AI WORLD HQ
A new starter joins on Monday and needs the refund policy by lunch. Instead of pinging three people and digging through shared drives, they type one question into Copilot and get a sourced answer in seconds. That is what a working AI knowledge base looks like. Here is how to build one without writing code.
Before you start
You need four things in place before Step 1:
- A Microsoft 365 Business subscription (Basic, Standard or Premium). Personal Microsoft accounts do not support this setup.
- A Microsoft 365 Copilot license for each user — a paid add-on, around $30 USD per user per month (about $45) as of 2026. Confirm the current price on Microsoft's pricing page, as it can shift.
- Admin access to the Microsoft 365 admin center, or an IT person who can help with the setup step below.
- Your files already saved in SharePoint Online, not just sitting on personal OneDrives or local laptops.
You will also need a modern browser (Edge or Chrome) and a Teams or Outlook account so you can talk to Copilot at the end.
Step 1 — Move your documents into a SharePoint document library
Open your team's SharePoint site in the browser and pick (or create) the document library where your work files should live. Click the "New" button at the top of the library, then "File upload" or "Folder upload" to drag in your existing PDFs, Word documents, Excel sheets and PowerPoint decks.
You will see your uploaded files appear in the library list with thumbnails and the date they were added. You'll know it worked when the files show up in the library view and you can click one to open it in the browser.
💬 Tip: name your folders by topic, not by date — "Client Onboarding" beats "2024 Stuff".
Step 2 — Check the file formats Copilot can actually read
Copilot works best with Word (.docx), Excel (.xlsx), PowerPoint (.pptx), PDF and plain text files that already contain selectable text. Scanned PDFs that look like photos will not be searchable until you run them through OCR (text recognition — software that reads the image and turns it back into editable text).
Open a few of your key documents and try to highlight the text inside. If you can copy and paste words from the PDF, it is ready. If you cannot, it needs OCR first.
You'll know it worked when you can select and copy text out of every important document without it coming out as garbage characters.
Step 3 — Review who can see what
Copilot only shows people documents they already have permission to open. If a folder is wide open to the whole company, Copilot will happily share that information with anyone who asks. This is the most important step to get right.
In your document library, click the "Settings" icon (the gear) at the top right, then look for "Library settings" or "Permissions". Review which groups have access. For sensitive folders — payroll, client contracts, HR — restrict access to just the people who need it.
You'll know it worked when a test user from outside the right group gets an "Access denied" message when they try to open the folder.
💬 Tip: ask your IT admin to create security groups like "Marketing Team" and "Finance Team" so you can assign folder access by team, not by individual name.
Step 4 — Switch on Copilot in the admin center
This is where your IT admin comes in. They need to log into the Microsoft 365 admin center and assign the Copilot license to each user who should have it. The exact menu path can shift as Microsoft updates the interface, but it generally sits under Billing or Licenses. Search for "Microsoft 365 Copilot" and assign licenses to the right people.
After a few minutes, those users will see a Copilot icon appear in Word, Excel, PowerPoint, Outlook and Teams. It can take up to 24 hours for licenses to fully activate across the system.
You'll know it worked when a licensed user opens Word and sees the Copilot panel on the right-hand side of the screen.
Step 5 — Ask Copilot your first real question
Open Copilot from the side panel in Teams, or in Word, and type a question the way you would ask a colleague: "What does our refund policy say about digital products?" or "Summarize last quarter's sales report from the Marketing library."
Copilot will search your permitted SharePoint files and return a written answer with citations — clickable links back to the exact document and section it used. If the answer is wrong, the right file is usually missing, badly named, or in a folder you cannot access.
You'll know it worked when you get a confident, sourced answer (not a "I cannot find that" response) and clicking the citation opens the right document.
💬 Example prompt to copy: "Based on the policy documents in our HR library, summarize the parental leave entitlements for full-time staff."
Step 6 — Tidy up based on what you learn
After a week of use, ask your team which questions Copilot answered well and which it fumbled. The fumbled ones usually point to missing files, confusing file names, or permissions that block the AI.
Spend 30 minutes renaming the worst offenders, moving strays into the right libraries, and tightening permissions on sensitive folders. This small cleanup is what separates a Copilot setup your team trusts from one they quietly stop using.
You'll know it worked when your team starts using Copilot unprompted for everyday questions instead of emailing you for documents.
Common mistakes
- Mistake: Assuming Copilot can read scanned PDFs. Fix: Run them through OCR first using OneDrive's built-in OCR, Adobe Acrobat, or your scanner's "searchable PDF" option.
- Mistake: Leaving sensitive folders open to everyone in SharePoint. Fix: Use SharePoint's permission settings to restrict access by group, and audit access before turning Copilot on.
- Mistake: Uploading files with names like "Document1 FINAL v3 (2).docx". Fix: Rename files with descriptive, searchable names like "Client-Acme-Proposal-2026.docx" so Copilot and your team can both find them.
- Mistake: Expecting Copilot to invent answers when the document is missing. Fix: If Copilot says it cannot find something, the file is probably not in SharePoint yet — check OneDrive and local drives for strays.