You started using Copilot and your organization is interested in agent solutions to address purpose built agent solutions to help with organizational data for specific use cases. Ever been confused on which agent model to use, or which connector would be the best for your scenario ?
This is where intentional architecture matters.
Microsoft offers a wide variety of tools and choices, which can feel overwhelming at first, but ultimately enables better response accuracy, richer agent experiences, and more efficient cost management.
End users are becoming more comfortable with AI-powered search and retrieval solutions, while technical teams are eager to move further into custom-built experiences. Enter Copilot Studio — a low-code platform that makes agent development accessible and fast. However, ease of use can sometimes create blind spots, leading to architectural missteps if foundational planning isn’t addressed early.
Before jumping in, consider a few key questions:
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Is your Power Platform governed correctly and supported with ALM-ready environments?
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Do you truly need a Custom Engine agent or custom connectors, or would a Microsoft Graph connector meet the requirement more efficiently?
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Are users already licensed for M365 Copilot, and could leveraging Graph connectors help manage cost while still delivering secure data access?
I frequently see the excitement around Copilot Studio spark immediate building — which is great — but without proper planning, this can quickly introduce unnecessary cost, confusion for end users, and complex licensing gaps between fully licensed and pay-as-you-go users.
In this post, we’ll explore connector strategies along with the architectural considerations you should validate before building your first agent. We’ll compare these decisions through the lens of the ServiceNow ecosystem, which is equally robust and full of solution design possibilities.
Real world scenario with ServiceNow:
To set the stage: your organization is using M365 Copilot Chat — adoption may be growing, but not yet universal. You know valuable insights live inside ServiceNow, across Knowledge Bases, tickets and incidents, and service catalogs. The natural next step is figuring out how to bring that value into Copilot experiences — intentionally.
As a builder, you’re aware there’s no shortage of paths to take — and one of your primary starting points lives right inside the M365 Admin Center under Copilot, where you can configure access, licensing, and foundational settings.
You might be wondering: Why are there three different Graph connector options, and how do they compare to the ServiceNow connectors available in Copilot Studio?
To clarify this, we’ll walk through Graph Connector–based agents vs. Custom Connector–based agents, which will make it easier to understand the purpose and value of each Graph connector type.
Graph Connector – Integrates ServiceNow data into Microsoft 365 Copilot experiences (e.g., search, summarization, answers) by indexing ServiceNow content through Microsoft Graph. This enables enterprise search-driven intelligence without requiring direct API calls during each interaction.
Custom Connector – Enables a custom agent to call ServiceNow APIs in real time, supporting workflow actions, transactional operations, and deeper conversational logic. Because it executes API calls on demand during each interaction, it does not rely on Graph indexing and requires consistent API availability and performance.
Both approaches are secure, but they rely on different permission models and can drive different cost implications depending on how data is accessed and used. The three Graph connector options help accommodate these varying permission scopes and governance requirements.
Comparison - M365 Copilot with Graph connector vs Custom Agent connector
Lets start with Knowledge Base research.
Using M365 Copilot Chat with Graph connector enabled - lets search for any articles related to Apple products.
The same prompt leveraging a Copilot Studio agent with custom connector and API call. (Demonstrated using Copilot Studio test pane to review the connector steps and the generative orchestration enabled through the agent configuration)
While both approaches provide helpful responses, there are some key differences. The Studio agent calls the connector and directly queries the ServiceNow API, generating a more condensed set of responses. In contrast, the M365 Copilot Chat experience leverages Graph index data and generative orchestration to provide richer, more detailed answers within the conversation while also including reference links to the ServiceNow source.
In practice, even though this difference may not be immediately obvious, the user experience can be quite similar. For many scenarios—such as retrieving knowledge base articles—direct API calls aren’t always necessary. Using the Graph connector to index ServiceNow data can be more responsive and cost-effective, requiring only configuration of the connector without the need to build a fully interactive agent.
Using Graph-indexed data can optimize the experience when the source content is relatively static and not constantly changing. Knowledge base articles or reference materials are ideal candidates for this approach. In contrast, tickets, incidents, or catalog items tend to be more dynamic, frequently updated, or require additional user interaction to reach the correct information. In these cases, direct API queries via a custom connector or Studio agent may provide more accurate and timely responses.
Additionally, ticket or incident data may require different user permissions to ensure that critical or sensitive information isn’t inadvertently shared across the organization. Proper access controls and governance are essential when exposing dynamic or confidential data through either Graph-indexed solutions or custom connectors.
Topic integration for advanced scenarios like ServiceNow Catalogs
Where Copilot Studio agents truly shine is in their flexibility—for example, when working with catalog knowledge in ServiceNow. While catalogs can be accessed through both Graph-indexed data and custom connectors, the combination of Topics and Tools in Studio allows for a more intuitive and interactive end-user experience. This approach enables users to navigate complex catalogs more naturally and complete tasks with fewer steps.
In this example, the end user may not know which catalogs or catalog items are available through M365 Copilot Chat. Studio agents, with their flexible combination of Topics and Tools, can surface relevant options more intuitively, guiding users to the right catalog items without requiring prior knowledge of what’s available.
A custom-built agent in Copilot Studio can be designed to deliver a more intuitive sequence, guiding users efficiently and aligning responses more closely with their specific needs using generative orchestration.
Using a Topic to steer the conversation to the appropriate tool (GetCatalogs):
Once the catalog is selected - the topic calls an additional tool (GetCatalogItems) to gather the inventory and provide links to each catalog item.
To support an intuitive user flow, the agent is structured and designed in the following way:
The Topic guides the conversation flow between the ServiceNow connector tools and generative orchestration, while instructions define how the final output should be formatted for the end user. In this example, variable management (Set Variable Value Expression) is also leveraged to dynamically present the available catalog list directly within the agent’s chat experience, creating a more interactive and personalized workflow.
When working with multiple catalogs and large, detailed inventories, an interactive agent experience can significantly improve user satisfaction by helping users navigate options more efficiently and reach the right information with less friction.
Cost comparison - M365 Copilot with Graph connector vs Custom Agent connector
When using M365 Copilot with a Graph connector, licensing is straightforward — Copilot is priced at $30 per user per month, and Graph-based queries are included in that cost. For organizations with active M365 Copilot adoption, this becomes a predictable, all-inclusive experience.
In contrast, Copilot Studio agents that rely on custom connectors call external APIs (such as ServiceNow) during each conversation. Users who do not have an M365 Copilot license will consume pay-as-you-go (PAYG) credits, introducing variable usage-based costs. This can be very cost-effective at low usage but may scale significantly in high-volume scenarios.
Example Cost Model (at time of writing)
Copilot Studio is billed using Copilot Credits, the universal currency for agent execution.
Prepaid Pack: 25,000 credits for $200/month
PAYG: $0.01 per credit
Estimated Credit Use (ServiceNow-integrated agent)
Generative response: 2 credits
External API call (ServiceNow): 5 credits per call
Assume ~3 API actions per conversation → (3 × 5) + 2 = 17 credits per conversation
Sample Monthly Scenario
2,000 conversations × 17 credits = 34,000 credits / month
| Component | Cost |
|---|---|
| Prepaid 25,000-credit pack | $200 |
| Remaining 9,000 credits (PAYG @ $0.01) | $90 |
| Total Estimated Monthly Cost | ~$290 |
In short, choosing between Graph connectors and custom connectors in Copilot Studio isn’t just a technical decision — it’s a strategic one. Graph connectors let you securely bring ServiceNow data into Microsoft 365 Copilot experiences, while custom connectors unlock direct API-driven workflows, richer dialogues, and real-time actions. Each has its own security, permission, and cost trade-offs — and Microsoft’s three Graph connector variants give you flexibility to align with your governance and usage model. From a cost standpoint, leveraging existing M365 Copilot licenses can be very efficient, but building in Studio with custom connectors may introduce pay-as-you-go consumption for non-licensed users, that needs to be managed carefully.
If you want to dive deeper, here are a few great resources:
- Copilot Studio licensing guide on Microsoft Learn
- Configuring ServiceNow knowledge with Graph connectors
- How to use prepaid Copilot Credit packs for Copilot Chat and SharePoint agents
- A technical walkthrough video: Mastering Copilot Studio + ServiceNow Connectors
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