By Rik Hoffelder, Microsoft Solutions Architect, Paragon Micro
As we look ahead to 2026, one thing is clear: Microsoft is entering a new phase. One defined by AI at the center of the employee experience, tighter security across every layer of the stack, and meaningful shifts in how organizations license and manage Microsoft technologies.
For IT leaders, this moment represents a strategic inflection point that will influence productivity, cost structures, security posture, and long-term modernization plans.
Below is a breakdown of the most important changes coming in 2026 and what organizations should do now to prepare.
AI Enhancements in Microsoft 365
In the coming year, we see Microsoft focusing heavily on AI and security. This has been a staple since the release of Copilot, but it is picking up steam. In 2026 Microsoft is enhancing Copilot Chat with the addition of Work IQ, Agent Access in Office applications, and Agent 365, a new control plane to manage and secure a variety of agents, not just Copilot.
Security Updates Across Base Licenses
Security is top of mind for all of us. In 2026 Microsoft is bringing several security features to their base license products of Microsoft 365 Business, Office 365 and Microsoft 365 Enterprise plan. This includes URL security to email in Business Basic and Standard plans, the addition of Defender for Office 365 P1 to Office 365 E5 and Microsoft 365 E3 plans. There are also several additions with Intune to the Microsoft 365 E3 and E5 plans, with E5 gaining the features that were available through the Intune Suite addon.
Unified Security Management
The Microsoft Security Copilot agent will be added to the Microsoft 365 E5 plan. Microsoft is also adding Sentinel SIEM into the Defender portal to bring your security monitoring under a single portal view. Additionally, the Microsoft Defender Threat Intelligence portal is moving into Defender and Sentinel again to being this under a single portal view, making it easier for admin to identify and track threats in their environment.
Cost Considerations
Naturally, the new features will come with an increased cost. However, when you consider the cost of purchasing separate Microsoft addon licenses or the use of third-party services, the cost becomes moot. Consider that the increases range from $1 to $3 per user per month depending on the plan; it can actually lower you overall per employee license cost because you eliminate the expenses of addons or third-party solutions. I refer our readers to this article to gain a full understanding of the changes coming in 2026.
Dynamics 365 and Business Intelligence AI
Let us not forget about Dynamics 365 and Business Intelligence. In April of 2025 Microsoft expanded Power BI Copilot to all Fabric SKUs bringing AI to Business Intelligence. They added Copilots for Sales and Supply Chain to Dynamics 365. In the next waves, Copilot will be coming to Dynamics 365 Finance and Customer Service. Business Central is also getting a major upgrade to AI with AIERP.
Beyond Copilot: Azure AI Foundry
Keep in mind the Microsoft platform offers more than just Copilot. The Azure AI Foundry offers over 12,000 language models that can make use of Azure infrastructure operating under GPU as a Service in their datacenters. While Copilot is Microsoft, they offer the ability to use other models across their platforms, Microsoft 365 and Azure.
Datacenter Presence and VMware Pricing
Microsoft is still ever present in the datacenter with Windows Server providing a platform for a variety of applications and services including Active Directory and SQL Server. However, with changes to VMware pricing we are seeing and expect to see a continued shift away from this platform. Some organizations are adopting Hyper-V as their hypervisor of choice with others looking toward Azure Local for the Azure experience in their datacenters. Some are looking at other third-party solutions. The bottom line is that VMware is pricing itself out of most markets, and Microsoft has solutions to replace it.
Windows Server 2016 End of Support
2026 is also a year to plan for the replacement of any remaining Windows 2016 servers. Windows 2016 is set to reach end of support on January 12, 2027. The time to plan for the replacement is now. While we anticipate that Microsoft will make Extended Security Updates for Windows 2016 available, the best path is to upgrade to the latest version for security improvements and long-term supportability.
Online Services Pricing Consistency Update
On November 1, 2025, Microsoft announced its Online Services Pricing Consistency Update. This will have an effect on customers with Enterprise Agreements (EA) and Microsoft Products and Service Agreements (MPSA). The bottom line here is that there will no longer be discounted pricing based on volume for Microsoft subscription plans. This affects both seat-based (Microsoft 365, Power Platform, Dynamics, etc.) and Azure subscriptions. Microsoft is shifting this to the Cloud Service Provider (CSP) model with many plans offering monthly, annual, or triennial (limited) commitments. We recommend reaching out to your provider or consider Paragon Micro as your CSP and plan for this change sooner than later.
Looking Ahead with Paragon Micro
2026 will be a year of change in both licensing and the future state of AI. Paragon Micro is ready to help with your questions, license needs, and implementation services to cover a wide variety of Microsoft solutions. Request a Microsoft strategy session.