Return on investment for Copilot? Microsoft has work to do

Jared Spataro, boss of modern work and biz apps division, says 'hard to make the ROI argument for it'

A Microsoft exec claims Copilot is boosting productivity among the customers that adopted it yet sustained efforts to convince many them of the returns on investment remains a work in progress.

Jared Spataro, corporate veep of the Modern Work and Business Applications division at Microsoft, made the admission at the recent Goldman Sachs Communacopia + Technology Conference.

Asked about the productivity benefits by Kasthuri Rangan in the research division at the investment bank, the Microsoft exec said:

“For the most part, we feel pretty great about what we can do. We think, in many tasks, we can improve efficiency by 20 to 30 percent. And if you do control and treatment type group experiments, you can show that.

“The most difficult thing about that is it's tough to drive ROI on saying Kash is 30 percent more productive… unless he's a salesperson and carries a quota, quite frankly, because a lot of knowledge work doesn't translate directly into top line, bottom line. It's a team that has to work.

“So we continue to do that work. We feel good about it, but it is hard to make the ROI argument for it.”

This is hardly the glowing endorsement expected from many of the customers that Microsoft says are using Copilot: Spataro reiterated a data point his employer released a few quarters ago that “70 percent of the Fortune 500 are using Copilot in a pretty extensive way.”

And it’s growing in terms of seats and the volume of customers “coming back to add seats in a big, significant way," he added.

Persuading enterprise customers to wrap their arms around Copilot is something Spataro discussed 18 months ago when he said Microsoft was trying to build a business case to justify the “substantial price tag” of $30 per seat to use Copilot.

Despite failing to advance this in a meaningful way for many customers since March last year, the fear of missing out on AI - the next big thing pitched by the tech industry - is outweighing any other consideration.

“Over the last 6 months, I've seen a marked change in most enterprises," he said.

"Whereas 6 months ago, they were like, well, maybe we'll do something where we provide kind of some sort of assistant at work for everyone, most companies at this point have decided they're going to do that and that they're just trying to decide who will I go with or what will my estate look like. And that's a big change because once you start to lay down that baseline layer, I think it improves the literacy, helps people to find other ways to use the technology.”

He claimed Copilot is “still is our fastest growing M365 portfolio product that we've ever had”, outpacing Teams during the pandemic. Spataro didn't provide the total number of Copilot seats or penetration of the estimated 430 million total seat market.

“It's just early innings. It takes a while. This is a business where we've been trying to say we feel like we've got a great position, but we've got to land. We've got to expand. We've got to help people change the way they work. There's some transformation required.”

Microsoft is betting hundreds of billions of dollars on Copilot and if the technology fails then senior executive heads will roll, and building trust with customers after what would be a monumental failure would take years.

Not everyone is convinced of the productivity benefits, let alone the return on investment, as a trial with the Department of Trade and Business found recently.

Nevertheless, Microsoft is trying to enlist the support of its 13,000 global resellers to convince customers of the benefits. If the channel succeeds, then never will so few - in Microsoft’s Suite - owe so much to so many. ®