Can Microsoft 365 Copilot Command the Coin?
After many conversations with organizations about Microsoft 365 Copilot, we’re starting to see two patterns developing:
This insight comes from conversations before Microsoft lifted the minimum requirements of 300 licenses under EA. Now, Microsoft 365 Copilot is available in any increment to any customer with a minimum of Office E3, and can be procured under CSP or EA.
Early adopters like Sherry Neubert, VP and CIO at Goodyear offered praise: “As our team has tested the technology, we’ve received great feedback about Copilot in Teams.”
Some folks were more measured. They’ve compared the $30 to ChatGPT Plus at $20 per user per month (PUPM), and realize that $30 is a ~50% addition to the $57 PUPM of the Microsoft 365 E5 bundle.
But software is measured by the value it provides more than its cost. Will $30 provide a return for some people? How would an IT leader know for whom to budget? For the others, how can they be told “no?”
This blog dissects the basis of the additional cost, ways to evaluate the use cases, and suggestions to measure ROI, so you can do some budgeting for larger numbers of Microsoft 365 Copilot licenses.
Why Charge Extra?
I was with a CIO on the day the $30 PUPM announcement was made. He’d just invested in the M365 E5 and was… nonplussed. In other circles, I’ve heard cynical suggestions for Microsoft to create an E7 license to bundle its myriad add-ons. Cost and licensing complexity are valid concerns.
Fact is, running a Large Language Model (LLM) is expensive. Before giving details, it’s important to mention that Microsoft 365 Copilot will not use the same infrastructure as ChatGPT nor any other public AI. Copilot is using the standard OpenAI models in Azure, just like ChatGPT, meaning people can use similar language and prompting. But that’s the end of the similarity. So that enterprise security and privacy is applied, Copilot uses separate instances and separate infrastructure. That means data is confined inside each customer’s M365 tenant, and never used to train the model.
In any case, LLMs use serious computing power. At Build, a Microsoft scientist explained that today, a GPT-4 model runs on a Virtual Machine with 24 NVIDIA A-100 80GB GPUs, each of which costs $15,000. Microsoft needs these $360,000 machines to be paid for by its users.
Figure 1: Scott Guthrie in front of an AI computing bank. OpenAI’s infrastructure is comprised of a bank of 135 racks of such computers, in Microsoft’s Des Moines data center alone!
Figure 2: NVIDIA’s ~$15,000 A100 GPU Module. Maybe that silicon is actually gold?
Who Would Benefit?
IT budgets are likely not prepared for an immediate $360/year for all users. So as the next budget cycle approaches, who should be considered?
As an added factor, people who are already familiar with ChatGPT are likely ideal candidates. Finally, involve someone from your legal team, and get their input and concerns addressed before adoption becomes pervasive. The early wins will come from those shortcutting the first draft.
Finding the ROI
Once the candidates who could gain from using Microsoft 365 Copilot are identified, how could a CFO and CIO justify the cost? They might simply consider two simple questions:
If the answer to both is “Yes,” read on.
According to the U.S. Bureau of Labor Statistics, all jobs done by all workers in the country average $61,900/year ($29.76/hour). If Copilot saves the average worker an hour of their time per month, the ROI is net positive. Management occupations average $131,200/year, requiring only 30 minutes of time savings to break even for managers.
Admittedly, this back-of-the-napkin calculation lacks some important aspects:
Professional services firms like eGroup Enabling Technologies can round out the TCO estimates by explaining how to successfully prepare for Copilot. CIO Advisor and former VP of IT Tom Papahronis summarized it well, saying, “The key ROI factors I would look at are who in the organization would benefit from the capabilities and have the time to embrace it, versus what risks will it introduce? Will the cost of fixing or carrying that risk be worth the time savings it generates?”
Survey a Pilot Group
There are likely departments that everyone in your organization agrees are valid candidates. Some are listed above. Recruit a person or two from each of those departments for a pilot group—ideally a person who already is familiar with ChatGPT, and one who is not. Survey everyone before and after using Copilot, particularly focusing on time savings and other business specific KPIs (i.e., customer sat, response times, etc.). In simplest terms, survey with questions (before and after Copilot) such as:
Or, more simply, ask:
Based on the calculated ROI, KPIs, and broader strategic considerations, you’ll find the departments where $30/month justifies the returns.
Upskilling: The Real ROI in an AI Workplace
Justifying the tools is just the beginning. What matters most is what people do with their extra time.
Retooling and upskilling the employee base is a far greater initiative. In McKinsey’s, “The State of AI in 2023: Generative AI’s Breakout Year,” a survey of 1600+ participants found that high-performing AI organizations, “Are expected to conduct much higher levels of reskilling than other companies are. Respondents at these organizations say their organizations will reskill more than 30 percent of their workforces over the next three years as a result of AI adoption.”
Organizations with the tools and training programs in place to upskill their workers will have a competitive advantage.
Cautions and Caveats
Organizations with accurate, clean data will maximize AI’s competitive advantage, while those without will struggle.
Another important survey question to ask is:
Develop a process to uncover what people are able to see (using Purview Content Explorer) and for people to report overexposure. This process can be time-intensive but is good business practice anyway. Some CIOs may decide to ignore such costs from Copilot’s ROI equation.
Check out our Preparing for Microsoft 365 Copilot blog for more info about prerequisite steps.
Preparing to Say “No” to Licensing Requests
Few people get miffed, for instance, if they are assigned an F3 (Frontline) license instead of an E3. But then again, they don’t read headlines about E3 creating a massive workforce shift! But they do see press like, AI Won’t Replace Humans—But Humans With AI Will Replace Humans Without AI (hbr.org).
Savvy CIOs won’t underestimate the potential flak from the “withouts.” Imagine scanning a headline like that right before attending a meeting with someone using the latest and greatest AI tools. You’d feel at risk of being left behind.
CIOs will be in the hot seat if they’re the only ones to say “No.”
Here are suggestions to stay cool:
Conclusion
Copilot’s $30 price tag won’t be justifiable for all people, but it’s likely to be worthwhile for some creators, analysts, customer service agents, HR, and VIPs. Saying “no” due to budget constraints involves forming committees, creating an AI charter, and planning for exceptions.
Achieving ROI hinges on time saved and the effective use of that saved time. Upskilling the workforce to capitalize on this extra time becomes crucial for real long-term ROI of AI.
Data accuracy and legal considerations are paramount, and organizations must proactively manage their data for Copilot to provide meaningful insights. Copilot will not solve existing data management problems, but organizations with accurate, clean data will maximize their competitive advantage. Microsoft will partition your data and keep it within your tenant, but they won’t ensure that your data is accurate, nor that you’ve trimmed your data’s read/write privileges. Preventing sensitive data exposure requires planning at both the file and site levels.
In conclusion, Microsoft 365 Copilot’s potential is multi-faceted. It’s not just about cost, but the transformative power it holds for organizations willing to harness AI effectively. By navigating its implications, upskilling the workforce, and aligning it with strategic objectives, Copilot can indeed command its cost, leading to a more efficient and AI-driven modern workplace. Click Here to learn more about how we’re helping organizations prepare!
CTO & VP of Strategy - eGroup Enabling Technologies
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