What Copilot Cowork, Agent 365 and E7 Mean for UK Organisations

On 9 March 2026, Microsoft announced what it is calling Wave 3 of Microsoft 365 Copilot. It is the biggest set of changes to Copilot since it launched, and it touches licensing, AI capabilities and governance in ways that will affect every organisation on Microsoft 365.

Most of the coverage so far has focused on the new E7 pricing tier. That matters, but it is not the most interesting part. The real story is the shift from Copilot as an assistant that answers questions to Copilot as a system that executes work on your behalf.

Here is what was announced, what it actually means and what UK organisations should be thinking about.

Copilot Cowork: From Chat to Execution

The centrepiece of Wave 3 is Copilot Cowork, a new capability that moves Copilot beyond single prompts and into multi-step task execution. Instead of asking Copilot a question and getting a response, you describe the outcome you want in plain English and Cowork builds a plan, works across your Microsoft 365 apps in the background and checks in at key points for approval before taking action.

This is not a chatbot. It is a delegated task runner that can coordinate across Outlook, Teams, Excel, Word, PowerPoint and SharePoint simultaneously.

Microsoft demonstrated four specific scenarios during the announcement:

• Calendar triage: Cowork reviews your Outlook schedule, flags conflicts and low-value meetings, proposes changes and then applies them once approved, including declining meetings, rescheduling and adding focus blocks
• Meeting preparation: Given a client meeting, Cowork pulls context from your emails, files and past conversations, builds a briefing document, creates a slide deck and schedules preparation time on your calendar
• Deep research: Cowork handles multi-step research tasks such as analysing SEC filings, earnings reports and analyst commentary, producing structured, cited outputs
• Product launch coordination: Cowork builds competitive comparisons in Excel, creates value proposition documents, generates pitch decks and outlines milestones and owners

Throughout all of this, Cowork pauses at checkpoints so you can confirm, modify or cancel actions. It asks for clarification when it needs more information. The work is observable, actions are transparent and everything is saved inside Microsoft 365 rather than downloaded locally.

Built with Anthropic

Cowork is built in collaboration with Anthropic, integrating the technology that powers Claude Cowork into the Microsoft 365 environment. The key difference from Anthropic's standalone product is that Copilot Cowork runs in the cloud inside Microsoft 365's infrastructure and draws on the full graph of your enterprise work data through a system Microsoft calls Work IQ. That means it has access to your emails, Teams conversations, calendar, SharePoint files and the relationships between them, which Claude Cowork's desktop-based product cannot access.

Alongside Cowork, Microsoft also announced that Anthropic's Claude models are now available across the full Copilot Chat experience for Frontier customers, not just in the Researcher agent and Excel where they were previously offered. This makes Microsoft 365 Copilot a genuinely multi-model platform where the system can select the best AI model for each task.

Availability

Copilot Cowork is currently in research preview with a limited set of customers. Broader access will come through Microsoft's Frontier programme in late March 2026. This is not something your team can use today, but the direction it signals is significant.

Agent 365: The Governance Layer

The second major announcement is Agent 365, which Microsoft describes as the control plane for AI agents. It becomes generally available on 1 May 2026 at $15 per user per month.

Agent 365 is not a tool for building agents. It is a tool for managing them. It gives IT and security teams a single location to observe, secure and govern every AI agent operating across an organisation, regardless of whether those agents were built using Microsoft tools, third-party frameworks or open-source options.

Agents get their own Entra identity, which means they are subject to the same conditional access policies, least privilege restrictions and audit trails as a human user. If an agent does not need access to something, it does not get it. If it starts behaving unusually, Entra ID Protection can detect anomalous activity and auto-remediate compromised agents.

Microsoft shared some internal numbers that give a sense of the scale they are anticipating. Within the company itself, they now have visibility into more than 500,000 agents, with the most widely used focused on research, coding, sales intelligence, customer triage and HR self-service. Over the past 28 days, those agents generated more than 65,000 responses per day for employees. IDC projects 1.3 billion agents in circulation by 2028.

This governance angle matters more than most of the coverage suggests. As agents become more capable and more numerous, the organisations that figure out governance early will have an advantage. The ones that skip it will end up with agents nobody owns doing things nobody approved.

Microsoft 365 E7: The Pricing

Microsoft 365 E7 launches on 1 May 2026 at $99 per user per month. It bundles together Microsoft 365 E5, Microsoft 365 Copilot, Agent 365, the Entra Suite and advanced capabilities from Defender, Intune and Purview.

Microsoft positions this as cheaper than buying the components separately. The maths works like this: E5 rises to $60 per user per month from 1 July 2026. Copilot remains $30. Agent 365 is $15. Add the Entra Suite and security components and you are well above $99 on a per-component basis. So the bundle discount is real.

But context matters. E5 currently sits at $57, and Microsoft's own figures show that only 3% of its 450 million commercial Microsoft 365 seats have purchased Copilot. Going from $57 to $99 per user is a 74% increase, and that is a hard conversation for finance directors even with additional features included.

For organisations already on E5 with Copilot ($87-90 per user depending on discounts), E7 is more of a consolidation play that adds Agent 365 and the Entra Suite. For organisations still on E3 or E5 without Copilot, the jump to E7 is significant and needs a clear business case.

Worth noting: Microsoft has confirmed promotional offers for E7 starting 1 April. Given their history of Copilot discounting (15%, 20% and 30% promotions have all been seen), the initial list price may not be what you end up paying. If your EA renewal is approaching, this is worth factoring into your negotiations.

The UK Data Residency Question

This is the part that most coverage has missed, and it matters specifically for UK organisations.

Copilot Cowork is built on Anthropic's Claude technology. Anthropic's models are currently excluded from the EU Data Boundary and in-country processing commitments. Data processed by Claude-powered features leaves Microsoft's environment, goes to Anthropic's infrastructure in the United States and then returns. Microsoft has set the Anthropic toggle to Off by default for organisations in the EU, EFTA and the UK.

Admins can choose to opt in through the Microsoft 365 admin centre under Copilot > Settings > Data access > AI providers operating as Microsoft subprocessors, but it requires an active decision.

Since January 2026, Anthropic operates as a Microsoft subprocessor rather than requiring separate commercial terms. This means Claude usage is covered under Microsoft's Product Terms and Data Protection Addendum, and your data is not used to train AI models. But the physical processing location still introduces international data transfer considerations that compliance teams need to assess.

For most UK professional services firms and accounting practices, this is likely manageable with a proper Data Protection Impact Assessment (DPIA). For organisations with stricter data sovereignty requirements, it is a more involved conversation. Either way, it needs a conscious decision rather than being ignored.

We covered this in detail in our earlier post on the AI models powering Microsoft 365 Copilot, and the same guidance applies here. If you are unsure about the implications for your organisation, speak to your compliance team before enabling Anthropic in your tenant.

What Else Was in Wave 3

Beyond the three headline announcements, Wave 3 includes several other changes worth noting:

• Agentic capabilities in individual apps: Word, Excel and PowerPoint are all getting embedded agentic features that go beyond the existing Agent Mode previews. These operate inside the apps rather than through Copilot Chat
• Multi-model support in Copilot Chat: Claude and the latest OpenAI models are now both available in the main Copilot Chat experience for Frontier customers. Copilot can route tasks to the best model for the job
• Copilot adoption stats: Microsoft reported that paid Copilot seats have grown more than 160% year over year, daily active usage is up tenfold and 90% of the Fortune 500 now use Copilot. The number of customers with more than 35,000 seats has tripled year over year

What This Means for UK Organisations

Wave 3 is a lot to take in, so here is what actually matters depending on where your organisation is:

If you have Copilot but adoption is low

This is the most common situation we see. Organisations bought Copilot licences, ran a workshop or two and then moved on. Six months later, 80% of the team barely uses it. Wave 3 does not fix that problem. The new features are exciting, but they only matter if your team is already using Copilot effectively in their daily work. Before thinking about Cowork or Agent 365, focus on getting the foundations right with practical, hands-on Copilot training that connects to real workflows.

If you are considering Copilot for the first time

Wave 3 strengthens the case for Copilot, but it also makes the licensing landscape more complex. Start by understanding what you already have. Every Microsoft 365 subscription includes Copilot Chat at no extra cost. Get your team using that effectively before committing to paid licences. Then consider an AI readiness assessment to understand where the real opportunities are.

If you are exploring AI agents and automation

Agent 365 and Copilot Cowork signal clearly where Microsoft is heading: agents as a managed, governed part of the enterprise. If you are already building automations with Power Automate or custom agents with Copilot Studio, start thinking about governance now. How will you manage agents at scale? Who owns them? What access do they need? The organisations that answer these questions early will be better positioned when these tools reach general availability.

If your EA renewal is coming up

The timing of this announcement is not accidental. E7 launches on 1 May, price rises hit on 1 July and Microsoft is running promotional offers from 1 April. If your Enterprise Agreement renewal falls anywhere near these dates, do your homework before negotiations. Understand your current Copilot usage. Know how many users would genuinely benefit from E7 versus staying on E5 with selective Copilot licences. Do not let the announcement pressure you into a commitment that does not match your actual adoption.

Our View

Wave 3 is genuinely significant. Copilot Cowork represents the shift from AI as a chat interface to AI as an execution layer, and the collaboration with Anthropic signals that Microsoft is serious about the multi-model approach. Agent 365 addresses the governance gap that has been a real concern for IT teams as agents proliferate.

But we have not used Copilot Cowork yet. Nobody outside a small preview group has. The demos look impressive, and the architecture makes sense, but the real test is always what happens when it meets your actual data, your actual workflows and your actual team. We are reserving full judgement until we get hands on with it.

What we can say with confidence is that the direction is clear. AI is moving from answering questions to doing work. The organisations that prepare for this, by building AI literacy, getting governance right and treating adoption as an ongoing journey rather than a one-off project, will be the ones that benefit most when these capabilities become widely available.

At IQIT, we help UK organisations get more from their Microsoft 365 and Copilot investment. Whether you need to get adoption off the ground, train your team on the latest features or figure out where AI agents fit into your workflows, we can help. Book a free consultation to talk through where you are and where you want to be.