Small Business Guide to Understanding Microsoft 365 Copilot Agents

Many businesses have heard about AI’s potential but struggle to understand how it can truly impact their operations. This article focuses on Microsoft 365 Copilot Agents, an AI-powered assistant that automates repetitive tasks and improves efficiency.

What Are Copilot Agents?

Copilot Agents are AI-driven virtual assistants designed to handle routine inquiries and tasks within an organization. For example, in an HR department, an officer named Hannah spends 20% of her time answering common employee questions, such as:

• How many holiday days do I have left?
• How does maternity leave work?
• How do I get reimbursed for travel expenses?
• How do I get a copy of my P11D?

By creating a Copilot Agent named Hannah HR, employees can ask these questions directly within Microsoft Teams, reducing the workload on Hannah and allowing him to focus on higher-value strategic tasks. Scaling this AI-driven automation across all departments could significantly increase business efficiency.

Copilot Pricing & Features

Microsoft offers different pricing options for Copilot, depending on business needs and budget:

1. Microsoft 365 Copilot Chat (Free Version)

• Allows users to create Copilot Agents that access public web data.
• Access to internal business data (Outlook, Teams, OneDrive, SharePoint) is available but on a pay-as-you-go basis.

2. Microsoft 365 Copilot (£24.60 per user/month)

• Fully integrates with internal business data within the Microsoft 365 environment.
• Provides a more powerful AI assistant, with no pay-as-you-go limitations.

3. Copilot Studio (Pay-as-you-go)

For businesses not ready for a full Copilot subscription, Copilot Studio allows flexible AI adoption:

• £153.80 per month includes 25,000 AI-generated messages (each response counts as a message).
• Alternatively, businesses can pay £0.01 per message, making it cost-effective for those still testing AI implementation.

Building a Custom Copilot Agent

Microsoft 365 Copilot Studio allows users to create AI-powered assistants without needing coding experience.

Here’s how:

1. Accessing Copilot Studio

• Log into Microsoft 365 Copilot Studio through the Microsoft 365 portal.
• Navigate to Agents and choose to create a new agent or use a pre-built one.

2. Defining Agent Behavior

• Set an agent name (e.g. Hannah HR) and customize its icon and appearance.
• Write a clear description so employees understand what the agent can do.

3. Setting Agent Tone & Personality

• Define the agent’s communication style (e.g., professional, friendly, jovial).
• Add response guidelines to ensure appropriate and consistent messaging.

4. Adding Knowledge Sources

• Upload internal documents (Word, PowerPoint, PDFs).
• Link to SharePoint sites containing HR policies, IT guidelines, or business procedures.
• Decide whether the agent should also reference public web data (for general queries) or strictly rely on internal knowledge.

5. Creating Starter Prompts

• Add common employee questions (e.g., "How many holiday days do I have left?”).
• These prompts appear when users first interact with the agent, helping guide them on what it can assist with.

6. Testing & Deploying the Agent

• Use the built-in test environment to ensure responses are accurate.
• Deploy the agent in Microsoft Teams or other business apps.
• Manage user access to ensure only authorized employees can interact with it.

Real-World Application: Testing Hannah HR

Once deployed, Hannah HR can quickly answer employee questions by referencing HR policies stored in SharePoint. For example:

• A user asks: “How do I get reimbursed for my expenses?”
• Hannah HR pulls data from the expense policy document and provides a summarized response.

Additionally, Copilot Agents can handle out-of-scope questions creatively. Hannah HR will still respond in a friendly and engaging manner, reinforcing a positive user experience.

Limitations & Licensing Considerations

• Copilot Agents require appropriate Microsoft 365 licensing for full functionality.
• Users on free plans may see limitations unless pay-as-you-go billing is enabled.
• Organizations must ensure security measures are in place so employees can access SharePoint-linked policies and data securely.

Final Thoughts & Future Insights

For small businesses that want to explore AI without making a large upfront investment, Copilot Agents provides a low-cost and scalable solution. Instead of hiring additional staff to handle routine inquiries, businesses can deploy an AI assistant that works 24/7 at a fraction of the cost. With Copilot Studio’s pay-as-you-go model, small businesses only pay for what they use, ensuring affordability and flexibility. This makes it an ideal way to experiment with AI-driven automation before committing to a full-scale AI strategy.