Help planning and understanding ADFS and Azure roll out.

I am trying to better understand our needs in terms of ADFS, Azure, and everything else involved.  I am trying to understand at a high level what my options are, and what the best design would be.

Notes:
2008 R2 infrastructure w/ 1 forest & 1 domain
No on site exchange server, but use Office 365 for mail.

Needs:
I would like to setup SSO between our AD environment and Office365.  I would also like this integrated with our 3rd party cloud storage provider, 3rd party payroll company, etc.  Not to state the obvious, but I would like to have all users use a single password for all of these things.

I am trying to understand at a high level how to approach this, but I am still a little confused with the federated services environment as a whole.  Would it be best to setup my own ADFS server & proxy server?  Since we don't have any internal applications needing integration, would it be better to host ADFS locally or using Azure in the cloud?  Once AD & Office365 are integrated, would I want to integrate 3rd party apps with my local ADFS server, or Azure in the cloud?  If it helps we have the Office 365 Enterprise E1 plan currently.

Any advice you could give to help me grasp the needs and plan things out would be greatly appreciated.
spadmin1Asked:
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Vasil Michev (MVP)Connect With a Mentor Commented:
The "Azure" portion of O365 is Azure AD, it has nothing to do with hosting VMs or similar. You will have to purchase a separate Azure subscription and provision the VMs there. If you want to place the AD FS infra in Azure that is, otherwise just run it on prem.

You can also just use dirsync with password sync as alternative, it's actually the recommended setup for smaller shops.
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Vasil Michev (MVP)Connect With a Mentor Commented:
You can run the AD FS servers on Azure VMs if that's what you mean, but I'd stick to an on-prem solution, if possible. I suggest you review the TechNet documentation in details:

https://technet.microsoft.com/en-us/library/dn509539.aspx
https://technet.microsoft.com/en-us/library/dn509516.aspx
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spadmin1Author Commented:
We run Office365/Exchange up in the cloud.  If we had an on site AD FS server, would I still need to setup Azure VM's for Office365 SSO?  All of the documentation I have been looking at indicates I would need to do so.  Or would I get to use the free "Azure" portion of our Enterprise E1 Office 365 plan?
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