Foundations First: What You Need Before You Start
A slightly shorter episode today but an essential one nonetheless. Before any business jumps into the world of AI, there’s a simple truth to accept: Copilot is only as good as the foundation you give it. And Yes I will keep reintegrating this as its the key theme to the series.
Think of it like buying a high-performance sports car – it’s fairly useless if the roads are full of potholes or you’ve forgotten to put petrol in the tank. So as long as SME’s prepare the roads first they only need the right signposts.
In this short episode, we’ll look at the essentials:
- Which licences actually work.
- The “non-negotiable” technical bits.
- How to avoid the most common “Day One” mistakes.
1. The Licensing Part (Simplified for 2026)
Microsoft recently updated its lineup to make things easier for smaller companies. To get the version of Copilot that actually talks to your business data, you need two things:
✔ A “Base” Microsoft 365 Subscription Hopefully you already have this. Copilot is compatible with:
- Microsoft 365 Business Standard or Business Premium (The most common choices for SMBs).
- Microsoft 365 E3 or E5.
- Microsoft 365 Business Basic (Note: While compatible, Premium is recommended for enhanced security capabilities).
✔ The Copilot Business Licence In 2026, this is usually an add-on. For businesses with fewer than 300 users, look for Microsoft 365 Copilot Business. It’s specifically priced for the mid-market and doesn’t require the massive upfront commitments that big corporations face.
2. The Technical “Must-Haves”
Even with the right licence, Copilot requires a way to “see” your work. If your setup is a bit dated, you might need a quick spring clean.
- Cloud Email is King: Your email must be in Exchange Online. If you’re still using an old on-premises server or a third-party host, Copilot won’t be able to help you summarise your inbox.
- Files in the Cloud: Copilot isn’t a mind reader, so it can only “read” what’s in OneDrive or SharePoint. If your vital documents are still sitting on local desktops or a physical server in the corner of the office, Copilot can’t use them to draft that new proposal.
- The “New” Teams: Ensure your team is using the latest version of the Microsoft Teams client. The AI features rely on this modern architecture to summarise meetings in real-time.
- Users must be in Entra ID (formerly Azure AD – This is the identity system that controls access, permissions, and security which may mean you need to migrate your user accounts
3. Recommended (But Optional) Security Bits
You won’t need these to start, but I strongly suggest you deploy these to keep your data safe :
- Sensitivity Labels: These will tell Copilot, “This document is confidential; don’t use it to generate public-facing content.”
- Permission Hygiene: If everyone in the company can see the “Payroll” folder, Copilot can too. Now is a great time to check that people only have access to what they truly need.
- A Simple AI Policy: Just a one-page guide for staff on what they should (and shouldn’t) ask the AI to do.
4. Common Mistakes to Avoid
- Mistake 1: The “Big Bang” Rollout. Don’t give it to 50 employees at once. Start with a “Focused group” of 3–5 power users to see how it works for your specific business.
- Mistake 2: Expecting Magic on Messy Data. If your SharePoint is a maze of “Document_v2_FINAL_FINAL,” Copilot might get confused. Clean up your naming conventions first.
- Mistake 3: Forgetting the Human Element. AI is a new skill. If you don’t show your team how to talk to it (this is called “prompting”), they’ll treat it like a search engine and get frustrated.
A Quick Readiness Checklist
A quick and easy way to take stock and track you readiness is with a simple checklist. You can use the below to confirm at a high level whether your business is ready to move to Copilot:
Licensing
- [ ] Microsoft 365 Business Standard or Premium
- [ ] Copilot for Microsoft 365 add‑on purchased
Technical
- [ ] All users have Exchange Online mailboxes
- [ ] Files stored in OneDrive/SharePoint
- [ ] Users in Entra ID
- [ ] New Teams client deployed
Recommended
- [ ] Basic data structure in place
- [ ] Permissions reviewed
- [ ] Sensitivity labels configured
- [ ] Staff aware of AI usage guidelines
If you can tick most of these boxes, you’re ready for the next stage.
🧭 Episode 3 Summary
Getting ready for Copilot isn’t necessarily about running a massive IT project; it’s about making sure your current tools are used correctly.
- Check you’re on Business Standard or Premium.
- Move those final few files into SharePoint or OneDrive.
- Start small with a pilot group.
Once the foundation is solid, you’re ready for the real transformation. Read on below if you want more detail and clarity around the different Copilot /Types licenses.
There are changes happening all the time around AI as you know and big Tech certainly likes a brand rename or re-bundling. Microsoft is no different and has recently streamlined the “alphabet soup” of Copilot versions. For SME’s, the simplest way to view the ecosystem is as a three-tier hierarchy: Personal, Business, and Specialised as we touched on in Episode 2.
Probably one of the more important updates though for 2026 is that the role-based versions (Sales, Finance, Service) are no longer separate, expensive add-ons. They are now Agents included in your standard business licence.
🧩 The Copilot Ecosystem: SME Edition (2026)
1️⃣ Microsoft Copilot (Free)
- The Goal: A secure, web-grounded AI assistant for everyone.
- SME Context: Best for quick research or drafting public content.
- Note: Includes Commercial Data Protection so your business chats stay private, but it cannot “see” your internal company files.
2️⃣ Copilot Pro (Individual)
- The Goal: A performance boost for solo-preneurs or home users.
- SME Context: Rarely used in a team setting because it lacks Teams integration and central management.
3️⃣ Microsoft 365 Copilot (The “Business” Tier)
- The Goal: The definitive version for SMEs that connects to your business data (Work IQ).
- 2026 Update: Now split into “Business” (under 300 seats) and “Enterprise” (unlimited) tiers to make it more affordable for smaller teams.
- Why it matters: This is the version that summarises your Teams meetings and drafts emails based on your real SharePoint files.
4️⃣ Role-Based Agents (Sales, Finance, Service)
- The Goal: Specialised “Expert” skills that plug into your main Copilot.
- The BIG Change: These are now included in your Microsoft 365 Copilot licence.
- Usage: You simply “turn on” the Sales Agent to link Copilot to Salesforce/Dynamics, or the Finance Agent to automate bank reconciliations in Excel.
5️⃣ Copilot in Windows & Edge
- The Goal: The “On-Ramp” to AI built into your operating system.
- 2026 Update: On the newer Copilot+ PCs, these run locally on the device, making them lightning-fast and functional even without an internet connection.
6️⃣ Microsoft 365 Copilot App (Mobile)
- The Goal: AI-first mobile productivity.
- Note: This replaced the old “Office App.” It allows you to use your voice to triage emails or get a briefing on your day while on the move.
7️⃣ Microsoft Copilot Studio (The Factory)
- The Goal: Where you build your own “Custom Agents.”
- SME Context: If you have a specific task—like an agent that only knows your company’s HR policies—you build it here.
8️⃣ Agent 365 (The Control Plane)
- The Goal: The “Manager” behind the scenes that keeps everything secure.
- SME Context: This is the dashboard where the business owner or IT lead sees which agents are running, who is using them, and ensures no data is being leaked.
🎯 Which one should you buy?
For almost every SME, I would have to agree with Microsoft on this: Microsoft 365 Copilot Business. It gives you the full suite of Office integration, the new role-based agents (Sales/Finance), and the security of Agent 365 for a single, predictable monthly cost.
There are many studies already available to help SME’s start mapping the Copilot types to roles. Most notable research has come from the Microsoft Work Trend Index 2026 and independent research from Gartner and Forrester.
The consensus is that a “one-size-fits-all” rollout is a mistake for SMBs. Instead, businesses are now using Role-Based Mapping to decide who gets which version and which “Agents” to deploy.
Here is how those studies have mapped the Copilot versions to specific work roles:
📊 The 2026 Role-to-Copilot Mapping Matrix
| Work Role Type | Recommended Version | Primary “Agent 365” Use Case |
| Leadership / Owners | M365 Copilot Enterprise | Strategic Intelligence: Summarising long board packs, tracking sentiment in Teams, and “Ask my Data” for financial forecasting. |
| Sales & Marketing | Copilot for Sales (Role-Bundle) | Relationship Management: Automating CRM entry (Salesforce/Dynamics), drafting personalised proposals, and “Meeting Recap” for client calls. |
| Operations / Admin | M365 Copilot Business | Process Automation: Using the Project Agent to manage timelines and the Email Agent to triage high-volume shared mailboxes. |
| Finance / HR | Copilot for Finance | Data Integrity: Reconciling statements in Excel, identifying payroll anomalies, and drafting policy updates based on UK law changes. |
| IT / Security | Security Copilot | Proactive Defence: Automated device offboarding (Intune) and real-time threat hunting in Defender. |
| Frontline Workers | Copilot (Free/Pro) | Information Retrieval: Quick lookups of product manuals or safety procedures via the Copilot Mobile app. |
📘 Coming Tomorrow: Episode 4 Preparing Your Data & Security — How to make sure Copilot only sees what it should. Plus I’ll introduce you to Agent 365, which you are going to hear more and more of from Microsoft in 2026 and could become an important element to AI management going forward (Still in Preview).