Make Office Copilot can be configured to use third-party servers and models.

For the 2nd solution (using third-party AI models like Anthropic Claude inside Excel Copilot) you do not install Claude separately. It is a tenant-level Microsoft 365 Copilot feature. The administrator enables the allowed AI providers, and then users can select the model in Excel Copilot.

Enabling Third‑Party AI Models in Excel Copilot

(For Windows 11 Enterprise + Entra ID + Microsoft 365 E5 environments)

Prerequisites

• Enterprise tenant with Microsoft 365 Copilot licenses assigned (not Copilot Pro, not consumer plans).
• Excel on a supported update channel that has the model picker feature (verify rollout via the Microsoft 365 admin center message center or Microsoft 365 roadmap—no fixed availability date is assumed).
• Admin rights to enable third‑party model selection.

 1. Admin Configuration (durable path)

• Sign in to the Microsoft 365 admin center.
• Navigate to Copilot settings. (The exact UI may change; if the left‑nav differs, use the admin center search for “Copilot models” or “AI models”.)
• Locate the section for AI models, Model selection, or Third‑party AI providers.
• Turn on Allow users to choose third‑party models.
• Select the approved models (e.g., Anthropic Claude).

EU/EFTA/UK tenants: Third‑party models are typically disabled by default—you must explicitly opt in.

• Save. Changes can take up to 24 hours to propagate.

 2. End‑User Steps in Excel

1. Open a workbook with an account that has an active Microsoft 365 Copilot license.
2. Open the Copilot pane (Home tab → Copilot button).
3. If the feature is enabled, a model selector dropdown (often labelled “Auto”) appears at the top of the pane.
4. Choose the desired model (e.g., Claude).
5. Prompts submitted while that model is selected will use the chosen model, subject to Microsoft’s service routing and availability.

 3. Data Handling & Compliance

• Microsoft operates the Microsoft 365 Copilot service and applies its enterprise data protection, compliance, and security commitments.
• The specific processing relationship with third‑party model providers is governed by Microsoft’s contractual arrangements.
• Your prompts and accessed data are processed through the Copilot service; you do not manage the endpoint or need a separate contract with the provider.

 4. Security & Governance (required for enterprise rollout)

 a. Conditional Access

Enforce the following to protect Copilot‑surfaced content:

• Require compliant device (Intune‑managed and Microsoft Entra joined or Microsoft Entra hybrid joined).
• Require multifactor authentication (MFA) for all Copilot‑licensed users.
• Block access from unmanaged endpoints (personal devices, unenrolled VMs).
• Review Copilot‑related sign‑in and audit logs in Microsoft Purview.

 b. Permissions & Oversharing Review (the #1 risk)

Copilot can only surface data the user already has permission to access. The exposure is over‑permissioned content, not the AI model itself. Before enabling Copilot, enterprises typically:

• Run SharePoint Advanced Management (SAM) reports to identify overshared sites and content.
• Consider Restricted SharePoint Search as a temporary governance control while permissions and information architecture are being reviewed.
• Use Entra ID Access Reviews to clean up stale group and site memberships.
• Review OneDrive sharing links (remove “Anyone with the link” or overly broad external sharing).
• Audit Teams memberships (private/shared channels with sensitive data).
• Validate sensitivity labels to ensure Copilot respects encryption and access restrictions.

 c. Optional: Microsoft Defender for Cloud Apps

For a mature security posture:

• Monitor Copilot‑related SaaS usage and anomalies.
• Detect unusual access patterns and risky sessions.
• Set activity policies for bulk downloads or high‑sensitivity access.

 d. Optional: Privileged Identity Readiness

For a mature E5 environment, consider:

• Entra Privileged Identity Management (PIM) for just‑in‑time admin access.
• Separate admin accounts for Copilot configuration tasks.
• Least‑privilege administration when assigning roles that manage Copilot settings.

 5. Troubleshooting if the Model Picker is Missing

• Confirm Excel build is on a channel that has the model picker (check message center or roadmap).
• Wait 24 hours after admin enablement, sign out/in, and restart Excel.
• Verify no Purview DLP policies or sensitivity labels inadvertently block the feature.
• Ensure the user holds an active Microsoft 365 Copilot license (not just Office 365 E3/E5).

 6. Important Note on Custom/Self‑Hosted AI Models

If your organisation requires a private, self‑hosted model, a custom LLM endpoint, or an internal AI infrastructure, this is not configured through the Excel Copilot model picker. That scenario requires a custom solution using:

• Copilot Studio (build custom agents using supported connectors, APIs, and AI services such as Azure OpenAI where applicable),
• Azure AI Foundry and custom APIs,
• or Office add‑ins that connect to proprietary AI services.

The model picker is exclusively for Microsoft‑integrated third‑party providers selected in the admin center.

 7. Copilot Readiness Assessment (recommended before rollout)

A mature enterprise rollout often includes this pre‑enablement checklist:

• Identity readiness: All users properly licensed, Entra ID groups defined.
• Device compliance: Intune policies enforced, device state known.
• Information protection: Sensitivity labels applied, auto‑labeling configured.
• SharePoint permissions: Oversharing remediated, SAM insights reviewed.
• External sharing review: No unintended “Anyone” or broad external links.
• DLP policies: Data loss prevention rules tested with Copilot scenarios.
• Audit readiness: Microsoft Purview Audit and compliance monitoring enabled for Copilot‑related activities.

 8. Enterprise Rollout Approach (full governance view)

1. Pilot Group (Entra ID security group)
2. Complete Copilot readiness assessment
3. Assign Microsoft 365 Copilot licenses
4. Enforce Conditional Access (compliant device, MFA)
5. Enable third‑party model in admin center
6. Validate on Current Channel (model picker present)
7. Purview Audit + DLP review + Entra ID Access Reviews
8. (Optional) Microsoft Defender for Cloud Apps monitoring
9. Staged rollout to broader groups

This document answers the correct enterprise question: How do we safely introduce additional AI capabilities into Microsoft 365 without losing control over identity, data access, compliance, and governance? It is now ready for internal publication as an enterprise rollout guide.

This content was created with the support of multiple AI tools and should be independently verified before use.

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