Connecting business software to Copilot: What’s new since October 2026

The short answer

• Many well-known programs already have a ready-made connector in the admin center’s connector gallery. Since October 27, 2026, admins can also create their own there, as long as the program has an MCP server.
• Without one, a custom MCP server has to sit between Copilot and the program’s API.
• Copilot queries the program live over MCP, and the data stays there instead of being copied into Microsoft 365. Microsoft calls these federated connectors.
• Copilot only sees what the signed-in person is allowed to see in the program, and it asks before changing anything there.
• Everyone who uses such a connector needs a Microsoft 365 Copilot license. Copilot Chat without that license isn’t enough.

Copilot queries live over MCP and copies nothing

MCP, the Model Context Protocol, is an open standard that lets AI assistants ask other programs for information. On the program’s side, an MCP server answers the questions and defines the available tools, such as “find customer,” “get order,” or “comment on ticket.” Copilot picks the right tool for each question on its own: for an open order, that’s “get order.”

In Microsoft’s terms, federated means the connector queries live on every request and stores nothing. The older synced connectors copy content into the Microsoft 365 search index instead. Live queries suit data that changes constantly, such as inventory levels or ticket status, and data that should stay in the source system.

Custom connectors work with any MCP server that has a reachable address, and admins can roll them out to the whole company. Ready-made and custom connectors both work in Copilot chat, in agents, in Cowork, in Copilot in Word, Excel, PowerPoint, and Outlook, and in Researcher, where they’re read-only.

Which route fits? Three questions

Ideally, go through this once for each important program.

Checklist · Question 1 of 3

Does everyone who should use the program’s data in Copilot have a Microsoft 365 Copilot license?

The new connectors only work with the paid Copilot license, not with free Copilot Chat, a Copilot Studio license on its own, or pay-as-you-go billing. The app is now just called Microsoft Copilot; the license is still Microsoft 365 Copilot.

Checklist · Question 2 of 3

Is the program already in Microsoft’s connector gallery?

The gallery is in the Microsoft 365 admin center under Copilot › Connectors. It lists ready-made connectors from Microsoft and from vendors, for example for HubSpot, Asana, monday.com, Notion, or DATEV (via Klardaten).

Checklist · Question 3 of 3

What does the software vendor offer?

An MCP server is an access point built for AI assistants. An API is an access point for other software, for example to sync with accounting. The documentation usually says which one exists; otherwise, the vendor knows.

Check the gallery first

A ready-made connector is the shortest route. The gallery is in the admin center under Copilot › Connectors, and Microsoft currently lists just under 180 ready-made federated connectors there, including HubSpot, Asana, monday.com, Notion, Airtable, Box, Xero, and Zoho Books. From German-speaking countries, there are awork, DeepL, and a DATEV connector from Klardaten GmbH, among others. That one connects DATEV data through the DATEVconnect interface and is aimed mainly at tax firms.

The connectors come from Microsoft or from vendors whose submissions Microsoft has reviewed. A setting under Agents › Settings › Agent and plugin access controls which ones employees may use. It distinguishes three groups: built by Microsoft, built by your own organization, and built by external publishers.

Allowing a group covers the future too: connectors added to it later become available to everyone automatically. For external publishers, I’d leave the group off and turn on each connector individually after a review. Who can use agents and connectors at all is set separately under “User access,” which defaults to “All users.”

Data protection belongs in that review. According to Microsoft, whatever an external publisher’s connector processes isn’t covered by the agreements with Microsoft. The publisher’s terms apply, and someone should read them before turning the connector on.

A custom connector: What the admin center needs

If the vendor has an MCP server but no gallery listing, an admin can set up the connector in-house. That takes:

• the MCP server’s address (HTTPS), through which Copilot reaches it,
• the Global Administrator or AI Administrator role, plus a suitable Entra role for sign-in through Microsoft Entra,
• access to the Teams Developer Portal, where the sign-in is registered,
• the provider’s name and links to the server’s documentation, privacy policy, and terms of use.

There are three sign-in options. With Microsoft Entra, employees sign in with their Microsoft 365 account; that only works if the MCP server or the API behind it uses Entra for sign-in. With OAuth 2.0, they sign in through another identity provider, such as their account for the program. The third option needs no sign-in at all: Copilot queries with the same access for everyone, and individual permissions no longer matter. That’s hardly suitable for company data.

The connector is created under Copilot › Connectors › Gallery with the “Create a new connector” tile and the “Connect to MCP server” option: enter a display name, the address, and the registration ID from the Developer Portal, then save. An admin can then turn it on for a test group first and for everyone later; changes take up to ten minutes. Each person connects with their own account in Copilot under Settings › Sources.

If the connector doesn’t show up for someone, Microsoft lists these causes in order: the group isn’t allowed, the connector is off, the person isn’t covered by “User access” or the test group, they have no Copilot license, the change hasn’t propagated yet, or they haven’t signed in under Sources.

No MCP server means building one

A business application often has no MCP server but does have an API, which it already uses to exchange data with other software. A custom MCP server then translates between Copilot and that API. It also defines what Copilot can do at all, for example read open orders and delivery times but not change prices. I’d start with a few clearly described tools, read-only at first.

Copilot calls the server from the Microsoft cloud, so its HTTPS address has to be reachable from the internet. If the program runs on premises, the MCP server sits where it can reach the program and exposes only the defined tools to the outside. For Copilot to respect each person’s permissions, the server has to pass the sign-in through to the program or check permissions itself.

Without an API, the only options left are read-only access to the database or regular exports, and whether that’s allowed is up to the vendor.

Because MCP is an open standard, the same server also works with Copilot Studio agents and with other assistants such as ChatGPT or Claude. The Connecting software page shows how Katio Tech builds and runs such servers.

For DATEV, the article Connecting DATEV to Copilot, ChatGPT, or Claude shows what that looks like; 3CX brings its own server with Update 10 (Setting up the 3CX MCP server).

Reading happens right away, changes need confirmation

Copilot uses read tools without asking. Tools that create, change, or delete something need the person’s approval. Before Copilot comments on a ticket, for example, it shows a card with the details it wants to send to the program, and nothing goes out until the person responds. The options are “Allow once,” “Allow for conversation,” “Always allow,” and “Cancel.” Approval always applies to a single tool, not to the whole connector, and if the publisher changes a tool or adds a new one, Copilot asks again.

In the admin center, control is coarser. Turning on a connector also turns on its write tools; there’s no separate switch for them. For now, only Copilot itself shows which tools a connector brings, under Settings › Sources; Microsoft has only announced an overview in the admin center. Admins can trace what happens through the connectors in Microsoft Purview.

For a connector that should only read, the safest choice is an MCP server that offers no write tools at all. A custom server can be specified exactly that way.

Everyone needs a Copilot license

Federated connectors only work with a Microsoft 365 Copilot license, for every person who uses them. According to Microsoft:

Since August, the app has simply been called Microsoft Copilot; the license is still Microsoft 365 Copilot. From December 1, 2026, Microsoft also sells the license without a Microsoft 365 base subscription, at the same price. According to Microsoft, this doesn’t change what Copilot can do.

Without a Copilot license for everyone, the alternative is Copilot Studio. There, an MCP server can be added as a tool to a custom agent that employees use, for example in Teams. Billing is then based on usage in Copilot Credits; for people with a Copilot license, there’s no extra charge.

What to do now

• Check the gallery to see whether the most important programs are already listed.
• Under Agents › Settings › Agent and plugin access, decide whether connectors from external publishers become available to everyone automatically.
• For programs without a listing, ask the vendor whether there’s an MCP server or an API.
• Start with a test group and read-only tools.
• Check who has a Copilot license, and work out the Copilot Studio route for everyone else.

The next time a customer asks where their order is, Copilot can read the email and look up the order, and the answer takes one step.