O365 Migration Question

Looking for some solid advice on starting to use O365. Currently have a company that has roughly 700 users. They have an on-prem data center that includes an Exchange 2010 array along with a SharePoint 2010 environment. They have purchased enough licenses at this time for O365 as they would like to move to SharePoint online. They would like to keep Exchange on-prem for the time being and start to utilize some of the other features of O365 like OneDrive and Teams. My questions is, what is the best way to setup the Azure AD connect at this time. Should I setup the Hybrid environment now for Exchange so that it is ready to move to Exchange online in the future or just wait until that time comes, if ever? I ran IDFX tool and it came back showing that all the users UPN and proxy addresses are showing the user@domain.local. I can easily fix the UPN addresses and add the @domain.com but what should I do about the proxy addresses? I read that you can remove the @domain.local from Exchange but that may cause some other mail routing problems. Should I just leave it, what have others done? I Just don’t want to initiate an AD sync now, mess anything up or make more work for myself. I look forward to hearing from you.

Thank you!
-Mike
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timgreen7077Exchange EngineerCommented:
We setup AD Connect first and setup the Exchange Hybrid later. Get AD connect up and running because that is the system that syncs your on-prem AD objects to O365, and this will not interfere with your on-prem environment. When you are ready to pull the trigger on setting up the Exchange Hybrid environment, you can just go back to the AD connect installer and select Setup Hybrid Exchange and follow those prompts, its actaully really simple, and to be honest if there are plans for moving Exchange to O365 you can do that with the initial setup of AD Connect but I agree with you that if it may never happen then I wouldn't bother with it. Either way works.

In regards to the @domain.local address, it will not cause mail routing issues if emails are not being sent using the @domain.local addresses. Only internal systems and users will be able to successfully email those addresses but most likely no one is using that anyway because they are using the email domain smtp address and not that domain.local address.

Hope this answers you questions, so you choice on setting up Hybrid with AD Connect, but if you need to choose which to do first, perform the AD connect setup first and Hybrid later if the decision is made to move forward with Exchange online.  Also once AD connect is setup you can perform a sync because its a one way sync, so your on-prem AD (OU you select during the setup) is synced to O365 and thats all at that point, there are no write backs to your on-prem AD Domain so its fine to sync if you choose, but you can also run the sync later if you choose.
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Todd NelsonSystems EngineerCommented:
Just to add onto what timgreen7077 stated, the @domain.local addresses must be removed in order to be able to move the mailboxes to EXO when the time comes else the moves will fail.
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timgreen7077Exchange EngineerCommented:
Enough info given to assist author with question. Assigning points and initiating close.
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