Microsoft is expanding AI functionality within Microsoft 365 with Copilot Wave 3. While Copilot was initially primarily an AI assistant for individual tasks, Wave 3 supports broader work processes and automated workflows in Word, Excel, PowerPoint, and Outlook.

This development is part of a broader trend in which AI is increasingly integrated into business software and cloud platforms. At the same time, this raises questions regarding licensing, governance, and cost management. Organizations can therefore benefit from insight into Copilot Wave 3 and the implications for licensing strategy.

What is Microsoft 365 Copilot Wave 3?

Wave 3 introduces agentic AI functionality, enabling users to perform multi-step actions across various Microsoft 365 applications. Copilot Cowork makes it possible to execute long-term workflow tasks while all changes remain transparent, auditable, and adaptable.

Copilot is integrated with Work IQ, which tracks context across files, meetings, chats, and relationships, while respecting permissions and sensitive data labels within Microsoft 365. In Excel, for example, Copilot can model scenarios and analyze trends; in Word, rewrite or summarize documents; and in PowerPoint, edit presentations while preserving organizational templates and styles.

Users can deploy various AI models, including OpenAI GPT and Anthropic Claude. The Work IQ integration is being rolled out in phases via web, Windows, and Mac.

AI agents within Microsoft 365

An important part of Wave 3 is AI agents that can support workflow tasks across multiple applications. They can gather information, prepare reports, and automate actions across multiple Microsoft 365 applications.

To manage these agents, Microsoft is introducing Agent 365, a platform that provides insight into the usage and activities of AI agents. Agent 365 can be used either separately or integrated into Microsoft 365, and offers oversight and governance for the safe and compliant use of AI.

Licenses and Microsoft 365 E7 Frontier Suite

Copilot Wave 3 and Agent 365 have implications for licensing planning. AI functionality is often not included in standard Microsoft 365 licenses, forcing organizations to choose between standalone licenses or bundles.

E7 Frontier Suite details:

  • Start date: May 1, 2026

  • Target price: approximately $99 per user per month for the full suite

  • Includes: Microsoft 365 E5, Copilot Wave 3, Agent 365 (also available separately for ~$15/month), Entra, Defender, Intune, and Purview

The bundle simplifies AI adoption, reduces integration complexity, and centralizes governance. Organizations can choose individual components or the complete bundle, depending on the number of users and desired functionality.

Governance and cost control

With the growing role of AI, the importance of license management and governance is also increasing. Organizations must have insight into who uses AI tools, how workflows run, and how licenses are deployed.

By mapping regular usage — both cloud and on-premises licenses — reduction and optimization opportunities can be identified, licensing costs controlled, and licensing conditions met.

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Microsoft 365 Copilot Wave 3 and AI agents offer new capabilities for workflow support and automation. At the same time, they bring licensing and governance challenges. Organizations would do well to evaluate now how AI functionality fits within their IT strategy and licensing environment.

BeSharp Experts as advisor

BeSharp Experts is an independent advisor in the field of software licenses and IT contracts. We support organizations with:

    • licensing advice and procurement strategy for Microsoft solutions
    • support with negotiations on prices and terms

Contact BeSharp Experts for advice on your software licenses and how to negotiate the best price and terms.