Copilot
Searching for “Microsoft 365 Copilot vs Copilot” usually means one of two things: the free Copilot Chat, or the consumer Copilot app that anyone can use with a personal account. Neither connects to your business data in the way Microsoft 365 Copilot does. The name is shared, but the tools are quite different, so check which one you are looking at before you compare features or costs.
Microsoft 365 Copilot vs ChatGPT
The biggest practical difference between Microsoft 365 Copilot and ChatGPT is control. Staff who use a personal ChatGPT account for work paste company information into a tool your business does not manage. Microsoft 365 Copilot runs inside your Microsoft 365 environment, under the same security settings and permissions as the rest of your systems.
ChatGPT is a capable tool in its own right, and plenty of people use it well. The question for a business is where your information goes, and who can see it. Microsoft’s plans and product names change often, which is another reason to have an IT partner keeping track of them for you.
Do You Need Microsoft 365 Copilot?
The question behind “what is Microsoft 365 Copilot and do I need it” comes down to two things: how much of your team’s day is spent in Microsoft 365, and how much of that time goes on work a first draft would speed up. There is no single answer for every business, so here are the signs it could suit you, and the signs you need expert help first.
Signs it could suit your business
- Staff spend hours each week writing documents, emails and reports
- Meetings run daily and the notes are written up by hand
- Your information lives in Microsoft 365, in files, Teams and SharePoint
- Your team already uses AI tools informally and you want them under control
- You have a clear task you want to improve, not just a wish to try AI
Signs you need expert help first
- Files are scattered, duplicated or poorly organised
- Permissions have grown messy over the years
- Nobody has decided who should use it or what for
- Your Microsoft 365 plan or setup needs attention first
If the second box sounds familiar, that is useful to know, and it is a sign to talk to your IT partner before anything else. A few weeks of tidying, which we can handle for you, often turns a ‘not yet’ into a ‘yes’.
Microsoft 365 Copilot for Business
Microsoft 365 Copilot for business works best when it starts small and is managed from the start. Together with your IT partner, pick a group of people with a clear task, such as account managers who write proposals every week, and measure what changes before rolling it out further. A managed pilot like this shows you what Copilot is worth to your business, and it gives you real examples to share with the rest of the team.
Microsoft 365 Copilot for Small Business
Microsoft 365 Copilot for small business follows the same rule, and small teams have an advantage. With fewer people and less data, it is easier for your IT partner to tidy permissions, train everyone and show results in weeks. We would start with a few licences for the people who would use it most, and expand once the value is clear.
Is Microsoft 365 Copilot Worth It?
Is Microsoft 365 Copilot worth it? It is when the time it saves outweighs the cost of the licence, and that depends on who uses it. A licence given to someone who spends their day in Word, Outlook and Teams earns its place far more easily than one given to someone who rarely opens them. A managed pilot tracks the hours saved, so the answer comes from your own figures.
Is Your Business AI Ready? Watch Our Webinar
Deciding whether Microsoft 365 Copilot makes sense is part of a bigger question: is your business ready for AI at all? Tools like Copilot work best when your data is organised, your people know what they are using it for and your security is in good shape. Our webinar, Is Your Business AI Ready?, looks at that question for small and medium-sized businesses, in plain English and without the jargon.
If you would like more practical advice on using AI at work, the webinar is part of CS Group’s Practical AI for SMBs series, which covers everyday AI for UK businesses.
How Microsoft 365 Copilot Is Licensed and What You Need First
Microsoft 365 Copilot is licensed per person, on top of your Microsoft 365 subscription. Microsoft sets the price and it can vary by plan, so the simplest route is to ask us. We will look at your current plans and put together a quote that covers everything, so you are not left working out licences on your own.
How Microsoft 365 Copilot Licensing Works
The Microsoft 365 Copilot licence is separate from the licence for Word, Excel and Outlook. Each person who uses Copilot needs their own, assigned to their account, and you pay for it in addition to their Microsoft 365 plan. Both parts must be in place: a plan that qualifies, and a Copilot licence on top.
Not everyone in your business needs a licence. That is why most businesses begin with a pilot group, and why Microsoft 365 Copilot pricing and cost are best judged against the time saved by the people using it, not the size of the whole team. Licences can be added as the value becomes clear, and we manage that for you, so there is no need to buy for everyone on day one. Buying licences without a plan is a common way for businesses to end up paying for Copilot that nobody uses well.
Microsoft 365 Copilot Requirements
The Microsoft 365 Copilot requirements are straightforward, though worth confirming before you buy:
- An eligible Microsoft 365 plan, which includes most business and enterprise plans
- A Copilot licence assigned to each person who will use it
- Up-to-date Microsoft 365 apps on each device
- Files stored in OneDrive, SharePoint or Teams, so Copilot has something to work with
- Permissions set up so people can only see what they should
The last two points matter most, and they decide whether Copilot is useful or frustrating. Copilot can only work with information it can reach, so files scattered across personal drives and old folders limit what it can do. Well-organised files and sensible permissions make it far more accurate and far safer.
Microsoft 365 and software licensing is something we handle for businesses every day. We can check your current plans, assign and manage the licences, and tell you exactly what is needed before you spend anything.
Is Microsoft 365 Copilot Safe? Security and Data Privacy
Is Microsoft 365 Copilot safe? For most businesses, yes, provided the basics are right first. Microsoft states that your business data is not used to train its underlying AI models, and Copilot works within your existing Microsoft 365 security. The part that often catches businesses out is permissions.
Microsoft 365 Copilot Security
Copilot can only reach what the person asking already has access to. That is reassuring, but it also means that an old folder everyone can open, or a file shared far too widely years ago, becomes much easier to find. A question as simple as “what are the salary bands?” could surface a spreadsheet nobody realised was open to the whole team.
Microsoft 365 Copilot security is therefore mostly about getting your existing access right. Copilot does not create new security gaps, but it does make existing ones visible very quickly. The businesses that have the smoothest experience are those that review access first, then switch Copilot on.
Microsoft 365 Copilot Data Privacy
For Microsoft 365 Copilot data privacy, the practical steps are simple:
- Review who can see sensitive files, such as HR, finance and client records
- Label confidential material so it is handled with the right level of care
- Agree what staff may and may not ask Copilot to do
- Make sure everyone knows that AI output must be checked before it is used or sent
- Keep personal AI accounts away from company information
Good habits matter as much as settings. The same care you would take with any shared document applies here, and clear guidance keeps your team confident.
Putting these steps in place is also the best way to prepare for Microsoft 365 Copilot. A short review of permissions, files and staff guidance before you start makes the difference between a pilot that works and one that disappoints.
This is where a managed IT partner makes the biggest difference. As a Cyber Essentials Plus certified provider, Sentinel builds cyber security checks into every Microsoft 365 project. We review permissions, apply labels and agree usage rules before a single licence is switched on, and we keep monitoring afterwards.
Why Have a Managed IT Partner Set Up Microsoft 365 Copilot?
Microsoft 365 Copilot is easy to switch on, but harder to get right. The businesses that see the most benefit are those that treat it as an IT project with an owner, and not a licence to add to someone’s account. A managed IT partner such as Sentinel looks after the parts that decide whether it works:
- Checking your plans and licences, and buying only what you need
- Reviewing permissions and labelling sensitive files before anyone uses Copilot
- Running a small pilot and measuring the time it saves
- Training your team to write good prompts and check the results
- Setting simple rules for how Copilot is used
- Monitoring and supporting it after launch, as Microsoft’s features change
You get one team to call when something needs attention, and your IT stays secure and under control as AI becomes part of everyday work. It is the same managed approach we take to your support, security and cloud services.
Getting Started with Microsoft 365 Copilot
You do not need to decide everything at once. The most useful first step is a look at how your team uses Microsoft 365 today, and where a little help would save the most time.
Copilot works best when it is set up and managed by people who look after your Microsoft 365 every day. Sentinel works with businesses across Hampshire, Dorset, Wiltshire, Surrey and Berkshire, with offices in Ringwood and central London. We review your plans, tidy your permissions, assign and manage the licences, run the pilot and train your team, so there is nothing you need to buy first. If you want to see where you stand, watch our AI readiness webinar above.
To talk through whether Microsoft 365 Copilot makes sense for your business, get in touch with Sentinel and we will help you decide on the right next step.
