Calculating the ROI: How to Decide if Copilot Pro/M365 Is a Smart Investment for You

Artificial intelligence (AI) has shifted from a future concept to a practical business tool. Among the most discussed innovations is Microsoft 365 Copilot, an AI-powered assistant designed to boost productivity and seamlessly integrated into the M365 suite, including Excel, Outlook, and Teams.

For small and medium-sized businesses (SMBs), adopting such tools is not just about keeping up with the latest technologies; it is about making sure the investment leads to measurable returns. Return on investment (ROI) calculations can help provide a clear picture of whether the potential gains justify the costs.

This guide explains how teams and businesses can assess whether Copilot is a worthwhile investment, using data from the October 2024 Forrester Total Economic Impact (TEI) study. The aim is to help decision-makers understand the benefits, costs, and potential scenarios before deciding on Copilot adoption.

Understanding Return on Investment

ROI is a key financial metric used to assess the profitability of an investment by comparing the net gains or cost savings generated to the total cost incurred. It is expressed as a percentage and calculated using the formula:

ROI = ((Total Benefits–Total Costs) / Total Costs) × 100

For instance, an expenditure of £100 that yields £200 in measurable benefits results in a 100% ROI, showing the investment has doubled its value.

ROI = ((200-100)/100) *100 = 100%

In this case, ROI is driven by three primary factors: revenue enhancement, operational cost reduction, and improved employee retention and productivity.

How Copilot Generates Business Value

The TEI study breaks Copilot’s benefits into three main areas: Go-to-Market Transformation, Operational Transformation, and People and Culture Transformation.

1. Go-to-Market Transformation

This benefit focuses on increasing topline revenue by enabling faster time-to-market, improving customer service, and helping sales teams spend more time providing services rather than preparing materials.

• Potential Revenue Increase: A potential increase of up to 6%.
• Example Use Case: A sales team using Copilot could prepare presentations and proposals much faster, freeing up time for direct client interactions. In the TEI study, interviewees reported that marketing teams were able to accelerate content generation, freeing capacity for higher-value creative work and strategic initiatives that directly influence revenue growth by integrating Microsoft 365 Copilot into their workflows.
• Three-Year Financial Impact: This was projected to be between £122,500 to £542,500.

This is especially relevant for businesses that compete in fast-moving markets or rely heavily on proposal quality and speed.

2. Operational Transformation

This category covers cost savings achieved by reducing external spending and increasing internal efficiency. Copilot can automate meeting summaries, generate first drafts of documents, and process data more quickly.

• Cost Savings Potential: Up to 0.85% of total expenditures.
• Example Use Case: One interviewee noted that Copilot had significantly improved their turnaround times. They explained that in the past, slow delivery had discouraged clients from bringing in new projects. With the ability to complete work more quickly, clients now approach them with more assignments, ranging from small one-hour tasks to large three-month projects, resulting in up to 15% more business. Supply chain management processes were also improved by automating repetitive reporting.
• Three-Year Financial Impact: This yielded a three-year projected total ranging from £473,000 (low) to £656,000 (high).

Operational transformation can produce quick wins for teams managing large volumes of repetitive information or dealing with extensive documentation.

3. People and Culture Transformation

Employee satisfaction, retention, and onboarding speed are often overlooked in ROI calculations, but they have real financial consequences. Copilot can help reduce mundane work, making roles more engaging and improving retention.

• Attrition Reduction Potential: Employee attrition for users of Microsoft 365 Copilot decreased by up to 20%.
• Onboarding Speed Increase: Onboarding of new hires saw an increase of up to 25%.
• Example Use Case: Sixty-six percent of respondents reported expecting a 6% to 15% reduction in new-hire onboarding time due to improved access to information and training. In contrast, 21% anticipated a 16% to 25% reduction.
• Three-Year Financial Impact: The three-year projected total is around £76,000 to £159,400.

A more satisfied workforce often stays longer, reducing the costs of recruiting and training replacements.

Additional Benefits That Are Harder to Quantify

According to the study, some advantages of Copilot are not quantitative but still matter for long-term strategy. They include:

• Improved compliance with industry and government regulations
• Enhanced data security and protection of intellectual property
• Easier collaboration across languages
• Employee upskilling

While these may not appear in the ROI formula, they contribute to overall organisational resilience.

The Costs of Copilot Adoption

Understanding costs is just as crucial as understanding benefits. Implementing the M365 Copilot involves three main cost areas.

1. Licensing Costs

For businesses, Copilot costs £30 per user per month, besides the required Microsoft 365 E3 or E5 license for each user. In the TEI example, the business scaled from 15 users in year one to 72 in year three.

• Three-Year Present Value: £42,000.
• Note: The outcomes observed may not reflect the experience of all organisations, and costs can vary based on several factors. The calculation assumes a 5% risk adjustment.

2. Implementation and Ongoing Management

This includes the time and resources required to set up Copilot, ensure proper data governance, and maintain it over time. Some companies might use professional services for implementation.

Interviewees and survey respondents said that implementing Microsoft 365 Copilot spanned approximately one to nine months. Complexity varies depending on an organisation’s size and systems.

• Three-Year Present Value: £130,000.
• Note: Risk-adjusted by 20% to account for variability in setup needs.

3. Training and Discovery

Employees need both initial training to use Copilot effectively and ongoing time for testing and learning new features. Results may vary across organisations, with costs influenced by factors such as the level of user training provided and the complexity of the business environment, which can affect onboarding and ongoing training needs.

• Variables involved in Calculations:
• 10 hours of initial training per new user.
• 15 hours annually for continued exploration.
• £35 per hour fully burdened rate.
• Three-Year Present Value: £98,000.

How to Calculate ROI for Your Team or Business (5 steps)

Here’s how to calculate ROI step-by-step, with a sample calculation to guide you.

• Step 1: Define Potential Benefits

Start by estimating the benefits most relevant to your operations. If sales speed is critical, focus on go-to-market gains. If operations are complex, emphasise cost savings. Apply realistic numbers based on your revenue, margins, and team structure.

Example: A company with £10 million in revenue and a 10% net margin might see:

• Revenue growth (4%): £80,000
• Operational savings (0.65% cost reduction): £130,000
• Retention/onboarding savings: £30,000

Total estimated annual benefit: £240,000 (Over 3 years, discounted at 10%: £300,000.)

• Step 2: Estimate Costs

Count the expected number of users and calculate license fees. Add estimated implementation and training costs. Use actual salary data to value employee time.

Assume the company incurs the following costs:

• 100 employees.
• 30 Copilot users
• Licenses: £27,000
• Implementation: £40,000
• Training: £31,500

Total estimated three-year cost (present value): £98,500

• Step 3: Apply the Formula

Insert your benefit and cost numbers into the ROI formula. This produces a percentage that shows the return relative to cost.

Using the example:

3-year discounted benefit: £300,000

3-year cost: £98,500

ROI = ((£300,000–£98,500) / £98,500) × 100 ≈ 204.6%

This indicates a strong case for adoption if the estimated benefits are achieved.

• Step 4: Test Multiple Scenarios

Model a low, mid, and high scenario to understand the range of possible outcomes. A cautious approach helps avoid overestimating returns.

• Step 5: Factor in Risks and Strategic Value

ROI numbers do not capture every benefit or risk. Consider how Copilot aligns with your broader strategy, readiness for AI adoption, and competitive positioning.

Making the Decision

Copilot can deliver significant returns for any organisation. However, decisions should be based on your specific situation.

Adoption is more likely to be useful if:

• Copilot can be integrated into workflows that directly impact revenue or reduce significant costs.
• You already hold Microsoft 365 E3 or E5 licenses.
• Teams have the capacity for training and process adaptation.

Reconsider adoption if:

• Expected usage is low, and benefits will be limited.
• Implementation complexity and governance requirements are high.
• The budget cannot support both licensing and necessary training.