Microsoft’s Copilot promises significant productivity and resource-saving benefits for your organisation, as well as better decision-making from more insightful data analytics and better team collaboration. However, you need to make sure that integrating Copilot into your existing processes and workflows, actually makes sense from an economic point of view.
Calculating the ROI of Copilot helps you learn the benefits it can potentially introduce to your business. This guide aims to explain how to make the most out of it, in your business.
Understanding ROI and Its Importance
Before we get into how Copilot benefits are calculated, let’s first make sure that you’re aware of the concept of return on investment.
Defining ROI
Return on Investment (ROI) is a metric that businesses use to assess the feasibility of a potential investment or solution. In its simplest form, ROI is calculated as the net profit of the investment divided by its cost in the form of a percentage.
Calculating ROI helps your business make key decisions when it comes to directing your business’s financial resources to the most impactful investments.
Specifics of AI ROI
While we know what ROI is and how to calculate it, can you use its general calculation to calculate the ROI of a sophisticated AI solution like Microsoft Copilot? The answer is yes! However, calculating the cost of Copilot and quantifying its benefits isn’t very straightforward.
For instance, Copilot has many benefits other than direct cost savings, like improved efficiency, data-based decision-making, and more satisfied customers. Such benefits may not be easily quantified.
Key Factors Influencing Copilot ROI
Cost Factors
Initial Investment
The license fees of Microsoft Copilot are $582.00 per user, per annum paid upfront, which equates to $48.50 per user per month. However, the total cost involves more than a single license fee.
At the time of Copilot’s initial release, users needed active Microsoft 365 licenses, either E3 or E5, which costs $57.70 and $88.60 per user, per month, respectively. However, Copilot for Microsoft 365 may currently be added to the following licenses: Microsoft 365 E3, E5, F1, F3, Office 365 E1, E3, E5, Microsoft 365 Business Basic, Business Standard or Business Premium. The costs for these licenses that you may have in use must be factored into your overall Copilot ROI’s. Additionally, a Copilot for Microsoft 365 license requires an annual commitment.
At present, Copilot is only available via an annual prepaid subscription which can be a major upfront cost for your business if you have more than just a few employees. But here’s the good news: Microsoft gives you the option to choose the exact number of licenses you need. So, for example, if there are 20 people in your organisation, but only 7 of them will need to use Copilot, you can pay for exactly 7 licenses.
The advantage of this pricing model isn’t just limited to its cost efficiency and scalability; it also presents a great opportunity for you to create a pilot test for your Copilot deployment with, maybe, 10% of your workforce before full deployment. This can also help you calculate the ROI with practical, real-time data from your pilot program.
Training Costs
You also have to consider the training costs of Copilot. Since generative AI is a relatively new technology, most of your employees aren’t likely familiar enough with it. You’ll need to identify your team’s skills gaps and create tailored training programs to improve their AI proficiency and accelerate Copilot onboarding and deployment.
Ongoing Overheads
Ongoing costs include the cost of maintaining Microsoft Copilot and M365 subscriptions, as well as the costs of any additional training programs that your team may need in the future.
Benefit Factors
- Time Savings: Reduction in time spent on tasks thanks to automation. Based on early user data from Microsoft, 71% said that Copilot helped save time on redundant tasks and 64% spent less time checking and replying to emails. On average, people save at least 14 minutes each day with Copilot, while 22% said they saved more than 30 minutes a day.
- Improved efficiency: Enhanced efficiency in completing tasks. According to Microsoft, 70% of Copilot users said they were more productive, and 73% said they get tasks done faster.
- Direct Savings: Direct cost savings from lower labour costs and improved operational efficiencies.
- Better decision-making: Higher quality outputs lead to better decision-making and business outcomes.
- Sparking creativity: 57% of Copilot users said it made them more creative with things like initial drafts in Word.
How to Approach Calculating Copilot ROI
Identify Your Goals
Start by understanding your business and what you’re planning to achieve with Copilot. Without clear goals, you won’t be able to properly evaluate the effectiveness of Copilot.
Collect Data
Collect data from your organisation’s historical costs, such as employee salaries, performance metrics, KPIs and overhead costs. You also need to identify the areas where AI could potentially create the highest impact in alignment with your goals.
For example, if your objective is to save your employees time, you can calculate how much time Copilot can potentially help you save.
Calculate Costs
Calculate the total cost of ownership of MS Copilot, which includes license fees, training costs, and other ongoing costs.
Estimate Benefits
As mentioned earlier, the benefits of Copilot can be challenging to calculate accurately. However, you can make rough estimates of the productivity gains and quantify them based on employees’ salaries.
Calculating and Interpreting ROI for Copilot
Basic ROI Formula
ROI= (Net Benefit/Total Cost) × 100
Detailed Calculation Example
Let’s consider a company with the following data:
- Avg. employee salary: $75,000
- # of sales/support employees: 15
- # of people leaders/ops: 4
- # of power users/collaborators: 6
- # of executives: 9
- Copilot cost: $48.50/month per user (via an annual subscription of $582.00 per user)
Assume Copilot reduces average handling time by 12%, saving 2304 hours annually. With an average salary cost of $75,000, the hourly rate (including overhead) is about $32.55.
Total Annual Savings: 2304 hours×$32.55/hour=$74,995/year
Total Annual Cost of Copilot: $48.50/month×34 employees×12=$19,788/year
Net Benefit: $74,995/year-$19,788/year=$55,207/year
ROI Calculation: ROI = (55,207 / 19,788) × 100 ≈ 279%
An ROI of 279% is considered high. Of course, you may need to redo the calculations with more refined estimates of the costs and benefits. This will give you the most realistic evaluation of the worthiness of investing in Microsoft Copilot.
Additionally, whether you’ve decided to fully deploy Copilot or run a pilot test, make sure that you continuously review and update your ROI calculations to ensure accurate results.
Maximising Your AI Investment with Copilot
To make the most out of Copilot, you need to deploy it in areas that could benefit the most from its capabilities.
Conduct team meetings to learn about your employees’ workflows and habits. Ask them about the tasks that take up the longest time in their workday and see if any of these tasks can be partially or fully automated with Copilot and whether that could impact the results positively or negatively.
Optimising Usage
If your employees are clueless about how to use AI, they won’t be able to harness its capabilities. Ensure that all your employees are adequately trained and continuously encourage best practices to maximise the benefits from Copilot.
Continuous Improvement
Regularly review and update your usage of Copilot to adapt to new features and improvements. Collecting feedback from users can also help you identify areas of improvement.
Case Studies
In order to bring this topic to life, we have developed two Case Studies that illustrate different aspects of deploying Copilot.
The data that each is based on, was collected and published by Microsoft for their Work Trends Index Special Report.
Case Study 1: Boosting Efficiency with MS Copilot
Overview
This study simulates a typical workday for a knowledge worker. It compares using Copilot versus more traditional workflows.
Objective
Evaluate the ROI and productivity benefits of Copilot.
Methodology
147 participants were split into two groups: one using Copilot and one without. They performed three tasks:
- Search for information
- Summarise a meeting call
- Write a web article
Results
- Speed: Copilot users were 29% faster across all tasks, finishing the tasks in them in 29 minutes and 42 seconds compared to 42 minutes and 6 seconds without Copilot.
- Writing Task: A first draft took just 8 minutes and 12 seconds with Copilot, compared to 13 minutes and 48 seconds without.
- Quality and Accuracy: There was no measurable difference in accuracy or quality between the two groups. A panel using a Large Language Model (LLM) confirmed that the quality of the two pieces of content was similar.
Conclusion
MS Copilot drastically improved productivity, offering massive time savings without compromising on quality while also providing a positive ROI for the business.
Case Study 2: Enhancing Search Efficiency with MS Copilot
Overview
This study evaluates the efficiency of MS Copilot in managing information retrieval tasks typical in a procurement department.
Objective
Assess the impact of Copilot on searching jobs.
Methodology
163 participants were divided into two groups: 80 using MS Copilot and 83 without. Each group simulated joining a procurement department, carrying out these jobs:
- Find information about the organisation’s procurement policies
- Check their managers’ requests from emails
- Check the timing of two upcoming meetings from the calendar
Results
- Speed: Copilot users finished their jobs 27% more efficiently, requiring only 17 minutes and 54 seconds compared to 24 minutes and 18 seconds without Copilot.
- Accuracy: There was no difference in accuracy between the two groups.
Conclusion
MS Copilot notably reduced the time required to search for information, boosting efficiency without affecting accuracy.
Final Words
Investing in new technologies like Copilot AI can give your company a competitive edge and yield positive returns, but only if you manage to deploy it successfully.
Calculating the ROI will help you optimise your Copilot workflows and make adjustments that help you maximise the returns.
Is your company ready for Copilot?
Understanding your organisation’s readiness to adopt Copilot is a crucial step in the implementation process. CodeBlue has developed a personalised Copilot Readiness Assessment calculator to provide you with an independent viewpoint on your readiness and to highlight areas of focus.
The Readiness Assessment is available to members of the CodeBlue Copilot Readiness community, which you can join for free here: https://codeblue.co.nz/codeblue-copilot-readiness-community/
