Exercise 2, Task 1: Use Microsoft 365 Copilot Chat to evaluate vendor contracts

Fabrikam’s Finance Manager shared two vendor contracts with you, one from Adatum Corporation and another from Contoso, Ltd. Each contract contains clauses related to pricing, delivery schedules, warranty terms, and penalties for nonperformance. You need to understand how these contracts differ and which poses greater financial or operational risk to Fabrikam. You plan to use Microsoft 365 Copilot Chat to compare both contracts side by side and identify key differences, highlight risk areas, and summarize potential negotiation points, all of which you plan to store in a Word document for later use.

Using Copilot Chat

In Copilot Chat on the web, the response mode selector lets you control how much time and reasoning Copilot uses when answering your prompt. You can leave it set to Auto (the default option) so Copilot balances speed and depth for you, or choose a faster or more in depth response style depending on the task.

When Copilot Chat opens in Work mode, the response mode selector isn’t shown. In Work mode, Copilot is optimized for secure, work context queries, so it automatically manages response depth for you. When you switch to Web mode, the response mode selector appears, allowing you to choose between faster responses or deeper reasoning. Once the selector is enabled, it remains visible as you switch between Work and Web modes.

If you’ve used Copilot in Excel, you know that it also includes a response control selector. However, its options are different from the Chat selector. In Copilot Chat, the selector controls how deeply Copilot reasons about your request. In Excel, the selector controls which AI model performs the work. Although these selectors might look similar, they control different aspects of Copilot and aren’t the same setting.

This task uses the default Auto selector mode.

Perform the following steps to complete this task:

1. Select the following links to download the two vendor contracts and then store the files in your OneDrive account for use by Copilot in your tenant:
   • Adatum Corp smart sensor contract.docx
   • Contoso Ltd smart sensor contract.docx

2. In your Microsoft Edge browser, sign in to the Microsoft 365 home page (https://www.microsoft365.com) if necessary.

3. Select the Work option, which is used for searching and analyzing internal organizational content (OneDrive, SharePoint, Teams, Outlook). In the prompt field, attach each of the vendor contracts that you downloaded in step 1.

4. Ask Copilot to compare the two contracts by submitting the following prompt:

[!NOTE] For this first prompt, we’ve provided the text so you can see what an effective prompt looks like when it incorporates the four key elements discussed in the Introduction unit. You must write all remaining prompts in this exercise, but in doing so, you can use this prompt as a model to emulate._

I’m a Financial Analyst at Fabrikam, Inc., evaluating two vendor contracts as part of a Cost Optimization and Risk Reduction initiative. The contracts are for components supporting our new smart sensor product line. Can you please compare the contracts from Adatum Corporation and Contoso, Ltd. to identify key differences that could affect Fabrikam’s costs, supplier risk, and long-term financial performance. Use the two attached vendor contracts as reference materials. Focus on clauses related to pricing, delivery timelines, warranties, and liability or penalty terms. Provide a clear, bulleted summary that highlights major differences between the two contracts, identifies which contract poses higher financial and operational risk to Fabrikam, and suggests two or three negotiation points Fabrikam could raise to improve terms.

1. Review the comparison generated by Copilot. At the end of the response, select the Edit in Pages icon.

2. When editing in Pages, note how Copilot displays the Copilot chat pane along with the Pages form. In the Pages form, select the Create button and then select Document in the drop-down menu. In the dialog box that appears, select Open Word, which opens the document in Word for the web.

3. In Word for the web, Copilot copies its entire response into a document, including the extraneous chat content that appeared at the beginning and end of the chat. Delete any extraneous text that was pasted in as well.Select into the file name that appears above the menu bar and change the file name to Smart Sensor contract comparison. Leave the document open as you plan to add additional information to it in the remaining steps.

4. In the Word document, select the Copilot option on the Home tab ribbon. Verify the Edit with Copilot icon appears in the prompt field next to the plus (+) sign. If you don’t see it, select the plus sign and then select Edit with Copilot in the drop-down menu. The icon should now appear in the prompt field.

5. You now want to ask Copilot to add an Executive Summary section to the document that compares the two contracts. However, before doing so, you must place your cursor in the document where you want the new section to appear. You want this Executive Summary to appear at the start of the document, so insert a blank line above the first section and place your cursor in this line.

6. Now ask Copilot to add an Executive Summary section to the document that provides a summarized analysis of the two vendor contracts. The section should indicate which contract has more favorable terms for Fabrikam, and why. The section should also indicate where Fabrikam should focus its negotiation efforts.

7. Review the section that Copilot added to the document. While this is a good starting point, you feel that it can be improved. When financial analysts review supplier contracts in the real world, there are numerous areas they may consider including in their analysis. Typical areas include:

   • Termination and exit clauses. Companies typically focus on notice periods and conditions for early termination, penalties or costs associated with contract termination, and how outstanding obligations such as inventory and payments are handled upon termination.

   • Volume flexibility and scalability. Contracts commonly include provisions for increasing or decreasing order volumes without penalty, how price breaks or discounts scale with higher volumes, and whether there’s an option to adjust minimum order quantities as demand changes.

   • Change management and amendments. Analysts usually want to know how contract amendments or changes to specifications are handled, and whether there’s a formal process for managing changes in technology or regulatory requirements.

   • Supplier performance and monitoring. Companies usually push to define key performance indicators (KPIs) or service level agreements (SLAs) within supplier contracts, what the remedies are if the supplier consistently underperforms, and whether there’s a process for regular performance reviews or audits.

   • Compliance and regulatory requirements. Analysts usually want to know if a contract requires compliance with specific industry standards or regulation, and whether there are audit rights for them to verify compliance.

   • Dispute resolution. Companies usually want contracts to identify what mechanisms are in place for resolving disputes; for example, arbitration, mediation, or jurisdiction.

   • Financial health and stability of the supplier. Depending on the supplier, a company might want the contract to include clauses requiring the supplier to maintain certain financial ratios or insurance levels, and identify what happens if the supplier is acquired or undergoes significant financial distress.

   Instead of asking Copilot to compare the contracts across several areas at once, select just one of these areas that’s of interest to you. You want Copilot to add a section that analyzes your selected topic. Before you make your request, place your cursor in the document where you want the new section to appear. Then ask Copilot to add a new section to the document that compares the contracts specifically on that point. Focusing on a single aspect can often yield more thorough and precise results than overloading Copilot with multiple requests in a single prompt.

8. Review the new section that Copilot just added to the document. You now want Copilot to add another section that analyzes a second topic. Before you make your request, place your cursor in the document where you want the new section to appear. Ask Copilot to add another section to the document that compares the contracts for this second topic that’s of interest to you.

9. Review the new section that Copilot just added to the document. You plan to create a PowerPoint presentation based on this document in the next task, so feel free to add any extra enhancements that you want. For example, if time permits, you can add a section that compares another topic from the earlier list. Or, you can review Copilot’s suggested prompts at the end of the Copilot pane and submit any requests that are of interest to you.