In plain English
Copilot is Microsoft’s AI assistant, and businesses meet it in two forms. The difference matters: some firms pay for the licence when the included version would do, while others assume the included version is all Copilot can do.
Copilot Chat is included for anyone who signs in with a work account on an eligible plan, including Microsoft 365 Business Basic, Standard and Premium. It mainly answers from the web, plus whatever you give it: text you paste in, a file you upload or the document you have open. In Outlook it can also look at your inbox, calendar and meetings. Microsoft says prompts and responses aren’t used to train its underlying models.
Microsoft 365 Copilot is the paid licence, added per person on top of your Microsoft 365 plan. For smaller firms Microsoft sells it as Microsoft 365 Copilot Business, or bundled with Business Standard or Premium. The big difference is reach: it can draw on everything that person is allowed to see across Microsoft 365, so “what did we agree with this client last month?” gets an answer from your own emails, meetings and files.
Microsoft changes the names of its Copilot products fairly often, so you may see the same thing called slightly different names in different places. What matters is whether a person has the paid licence or not.
An example from a small business
Take a hypothetical 12-person law firm. Everyone already has Copilot Chat, which is plenty for drafting a letter from notes or summarising a long email thread. The two partners and the practice manager, who spend their days in meetings and client email, get the paid licence. Before it’s switched on, the firm tidies up who can see which folders, because Copilot will surface anything a person can already open, including files that were shared too widely by mistake.
What to watch out for
- Fix oversharing first. Copilot respects your existing permissions, so a badly shared HR folder becomes easy to find.
- Don’t license everyone on day one. Start with the people who live in email, documents and meetings, and expand based on real use.
- It drafts, you decide. Copilot can still get things wrong (see AI hallucination), so anything going to a client needs checking.
- It assists, it doesn’t run processes. It won’t file every invoice or turn every meeting into formal minutes on its own. That needs workflow automation.
Related terms
- Retrieval-augmented generation (RAG): the idea behind Copilot answering from your files.
- Power Automate: Microsoft’s tool for the processes Copilot doesn’t run.
- Shadow AI: what happens when staff use unapproved tools instead.
Where AlphaOps can help
For firms whose IT is looked after by Alphabyte IT, our sister IT management company, Alphabyte IT handles the licensing and switches Copilot on safely. AlphaOps focuses on getting real work out of it: tested prompts, training and the automations that go further. Our guide to getting real work out of Microsoft Copilot has a 30-day plan, or book a free automation audit.