For most organisations, AI has delivered real but limited value so far.

It offers faster answers, quicker first drafts and less time on routine lookups. Great, but we are still missing that next step.

Microsoft's Wave 3 of Microsoft 365 Copilot, announced in March 2026, pushes past that point. Rather than responding to prompts, Copilot now executes work end-to-end:

• breaking complex requests into steps,
• coordinating across apps and files,
• and delivering finished outputs.

The headline feature is Copilot Cowork, but the wider release also introduces multi-model AI (including Claude from Anthropic), a new enterprise governance layer called Agent 365, and deeper integration across Word, Excel, PowerPoint, and Outlook.

So, what does it all mean? Let’s break it down for you.

Copilot now works inside your documents, not just alongside them

The most practical change in Wave 3 is that agentic capabilities are now built directly into Microsoft 365 apps.

Copilot can work through a Word document from top to tail, build real formula-based spreadsheets in Excel, produce slides that match your organisation's brand and layout conventions in PowerPoint, and draft and iterate on emails inside Outlook.

Changes happen inside the document itself, are visible as they are made, and can be reviewed or reversed. The work stays in one place, the context is preserved, and the human stays in control of direction without managing every step.

The best thing is that these capabilities are generally available in Word and Excel right now. PowerPoint and Outlook are rolling out over the coming months.

Copilot Cowork: handing off workflows, not just tasks

Cowork is built for multi-step work that unfolds over time.

You describe the outcome you want; Cowork grounds the request in your actual Microsoft 365 environment like emails, meetings, files, calendar, data etc, then builds and executes a plan to get there. It checks in at key points, flags decisions that need human input, and keeps everything auditable and reversible.

Examples of Cowork in action

• Calendar management: Cowork reviews your Outlook schedule, identifies conflicts and low-value meetings, proposes changes, and applies them once approved.
• Meeting preparation: From a single instruction, Cowork pulls inputs from emails, meetings, and files, then produces a briefing document, supporting analysis, a client-ready deck, and a draft status email.
• Company research: Cowork gathers earnings reports, SEC filings, and analyst commentary, then organises findings into an executive summary, a research memo, and a structured Excel workbook.
• Product launch planning: Cowork builds competitive comparisons, drafts a value proposition document, generates a pitch deck, and outlines milestones and owners — coordinating the full workflow from intent to deliverable.

Cowork is currently in research preview with a limited set of customers and will be available through Microsoft's Frontier programme from late March 2026.

Multi-model AI: the right model for the job

Wave 3 also brings Claude (via Anthropic) and the latest OpenAI models into mainstream Copilot chat.

Copilot selects the right model automatically depending on the task and users get the best available capability without having to manage model selection or switch between tools. This assures you that Copilot will choose the right tool for the job!

For organisations, this reduces the risk of vendor lock-in and removes the need to manage a growing landscape of separate AI products, each with its own interface and governance requirement.

Agent 365: governing AI agents across the organisation

As agent use scales, governance becomes the central challenge.

Agent 365 gives IT and security teams a single place to observe, secure, and govern every agent running across the organisation. It extends existing Microsoft security tools (Defender, Entra, Purview) to cover agents alongside users, using the same Admin Center interface organisations already manage.

Prices will start at $15 a month per user, and Agent 365 will be rolling out on 1st May 2026.

Microsoft 365 E7: the enterprise package

The next level of Enterprise Package is nearly here.

Microsoft 365 E7 bundles Microsoft 365 Copilot, Agent 365, Microsoft Entra Suite, and the advanced security capabilities of Microsoft 365 E5 into a single enterprise tier.

Copilot and agents share the same intelligence layer, operate under the same governance controls, and security is built in by default. In other words, E7 is the most comprehensive package out there.

E7 will also available from 1 May 2026 at $99 per user per month.

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How we can help

Now we’ve explained the sweeping updates from Wave 3, I’m sure you’re wondering what you’re your next steps are.

Wave 3 represents a meaningful change in what Microsoft 365 can do, but realising that value depends on how well it is deployed and adopted across your organisation. Knowing the technology is available is one thing; knowing where to start, how to integrate it with existing processes, and how to get your team confident using it is another.

Get in touch with BSW IT to understand what Copilot’s Wave 3 update means for your team.