Copilot for Microsoft 365 is an AI-driven tool designed to integrate with the Microsoft 365 suite to automate tasks and produce natural language responses. In applications like Word and Excel, it offers real-time support through editing suggestions, content generation and data analysis.
Before organizations can use Copilot, IT administrators must prepare data environments and assign licenses. The setup process is straightforward. However, it is important for admins to understand the process and review the associated considerations.
Requirements before enabling Copilot
Before setting up Copilot for Microsoft 365, organizations should ensure they meet Microsoft's prerequisites. Copilot is available as an add-on for eligible Microsoft 365 Business and Enterprise plans, including E3 and E5.
Microsoft has removed the 300-seat minimum purchase requirement. While Microsoft 365 Business plans remain capped at 300 users, organizations can purchase fewer Copilot licenses. This makes it more accessible to SMBs, while Microsoft Enterprise plans support scaling without user limits.
Organizations using Microsoft 365 E3 or E5 should already meet most of the requirements to use Copilot, but it's important to review Microsoft's list of prerequisites to confirm. These include the following:
- Each user must have a base Microsoft 365 or Office 365 license; it is not limited to E3 or E5.
- For Copilot mail and data integration, users must be managed through Microsoft Entra ID.
- Microsoft 365 Apps (desktop) must be deployed to enable Copilot in desktop applications.
- Additional licensing might be required for custom agents or Copilot Studio.
Although Microsoft recommends upgrading devices to Windows 11 to improve the user experience, 365 Copilot is also available on Windows 10. Once organizations confirm they have met the prerequisites, admins can begin installing and configuring Copilot.
Data preparation and governance considerations
There are several important considerations that IT teams must manage before implementing Copilot for Microsoft 365. First and foremost, organizations should address the security and privacy concerns associated with using Copilot. It is vital to ensure that users access only the data that they need to do their jobs. IT should implement best practices and tools to prevent data oversharing and restrict access without hindering user productivity. In addition, organizations should ensure that Exchange Online mailboxes and Microsoft 365 Apps use Entra ID-based permissions as needed.
Additionally, organizations must clean up their data so Copilot can use it correctly. To ensure a smooth experience for end users, IT should reduce redundant, outdated or trivial data and ensure appropriate access controls. Other best practices include standardizing file names and tagging files with descriptive keywords.
Organizations should prioritize strong data governance as they prepare for Copilot and ensure that compliance practices remain in place as they continue using the tool. Data preparation can be a long and complex process, so IT should treat it as its own project before starting installation and setup. Creating a plan around data access and management is a crucial first step.
Assigning Copilot for Microsoft 365 licenses
Before assigning licenses, ensure end users meet the required criteria and that Microsoft 365 Apps are updated to a supported version.
Organizations should also distinguish among the different Copilot offerings. For example, Microsoft Security Copilot is a separate product focused on threat response, risk management and other security tasks through data analysis. It supports the following capabilities:
- Incident response.
- Threat hunting and intelligence.
- Risk management.
- Automation of security workflows.
- Integration with Microsoft Defender.
| Microsoft 365 plan | Microsoft 365 Copilot (Productivity) | Microsoft Security Copilot (Security Operations) | User limit (max) | Base plan cost (per user/month) |
| Business Basic | Add-on required | Separate; uses SCUs | 300 users | $6 |
| Business Standard | Add-on required | Separate; uses SCUs | 300 users | $12.50 |
| Business Premium | Add-on required | Separate; uses SCUs | 300 users | $22 |
| Enterprise E3 | Add-on required | Separate; uses SCUs | No cap | $36 |
| Enterprise E5 | Add-on required | Separate; uses SCUs | No cap | $57 |
Microsoft 365 Copilot uses per-user licensing, while Security Copilot uses a consumption-based model, which introduces different cost and governance considerations.
Once an organization has fulfilled all the necessary prerequisites and has its data in order, the next step is to assign Copilot for Microsoft 365 licenses to users. There are several ways to do this. As with other Microsoft 365 services, admins can assign Copilot licenses using their preferred license assignment approach. Options include PowerShell and the Microsoft 365 admin center. Refer to Microsoft's documentation for additional details.
How to enable Copilot for Microsoft 365
In the Microsoft 365 admin center, IT can assign the licenses by completing the following steps:
- Go to Billing > Licenses.
- Select Copilot for Microsoft 365.
- Choose users and select Assign.
Changes apply immediately, though Copilot could take up to 24 hours to appear across all apps.
Users must have a qualifying base license (e.g., Microsoft 365 Business Standard/Premium, E3 or E5).
Ensure devices use the Current Channel for the newest Microsoft 365 apps. Slower channels might delay or limit Copilot availability in some apps.
- To verify service plans for assigned users, go to Users > Active Users and select licensed users.
- Open Licenses and Apps and confirm the Copilot service plan is enabled.
Additional services, such as Loop or Viva, can extend Copilot functionality but are not required.
- This step is optional when using alternative assignment methods. Admins can also assign Copilot licenses using the setup wizard or manage licenses under Billing > Licenses.
Adding Copilot to Microsoft 365 apps
At this point, data access permissions must be enabled and configured. Note that there are no specific permissions for Copilot, as it uses existing user permissions. Verify that each user has the necessary rights to access the desired data. Check the following permissions:
- SharePoint. Site access and sharing policies.
- OneDrive. File access and sharing settings.
- Teams. Chat access and retention policies.
- Exchange. Mailbox access and retention.
After confirming access, users must sign in with their licensed account. Note that Copilot appears differently across apps, and some might require additional steps.
Excel, Word and PowerPoint
The Copilot ribbon button appears automatically with no additional setup required. Some advanced features require Microsoft Graph Connectors and the Copilot semantic index, which require appropriate licensing and configuration.
Outlook
Copilot is available in Outlook on the web and the new Outlook for Windows, with limited support in classic Outlook. Admins can enable the new Outlook through policy. Features include draft generation, summaries and rewrite.
Teams
Copilot requires the new Teams client. Admins can optionally configure the following settings:
1. In the Teams admin center, go to Teams apps > Permission policies and ensure Copilot apps are allowed.
2. Go to Messaging policies and enable AI-enhanced chat features.
Copilot appears in chat, meeting recaps, real-time meeting assistance and message rewriting or summarization.
Loop, Planner and OneNote
- Loop. No admin toggle is required.
- Planner. Copilot adds project summaries; no toggle needed.
- OneNote. The Copilot icon appears in the ribbon after licensing.
Microsoft Edge
Copilot is also available in Microsoft Edge. Ensure the latest version of Edge is installed and users are signed in with a licensed account. Features include page summaries, access to work content and writing assistance.
Semantic index for Copilot
Organizations with appropriate Copilot and Microsoft Graph capabilities can enable the semantic index as follows: Go to Microsoft 365 Admin Center > Settings > Search & Intelligence.
Copilot enablement checklist
To enable Copilot for Microsoft 365, organizations must ensure the following:
- Copilot licenses are assigned to users.
- Copilot service plans are enabled for assigned users.
- Users have access to the required Microsoft 365 apps.
- Apps are up to date, and supported Teams and Outlook clients are in use.
- Data permissions are properly configured for SharePoint, OneDrive and Exchange.
After licenses are assigned, Copilot becomes available once users sign in, though availability might vary by app or configuration. To familiarize users with the new tool, Microsoft recommends that IT provide guidance on how Copilot works. Organizations can also establish a Copilot center of excellence to support training, drive adoption and gather feedback.
Editor's note: This article was originally written by Katie Fenton in December 2023. Gary Olsen updated and expanded this article in early 2026 to reflect how Copilot has evolved from a limited, add-on feature into a more integrated capability across Microsoft 365 apps and services.
Gary Olsen has worked in the IT industry since 1983 and holds a Master of Science in computer-aided manufacturing from Brigham Young University. He was on Microsoft's Windows 2000 beta support team for Active Directory from 1998 to 2000 and has written two books on Active Directory and numerous technical articles for magazines and websites.
Katie Fenton is site editor for Informa TechTarget's SearchEnterpriseDesktop, SearchMobileComputing and SearchVirtualDesktop sites.
