The AI features inside Microsoft 365 that most businesses overlook

Here's an uncomfortable fact about Microsoft 365 Copilot in 2026. The average SME paying for it uses somewhere between 10 and 20 per cent of what it can actually do. The other 80 per cent is sitting there, paid for, ignored.

Some of that's fine. Not every feature deserves attention. But the gap matters because most owners are still wondering whether AI is worth the money, when the answer is right there inside the subscription they're already paying for, doing nothing.

This piece is about what actually deserves your team's time among the rest. I've left out the obvious things, the email summaries, the meeting transcripts, the "draft a reply" buttons, because if you have Copilot you've already found those. Everything below is what comes next.

How has Microsoft Copilot changed in the last year?

Quick orientation, because the product has changed substantially.

Microsoft introduced new SME-specific SKUs in July 2025, Microsoft 365 Business Standard with Copilot and Business Premium with Copilot. These bundle Copilot capability directly into the small business plans rather than treating it as an enterprise add-on. If you're on a Business Standard or Premium plan and haven't checked your licensing in the last twelve months, it's worth a look, because what you get for £14 to £19 per user per month* in 2026 is meaningfully more than it was in 2024.

The other shift worth knowing about is Agent Mode, which became the default experience in Word, Excel, and PowerPoint in April 2026. This is the thing that lets Copilot actually do work in your documents rather than just suggest text. It's the change that takes Copilot from "useful chatbot in the sidebar" to "junior team member who can actually finish things."

Most SMEs I speak to haven't noticed.

Which Copilot features are genuinely overlooked?

Six worth knowing about.

Copilot Notebooks. Probably the single most underused feature in Microsoft 365 right now. Notebooks let you create a working space tied to a specific project, pull in relevant files, transcripts, emails, and chats as references, and then ask questions of all of it as one body of knowledge. When you've gathered enough material, the same notebook can generate a draft Word document, a PowerPoint deck, or an Excel workbook based on what's in it. For project-based businesses (agencies, consultancies, construction, professional services), this is the closest thing to "an AI assistant that actually knows your project" that currently exists. Almost nobody is using it.

Plan mode in Excel. When you give Copilot a complex task in Excel, you can ask it to plan first rather than just execute. It writes out the steps it intends to take, you confirm or adjust, then it does the work. Sounds minor. It isn't. Plan mode is the difference between Copilot quietly trashing a workbook and Copilot building you a useful model. If you've tried Excel Copilot and given up because it did something weird, plan mode is what you missed.

Implicit grounding in Outlook. Added in May 2026. When you start typing a prompt in Copilot Chat from inside Outlook, you can now drop the relevant email or thread straight into the prompt context without copying and pasting. Small change. Massive in terms of how much faster you can ask useful questions about your inbox. "Summarise this thread and draft three response options based on what we said in the last meeting about this client" now takes about fifteen seconds.

Model choice. Microsoft now lets you pick which AI model handles your request. As of mid-2026, that includes Anthropic's Claude Opus 4.7 and 4.8 alongside OpenAI's GPT-5.5. This matters because the models behave differently. Claude tends to be better at long-form writing, structured analysis, and following complex instructions; GPT tends to be faster on shorter tasks and stronger on technical or numerical work. For an SME, the practical use of model choice is simple: when one model produces a weak result, try the other before deciding the task is too hard.

Connectors. Microsoft now has over 1,000 connectors that let Copilot read data from third-party systems. The ones most relevant to SMEs include Xero, Shopify, monday.com, Asana, Jira, DocuSign, and HubSpot. Most owners I speak to don't realise these exist. When they do, they're surprised by what becomes possible. "Pull a list of overdue invoices from Xero and draft chase emails for each one" is a real workflow available right now to a 15-person business. Almost nobody has set it up.

Work IQ. This is the personalisation layer Microsoft introduced in late 2025 and quietly built out through 2026. It learns your communication style, your typical workflows, the people you work with most, and the context around what you're doing. The practical effect is that the longer you use Copilot, the more it sounds like you and the less you have to explain. Work IQ is on by default, but most users never notice it because it works invisibly. Worth knowing it's there, because the implication is that Copilot gets better the longer you use it, which is the opposite of how SMEs tend to evaluate a new tool.

What's the quickest way to get value from these features?

If you're paying for Copilot and feel like you're not getting value, three things to do this week.

The first is to open Copilot Notebooks and create a notebook for an active project. Pull in two or three relevant files, the latest meeting transcript, and any email thread that matters. Then ask it a couple of questions about the project as a whole. Most people who do this once start using it for everything.

The second is to switch Excel into plan mode the next time you need it to do something more than basic. Watch what it suggests before it does anything. You'll see immediately why edit mode was producing bad results.

The third is to look up your tenant's connector list (your admin or IT person can do this if you can't) and find out whether you can connect Copilot to your accounting, CRM, or project management software. If you can, the first useful thing to build is usually an end-of-week summary. "Every Friday at 4pm, give me a summary of open invoices in Xero, leads in HubSpot that haven't been replied to, and projects in monday.com that are behind schedule." That single recurring prompt saves most owners about an hour a week.

Which Copilot features are still not worth using?

To be fair, some of what Microsoft is shipping isn't ready. Honest read on the things to be careful with:

The PowerPoint agent will make you a deck, but the design quality is mediocre by default. Use it for first drafts and accept you'll need to do real work afterwards.

Copilot in Teams meetings can produce summaries that are confidently wrong in subtle ways. The transcript is reliable. The interpretation of who said what and what they meant is sometimes not. Treat the summary as a prompt for memory rather than a record.

The Excel agent for genuinely complex finance work (multi-scenario forecasting, group consolidations, anything regulated) isn't there yet. Microsoft announced major finance-specific updates in June 2026, but the pattern with these things is to give them six months to settle before relying on them for anything that matters.

The "computer use" feature in Copilot Studio, which lets agents drive web applications by clicking on their interfaces, is impressive in demos but brittle in practice. Wait until 2027 at the earliest before building anything important on it.

What should I actually do next?

The most useful question to ask isn't "what new AI tool should I buy?" It's "what am I already paying for that I'm not using?"

For Microsoft 365 customers, the honest answer is almost always "more than you think." If you're on a Business Premium with Copilot licence, you have access to Notebooks, plan mode, model choice, connectors, and Work IQ right now, today, with nothing more to buy. The cost of using them properly is attention and a small amount of internal training, not money.

Most SMEs treat AI as a budget question. For Microsoft 365 customers in 2026 it's mostly a habits question. The licence already covers the capability. What hasn't been bought yet is the time to learn it.

Half a day from one person who's prepared to try the six features above will produce more value than the next two AI tools you're being pitched. Worth doing this week.

* Prices correct at time of publication